act as they please. Credit rating agencies, especially two of the three major agencies – Moody’s, and Standard and Poor’s – were, in effect, similarly paid to bestow top credit ratings upon even the most “toxic” investment assets. Big auditing firms turned a blind eye to what were, at best, the major offenders’ dubious accounting practices, as, for example, did Ernst & Young with Lehman Brother’s fraudulent manipulation of its balance sheet leading up to the investment bank’s filing for bankruptcy on 15 September 2008, triggering the truly global phase of the financial crisis.
It was the collapse of Lehman Brothers, of course, that was the defining event of the day and that brought financial markets all over the world to a standstill. Ferguson does more than merely expose the mechanisms of the “products” and practices that led to Lehmans’ fall and the wider crisis: with Inside Job, he explains these mechanisms in clear language and illustration, which is an essential part of the process of communicating the audacity and the extent of what amounts to criminal fraud on a massive scale.
As appalling as such transgression and excess may be, any viewer not actually a participant in the fraud that contributed so roundly to the GFC will be left astounded when, towards the conclusion of the film, attention is turned to the staff appointed by US
President Barack Obama to inform his administration on economic and fiscal policy. The reality of the proverbial revolving door between government and big business should come as no surprise to anyone not living in a fantasy world, but the extent to which Obama’s promises to confront the banks and reform the financial system now ring hollow are encapsulated in these words: “It’s a Wall Street government”. In uttering those words, Robert Gnaizda, a social justice advocate and co-founder and former director of the Greenlining Institute, seems to have struck a popular chord: the video clip of him spitting them out in an interview with Ferguson in Inside Job is all over the internet.
A key point of Ferguson’s narrative (and Gnaizda’s) is that the financial services industry very quickly colonised the Obama administration to an extent that even outdoes previous administrations. From a position of power and influence at the heart of political, economic and associated legal policy making, the industry is fighting the introduction of regulatory measures and striving to restore the precrisis status quo. From outside the political structure, the industry supports the attainment of these goals by employing all the lobbying, marketing and buying (or bribing) power it can muster.
That the viewer is not shocked at these revelations testifies to the effectiveness of Ferguson’s research and
presentation, the result of which is – or should be – a profound scepticism in the US political–economic system. Of course, those more familiar with these issues would have come to this film already endowed with a healthy scepticism of the US political–economic system. There has, after all, been plenty of time to become familiar with the process of financial-industry deregulation and the resultant swagger of that industry’s institutions, which began in the early 1980s with the Republican administration of Ronald Reagan, and that continued through the Democratic administration of Bill Clinton, and through the Republican administration of George W. Bush, to the current Obama administration.
Writing for Salon, Ferguson provides yet more evidence for what is one of his principal conclusions in Inside Job: the Obama administration, far from moving to reform a clearly exploitative and destructive US financial system, has further entrenched the power of those who created the original crisis. Ferguson writes that, in preparing to make his documentary, he was unsure how to treat the then-new president – but that any questions he had were answered disconcertingly quickly:
The first troubling sign was [Obama’s] personnel appointments: Larry Summers, the man behind nearly every disastrous policy that created the crisis, fresh from making $20 million from hedge funds and investment banks while at Harvard, to become the director of the National Economic Council; Tim
Geithner, plucked from the New York Federal Reserve Bank and put in charge at Treasury; as Geithner’s chief of staff, Mark Patterson, a former Goldman Sachs lobbyist; to succeed Geithner at the New York Fed, William C. Dudley, who was chief economist of Goldman Sachs during the housing bubble years; Michael Froman, straight from Citigroup Alternative Investments, which lost billions while its executives became rich, to coordinate economic policy for the National Security Council; Jacob Lew, who was the [chief financial officer] of Citigroup Alternative Investments, as deputy secretary of state (and now, Obama’s nominee to run the Office of Management and Budget); Gary Gensler, a former Goldman executive who helped ban the regulation of over-the-counter derivatives, to lead the Commodity Futures Trading Commission, which regulates derivatives; Mary Shapiro, former head of the Financial Industry Regulatory Agency, the investment banking industry’s self-policing body, to run the Securities and Exchange Commission; reappointing Ben Bernanke [as chairman of the Federal Reserve]. And on and on.2
Ferguson cannot be dismissed as a filmmaker attempting to justify a wild conspiracy theory. Simon Johnson, professor of global economics and management at MIT’s Sloan School of Management and a former chief economist at the International Monetary Fund (2007–08), has written of “the flow of individuals between Wall Street and Washington”. The roll call is sobering: