Inside Job: Film Brings Us Face to Face with the People Who Nearly Destroyed Our Economy
Inside Job, the infuriating and compelling new documentary from Charles Ferguson, tells the story of the global financial crisis of 2008, which led to millions of people around the world losing their homes and jobs.
Critics have been raving about the film's insight and incisiveness. Kenneth Turan from the Los Angeles Times wrote, "After watching Charles Ferguson's powerhouse documentary about the global economic crisis, you will more than understand what went down -- you will be thunderstruck and boiling with rage."
Ferguson makes the case that the meltdown wasn't just an unfortunate accident -- it was totally avoidable. Through interviews with financial experts such as International Monetary Fund chief Dominique Strauss-Kahn, French Minister of Finance Christine Lagarde, and former New York governor Eliot Spitzer, and detailed explanations of credit default swaps and derivatives, Ferguson paints a picture of an unethical industry driven by greed, rampant deregulation and an indifferent government. Ferguson, who also made No End In Sight, about the Iraq war, has a PhD in political science, and worked as a government consultant and a Silicon Valley entrepreneur. He is clearly outraged about what happened. "You can't be serious," he tells a former governor of the Federal Reserve who claims they tried to find out who was responsible.
Ferguson sat down with AlterNet in San Francisco to talk about how he felt compelled to make this movie after recognizing the level of criminality to which the financial industry had sunk.
Emily Wilson: How did you decide how much detail you were going to explain to the audience, and how?
Charles Ferguson: We wanted to make the film accessible and the ideas accessible. I did my best to keep jargon out of the film. And where it was necessary to explain something that was somewhat technical -- for example, we felt it was important to explain credit default swaps and the securitization chain because they were so critical to what happened -- we did our best to make those things accessible. Hence the graphics and using a mixture of different ways to explain things, so that if someone wasn't attuned to narration but was attuned to graphics, or wasn't attuned to graphics but would be more attuned to hearing somebody say it, we tried to explain things in an overlapping way, with a little bit of deliberate redundancy.
EW: Your background is in political science, writing, and math. Why did you become a filmmaker?
CF: I've always loved film. Ever since I was a kid I've loved movies and always had a secret dream fantasy of being able to make them. Part of the reason I love movies is they show things other media can't. To take this film, if you were to read a transcript of my interview with Glenn Hubbard [chief economic adviser during the Bush administration and current Dean of the Columbia Business School] or Frederic Mishkin [a member of Board of Governors at the Federal Reserve from 2006 to 2008, and professor at Columbia Business School], you would certainly understand I was going after something and you'd probably understand they were being evasive, but to see them conveys it in a much clearer way. It conveys something the printed word just can't.
EW: Why do you think some of those people, such as Frederic Mishkin and some of Bush's top people, agreed to give you an interview?
CF: I think they're not used to being challenged. I think they granted the interview request assuming I was going to be like the other people that interview them -- very deferential, very nice, very easy. I think it came as quite a surprise to them when I challenged them. And also that I knew as much as I did.
EW: Did they know that you knew as much as you did?
CF: They clearly did not realize that in advance, but I think they should have. I did not conceal my background, so they knew who I was. Some of them asked to see a copy of my CV. Some of them asked to see my previous film. A couple of them had seen my previous film. David McCormack, for example, who was Under Secretary of the Treasury, had seen my film. He actually has a military background. He was at West Point and was in the first Gulf War as a battalion commander. So there was no concealment in mind about who I was. I think these guys are just used to people being really nice to them because they're powerful.
EW: Was there one defining moment that made you decide you had to make this movie?
CF: The simultaneous collapse of Lehman Brothers, Merrill Lynch and AIG in September 2008 made it pretty clear there was something truly enormous going on here, and I'd already been thinking about making a film about this subject. I was worrying about whether it would be possible to make a film about the finance interesting and wondering whether the crisis and its effects would be severe enough and sufficiently long lasting to merit making a film that takes two years to make and has to have a substantial audience to justify the effort and time and expense of making it. Well, September 2008, certainly took care of that problem. At that point it was clear to me and to people in the financial world and were watching this carefully, that this was a very deep thing and it was going to be with us for a long time. It was also clear it was sufficiently dramatic and sufficiently extreme that a lot of people would be interested in such a film if I could make it well enough.
EW: In the movie, in your questions, you seem to be angry about what happened. How much did you want to let that show, and how much did you rein it in in the movie?
CF: I wouldn't say I was always angry about it. I certainly tried to keep my cool when I was interviewing people and for the most part I think I did keep my cool. It doesn't benefit anybody if you lose your temper. It doesn't benefit the film. I wanted to keep a clear head because I wanted to get the information, and I wanted to get the answers. I wanted to make these people talk or show them trying really hard not to. I didn't want to just show a screaming match because there's no point in showing a screaming match. There certainly is an edge in my voice sometimes, but it was me being determined that I wasn't going to let these people get away with it. No, I'm not going to just let you say this and let it hang there. You're going to have to explain.
EW: What's an example of something outrageous you felt you couldn't let slide?
CF: Oh, there were quite a number of them ranging from David McCormack saying his boss, Henry Paulson, had spoken often and truthfully about the causes of the crisis when, in fact, one of the principle causes of the crisis was Henry Paulson -- a fact which Henry Paulson didn't mention very much. Then the way the academics handled the issue of their own personal conflicts of interest and the general issue of conflicts of interest in the economics discipline.
EW: Based on your research, what do you find the most upsetting or scandalous part of the story?
CF: The level to which ethics in the financial services industry have sunk. Investment banking used to be a genteel industry, and it's not anymore. It's a very ruthless, very dishonest industry. I found it quite surprising and quite shocking how far that had gone.
When I started making the film, it was already clear there had been some quite unethical behavior. That was already obvious, but I had no idea when I started making the film that for the previous three or four years the investment banks had been betting against the securities they were selling to people, and in some cases specifically designing securities so they could bet against them and profit by betting against them after they'd sold them to people. If somebody had said that to me, that this had been going on for years and it was tens of billions of dollars worth of securities, securities often sold to the pension funds of poor people, I would have said "No, I know that bad things have gone on, but that's just too evil. They wouldn't do that. That wouldn't be tolerated." But in fact, they had been doing it, and it was tolerated. It still is. Nobody has been prosecuted for this. Nobody.
EW: When this first happened, did you think people would go to jail?
CF: Yes, I did. In previous similar, far less extreme circumstances, people did go to jail. It used to be that if you committed a major financial fraud in the United States, you went to jail. In the late 1980s, there was, what was then considered a major financial crisis, caused by the collapse of the savings and loan industry, a collapse which had been brought about by a large quantity of fraud. Several thousand financial executives went to prison in the late 1980s. Several very senior Wall Street executives also went to prison for having assisted in this -- Michael Milkin, Ivan Boesky -- a large group of people went to prison.
Then in the aftermath of the dot-com bubble fewer people went to jail, but some people did go to jail. When Enron collapsed, the people who ran Enron went to prison, and the CEO of WorldCom went to prison. He's still in prison. Those things were far less extreme than what occurred here, with far fewer consequences.
EW: Why do you think that is?
CF: I think what's happened over the last 20 years roughly the financial industry has acquired so much political power that it now has impunity. Since we started having deregulation and financial crises, with each successive crisis the consequences were more severe and yet, fewer people went to prison.
EW: You talk about the 'corrosive relationships' that led to this -- what are they?
CF: The obvious, conventional one that everybody sort of knows about is between government and industry, people going back and forth between the industry that they're supposed to be regulating and the industry itself. For example, Robert Rubin, the CEO of Goldman Sachs, became Treasury Secretary of the Clinton administration. While he was Treasury Secretary, he had a major role in the further deregulation of the financial services industry and very specifically, repealing the Glass-Steagall Act which had forced a separation between investment banking and commercial banking. The first and biggest beneficiary of the repeal of that law was Citigroup. Citicorp and Travelers wanted to merge and that merger was illegal under the Glass-Steagall Act. Then Mr. Rubin and others got that law passed, and Mr. Rubin left the Clinton administration and became vice-chair of Citigroup, which then paid him over $100 million.
The less obvious one is that this is actually a triangular relationship, and the third part of the triangle is academia. People going between having positions in universities as economists and being in industry and being in government, and often being paid by industry while they are in academia and while they are writing papers and making speeches about what policy should be toward the industry they're being paid by.
EW: Why do you think people didn't get more outraged? Did that surprise you?
CF: It does surprise me. I think it's more difficult to do something about this because it's a fully bipartisan problem. You can't switch from one political party to the other. So the kind of effort people have to engage to try and become activist about this is much more complicated and much more difficult. You have to think about and know about the records of individual candidates, individual members of Congress. You have to think about who to donate money to and who not to. Or conceivably start a new organization or a new political party.
Someone said to me yesterday the American people are now weary and tired. Those people who have jobs are working harder to keep them and those people who don't have jobs don't have money and their primary concern is trying to get a job and keep their house, keep their car. And because things are so difficult for so many people, people don't have the kind of psychological energy to do the kind of things they might otherwise.