Inside Jobs Documentary Summary

Inside Job Summary Inside Job is a documentary that focuses on the cause and outcome of the 2008 economic recession in both the U.S. and around the world and who specifically is behind it. The film tells the story of the government and financial sector working in cahoots to profit off of citizen losses that plunged the world into a massive economic recession. In the beginning, the film explains the financial background of the 2008 Recession. Since the Great Depression, banks were highly regulated by the U.S. government, however, in 1981 U.S. private banks began to go increasingly public (Ferguson 00:12). The U.S. banks then had access to massive more amounts of money after going public, and this, combined with Reagan’s deregulation policies, led to the conglomeration of the U.S. financial sector into massive conglomerates (Ferguson 00:16). Then, the true turning point occurred when the U.S. Congress passed the Gramm-Leach-Bliley Act, also known as the Citigroup Relief Act, that overturned the Glass-Steagall that separated commercial and investment banking by U.S. law (Ferguson 00:17). Now that this separation no longer existed, the financial sector had unprecedented power over the U.S. public. After the Glass-Steagall act was overturned, derivates were developed by tech companies that essentially allowed bankers to gamble on anything (Ferguson 00:22). The derivates market developed into a $50 trillion-dollar unregulated market by the late 1990s, yet when analysts attempted to point out the impending danger, U.S. government officials like Larry Summers condemned them and continued to promote the deregulation of the derivates market to be the safest for the American public. However, at the same time that he promoted this deregulation, Summers was also in the midst of a $20 million dollar consulting deal with a hedge fund, a deal largely focused on the use of derivatives (Ferguson 00:25). And Summers was not alone; multitudes of U.S. government officials were promoting laws not for the benefit of the U.S. public but instead in order to line their own pockets. It is with this background information that we approach the housing bubble, and the film explains securitization food chains. These chains connect trillions of dollars in mortgages and other loans with investors all over the world and prompted the development of collateralized debt obligation, or CDOs (Ferguson 00:27). The CDOs, made up of complicated derivatives, were then sold to investors. And, in order to make the sale even more enticing to future investors, investment banks paid rating agencies to give the CDOs high ratings which stated they were not risky investments when they were, in fact, quite risky (Ferguson 00:29). Here the audience learns that these investment banks were well aware of what they were doing in terms of giving out risky loans, but their lucrative profits were more enticing than the long-term economic stability of their own country. The creation of CDOs promoted the lending of high-risk, subprime loans to the American public who were often tricked into taking out loans they could not afford. Therefore, since many more Americans had access to loans, mortgages quadrupled, and the price of houses skyrocketed (Ferguson 00:31). Now, economists were confused because the housing bubble made no sense, and it is here that they begin calling out the big Wall Street banks and hedge funds for putting the U.S. citizens’ money into massively risky investments that were almost certain to fail. However, whenever someone tried to raise criticisms, the financial sector and the U.S. government often worked together to shut down the subversive speech (Ferguson. 00:40). Inside Job also emphasizes the connection between the Boards of hedge funds/investment banks and the Boards of colleges and universities in the U.S (Ferguson 01:22). Once the government overturned the Glass-Steagall Act, the financial sector basically began making up their own theory of economics that supported their own profit at everyone else’s expense. However, they were able to successfully implement this fake economics into university curriculum across the country because the same people who were teaching these Business classes were also sitting on the Boards of investment banks or in seats in the U.S. government. Prominent academics make fortunes by shaping the public debate around finance (Ferguson 01:24), especially when they write published academic journals that encourage the dangerous behavior these investment banks take part in, all because the professors and academics themselves are gaining a profit from it. Yet, after all this information is given, the film reveals that, once the government bailed the investment banks out after they all inevitably went bankrupt, the men who led the companies, and the entire country and world, into the hole of recession were allowed to walk free and keep a vast majority of their fortunes (Ferguson 01:40). It would be easy to make them talk, but no one does, mainly because the American public is still entrenched in the ideology that government regulation is bad for the economy, despite the fact that the lack of just that caused the biggest recession since the Great Depression. However, despite the full knowledge of who specifically brought our country to that point, the American people continue to pay for the massive mistakes of the financial sector.