documentary film
A documentary film (often described simply as a documentary) is a nonfiction Film, motion picture intended to "document reality, primarily for instruction, education or maintaining a Recorded history, historical record". The American author and ...
2008 financial crisis
The 2008 financial crisis, also known as the global financial crisis (GFC), was a major worldwide financial crisis centered in the United States. The causes of the 2008 crisis included excessive speculation on housing values by both homeowners ...
. Ferguson, who began researching in 2008, said the film is about "the systemic corruption of the United States by the
financial services
Financial services are service (economics), economic services tied to finance provided by financial institutions. Financial services encompass a broad range of tertiary sector of the economy, service sector activities, especially as concerns finan ...
industry and the consequences of that systemic corruption", amongst them conflicts of interest of academic research, which led to improved disclosure standards by the American Economic Association. In five parts, the film explores how changes in the policy environment and banking practices led to the
2008 financial crisis
The 2008 financial crisis, also known as the global financial crisis (GFC), was a major worldwide financial crisis centered in the United States. The causes of the 2008 crisis included excessive speculation on housing values by both homeowners ...
The film begins by examining the effects of the government of
Iceland
Iceland is a Nordic countries, Nordic island country between the Atlantic Ocean, North Atlantic and Arctic Oceans, on the Mid-Atlantic Ridge between North America and Europe. It is culturally and politically linked with Europe and is the regi ...
's shift toward deregulation in 2000, which included the privatization of its banks. When Lehman Brothers went bankrupt and AIG collapsed, Iceland and the rest of the world went into a global recession.
Part I: How We Got Here
The American financial industry was regulated from 1941 to 1981, followed by a long period of deregulation. At the end of the 1980s, a savings and loan crisis cost taxpayers approximately $124 billion. In the late 1990s, the financial sector had consolidated into a few giant firms. In March 2000, the Internet Stock Bubble burst because investment banks promoted Internet companies they knew would fail, resulting in $5 trillion in investor losses. In the 1990s,
derivative
In mathematics, the derivative is a fundamental tool that quantifies the sensitivity to change of a function's output with respect to its input. The derivative of a function of a single variable at a chosen input value, when it exists, is t ...
JPMorgan Chase
JPMorgan Chase & Co. (stylized as JPMorganChase) is an American multinational financial services, finance corporation headquartered in New York City and incorporated in Delaware. It is List of largest banks in the United States, the largest ba ...
Standard & Poor's
S&P Global Ratings (previously Standard & Poor's and informally known as S&P) is an American credit rating agency (CRA) and a division of S&P Global that publishes financial research and analysis on stocks, bonds, and commodities. S&P is co ...
, Fitch). Investment banks bundled mortgages with other loans and debts into
collateralized debt obligation
A collateralized debt obligation (CDO) is a type of structured finance, structured asset-backed security (ABS). Originally developed as instruments for the corporate debt markets, after 2002 CDOs became vehicles for refinancing Mortgage-backed se ...
s (CDOs), which they sold to investors. Rating agencies gave many CDOs AAA ratings. Subprime loans led to predatory lending. Many home owners were given loans they could never repay.
Part II: The Bubble (2001–2007)
During the housing boom, the ratio of money borrowed by investment banks versus the banks' own assets reached unprecedented levels. Speculators could buy credit default swaps (CDSs), which were akin to an insurance policy, to bet against CDOs they did not own. Numerous CDOs were backed by subprime mortgages. Goldman-Sachs sold more than $3 billion worth of CDOs in the first half of 2006. Goldman also bet against the low-value CDOs, telling investors they were high-quality. The three biggest ratings agencies contributed to the problem, with AAA-rated instruments rocketing from a mere handful in 2000 to over 4,000 in 2006. There were some warnings about the growing risks in the financial system, including from Raghuram Rajan, then the chief economist of the IMF, who, at the
Federal Reserve
The Federal Reserve System (often shortened to the Federal Reserve, or simply the Fed) is the central banking system of the United States. It was created on December 23, 1913, with the enactment of the Federal Reserve Act, after a series of ...
The market for CDOs collapsed and investment banks were left with hundreds of billions of dollars in loans, CDOs, and real estate they could not unload. The
Great Recession
The Great Recession was a period of market decline in economies around the world that occurred from late 2007 to mid-2009.
began in November 2007, and in March 2008, Bear Stearns ran out of cash. In September, the federal government took over
Fannie Mae
The Federal National Mortgage Association (FNMA), commonly known as Fannie Mae, is a United States government-sponsored enterprise (GSE) and, since 1968, a publicly traded company. Founded in 1938 during the Great Depression as part of the New ...
and
Freddie Mac
The Federal Home Loan Mortgage Corporation (FHLMC), commonly known as Freddie Mac, is an American publicly traded, government-sponsored enterprise (GSE), headquartered in Tysons, Virginia.Bank of America
The Bank of America Corporation (Bank of America) (often abbreviated BofA or BoA) is an American multinational investment banking, investment bank and financial services holding company headquartered at the Bank of America Corporate Center in ...
. Henry Paulson and Timothy Geithner decided that Lehman must go into bankruptcy, which resulted in a collapse of the
commercial paper
Commercial paper, in the global financial market, is an Unsecured debt, unsecured promissory note with a fixed Maturity (finance), maturity of usually less than 270 days. In layperson terms, it is like an "IOU" but can be bought and sold becaus ...
market. On September 17, the insolvent AIG was taken over by the government. The next day, Paulson and Fed chairman
Ben Bernanke
Ben Shalom Bernanke ( ; born December 13, 1953) is an American economist who served as the 14th chairman of the Federal Reserve from 2006 to 2014. After leaving the Federal Reserve, he was appointed a distinguished fellow at the Brookings Insti ...
asked Congress for $700 billion to bail out the banks. The global financial system became paralyzed. On October 3, 2008, President
George W. Bush
George Walker Bush (born July 6, 1946) is an American politician and businessman who was the 43rd president of the United States from 2001 to 2009. A member of the Bush family and the Republican Party (United States), Republican Party, he i ...
signed the
Troubled Asset Relief Program
The Troubled Asset Relief Program (TARP) is a program of the United States government to purchase toxic assets and equity from financial institutions to strengthen its financial sector that was passed by Congress and signed into law by U.S. Presi ...
, but global stock markets continued to fall. Layoffs and foreclosures continued with unemployment rising to 10% in the US and the
European Union
The European Union (EU) is a supranational union, supranational political union, political and economic union of Member state of the European Union, member states that are Geography of the European Union, located primarily in Europe. The u ...
. By December 2008, GM and Chrysler also faced bankruptcy. Foreclosures in the U.S. reached unprecedented levels.
Part IV: Accountability
Top executives of the insolvent companies walked away with their personal fortunes intact and avoided prosecution. The executives had hand-picked their
boards of directors
A board of directors is a governing body that supervises the activities of a business, a nonprofit organization, or a government agency.
The powers, duties, and responsibilities of a board of directors are determined by government regulations ...
, which handed out billions in bonuses after the government bailout. The major banks grew in power and doubled anti-reform efforts. Many academic economists who had advocated for deregulation for decades and helped shape U.S. policy still opposed reform following the
2008 financial crisis
The 2008 financial crisis, also known as the global financial crisis (GFC), was a major worldwide financial crisis centered in the United States. The causes of the 2008 crisis included excessive speculation on housing values by both homeowners ...
. Firms involved were the Analysis Group, Charles River Associates, Compass Lexecon, and the Law and Economics Consulting Group ( LECG). Many of these economists were paid consultants to companies and other groups involved in the financial crisis, conflicts of interest that were often not disclosed in their research papers.
Part V: Where We Are Now
Tens of thousands of U.S. factory workers were laid off. The incoming Obama administration's financial reforms were weak, and there was no significant proposed regulation of the practices of ratings agencies, lobbyists, or executive compensation. Geithner became Treasury Secretary. Martin Feldstein,
Laura Tyson
Laura D'Andrea Tyson (born June 28, 1947) is an American economist and university administrator who is currently a Distinguished Professor of the Graduate School at the Haas School of Business of the University of California, Berkeley and a senio ...
, and Lawrence Summers were all top economic advisers to Obama. Bernanke was reappointed
Chair of the Federal Reserve
The chair of the Board of Governors of the Federal Reserve System is the head of the Federal Reserve, and is the active executive officer of the Federal Reserve Board of Governors, Board of Governors of the Federal Reserve System. The chairman p ...
. European nations imposed strict regulations on bank compensation, but the U.S. resisted them.
Interviewees
*
Matt Damon
Matthew Paige Damon ( ; born October 8, 1970) is an American actor, film producer, and screenwriter. He was ranked among ''Forbes'' most bankable stars in 2007, and in 2010 was one of the highest-grossing actors of all time. He has received va ...
as Self – Narrator (voice)
* Gylfi Zoega as Self – Professor of Economics,
University of Iceland
The University of Iceland ( ) is a public research university in Reykjavík, Iceland, and the country's oldest and largest institution of higher education. Founded in 1911, it has grown steadily from a small civil servants' school to a modern co ...
International Monetary Fund
The International Monetary Fund (IMF) is a major financial agency of the United Nations, and an international financial institution funded by 191 member countries, with headquarters in Washington, D.C. It is regarded as the global lender of las ...
Secretary of the Treasury
The United States secretary of the treasury is the head of the United States Department of the Treasury, and is the chief financial officer of the federal government of the United States. The secretary of the treasury serves as the principal a ...
Harvard Business School
Harvard Business School (HBS) is the graduate school, graduate business school of Harvard University, a Private university, private Ivy League research university. Located in Allston, Massachusetts, HBS owns Harvard Business Publishing, which p ...
Commodity Futures Trading Commission
The Commodity Futures Trading Commission (CFTC) is an Independent agencies of the United States government, independent agency of the US government created in 1974 that regulates the U.S. derivatives markets, which includes futures contract, fut ...
* Satyajit Das as Self – Derivatives Consultant
* Frank Partnoy as Self – Professor of Law & Finance,
University of California, San Diego
The University of California, San Diego (UC San Diego in communications material, formerly and colloquially UCSD) is a public university, public Land-grant university, land-grant research university in San Diego, California, United States. Es ...
Harvard
Harvard University is a private Ivy League research university in Cambridge, Massachusetts, United States. Founded in 1636 and named for its first benefactor, the Puritan clergyman John Harvard, it is the oldest institution of higher lear ...
review aggregator
A review aggregator is a system that collects reviews and ratings of products and services, such as films, books, video games, music, software, hardware, or cars. This system then stores the reviews to be used for supporting a website where user ...
website
Rotten Tomatoes
Rotten Tomatoes is an American review aggregator, review-aggregation website for film and television. The company was launched in August 1998 by three undergraduate students at the University of California, Berkeley: Senh Duong, Patrick Y. Lee ...
, it holds an approval rating of 98% based on 148 reviews, with an average rating of 8.2/10; the site's "critics consensus" reads: "Disheartening but essential viewing, Charles Ferguson's documentary explores the 2008 Global Financial Crisis with exemplary rigor." On
Metacritic
Metacritic is an American website that aggregates reviews of films, television shows, music albums, video games, and formerly books. For each product, the scores from each review are averaged (a weighted average). Metacritic was created ...
, the film has a weighted average score of 88 out of 100 based on 27 critics, indicating "universal acclaim", and, in 2011, Jason Dietz of Metacritic ranked the film as the best film yet made about the "ongoing financial crisis".
Roger Ebert
Roger Joseph Ebert ( ; June 18, 1942 – April 4, 2013) was an American Film criticism, film critic, film historian, journalist, essayist, screenwriter and author. He wrote for the ''Chicago Sun-Times'' from 1967 until his death in 2013. Eber ...
described the film as "an angry, well-argued documentary about how the American housing industry set out deliberately to defraud the ordinary American investor". A. O. Scott of ''
The New York Times
''The New York Times'' (''NYT'') is an American daily newspaper based in New York City. ''The New York Times'' covers domestic, national, and international news, and publishes opinion pieces, investigative reports, and reviews. As one of ...
'' wrote that "Mr. Ferguson has summoned the scourging moral force of a pulpit-shaking sermon. That he delivers it with rigor, restraint and good humor makes his case all the more devastating". Logan Hill of '' New York'' magazine characterized the film as a "rip-snorting, indignant documentary", noting the "effective presence" of narrator
Matt Damon
Matthew Paige Damon ( ; born October 8, 1970) is an American actor, film producer, and screenwriter. He was ranked among ''Forbes'' most bankable stars in 2007, and in 2010 was one of the highest-grossing actors of all time. He has received va ...
. Peter Bradshaw of ''
The Guardian
''The Guardian'' is a British daily newspaper. It was founded in Manchester in 1821 as ''The Manchester Guardian'' and changed its name in 1959, followed by a move to London. Along with its sister paper, ''The Guardian Weekly'', ''The Guardi ...
'' said it was "as gripping as any thriller", and also noted the influence of
Michael Moore
Michael Francis Moore is an American film director, producer, screenwriter, and author. Moore's work frequently addresses various Social issue, social, political, and economic topics. He first became publicly known for his award-winning debut ...
on the film, which he described as "a Moore film with the gags and stunts removed". Duane Byrge of the ''Hollywood Reporter'' said it deserved a "triple-A rating," writing: "'Inside Job' is no talking-heads drone. It's a lively, droll and acidic shakedown of the insiders who perpetrated this crisis." Kenneth Turan of the ''
Los Angeles Times
The ''Los Angeles Times'' is an American Newspaper#Daily, daily newspaper that began publishing in Los Angeles, California, in 1881. Based in the Greater Los Angeles city of El Segundo, California, El Segundo since 2018, it is the List of new ...
'' hailed the documentary as a "powerhouse" that presents its complex subject matter with "cinematic verve."
The film was selected for a special screening at the 2010 Cannes Film Festival. A reviewer writing from Cannes characterized it as "a complex story told exceedingly well and with a great deal of unalloyed anger".
Critical response
In 2010, economist Gene Epstein, writing for '' Barron's'', criticized the documentary for presenting an incomplete and biased view of the 2008 financial crisis. While acknowledging elements of truth in the narrative about Wall Street greed, Epstein argued that it failed to adequately explore the proactive role of government policy in the crisis, particularly the influence of
Fannie Mae
The Federal National Mortgage Association (FNMA), commonly known as Fannie Mae, is a United States government-sponsored enterprise (GSE) and, since 1968, a publicly traded company. Founded in 1938 during the Great Depression as part of the New ...
and
Freddie Mac
The Federal Home Loan Mortgage Corporation (FHLMC), commonly known as Freddie Mac, is an American publicly traded, government-sponsored enterprise (GSE), headquartered in Tysons, Virginia.Shawn Levy of '' The Oregonian'' rated the film B-, writing: "Whether the film's anatomy and analysis of the crash are accurate, they haven't been rendered in a way that's genuinely worth paying contemporary movie ticket prices to learn about it."
Accolades
See also
Films and series related to the 2008 financial crisis