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The movie “Inside Job”

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The movie “Inside Job” was a very controversial movie. It talked about the financial crisis and how it affected everyone. Personally, it made me angry. All of the big companies such as Goldman Sachs, Citi Bank, Meryl Lynch, and many more, performed unethical activities. They went behind their customers back to bet against them just to make more money, and the statistics don’t lie. From 1978 to 2008 a banker’s regular salary went from $47,000 a year all the way to $100,000, which is a pretty big increase. Inside Job talks about how that happened and the events that led to the financial crisis.

One of the reasons for the crisis was because of immoral decisions. After The Great Depression the industry was tightly regulated. Everything was fine for 40 year’s up until the 1980’s when Don Reagan, newly appointed Treasury Secretary and former Meryl Lynch CEO, pushed for deregulation. Without oversight, companies such as Meryl Lynch, and others like Goldman Sachs, started making risky investments. This is one of the reasons why the film made me angry, but also helped me realize what actually happened. We saw these companies start to become huge and gain more power, which in turn was one reason that led to the financial crisis. In my eyes they are responsible for some of the wrongdoings because if we were still regulated, the chances of the financial crisis would have been slimmer.

During the Clinton administration deregulation continued. In the late 1990’s firms such as CitiGroup and Travelers merged and began to get so big that their failure could easily threaten the whole system. Little did we know that’s exactly what would happen. I do believe that there was wrongdoing here because the merger between CitiGroup and Travelers violated the Glass-Steegal Act put in place in 1934 after the Great Depression. The Federal Reserve did absolutely nothing and gave them an exemption for an entire year. During that time Larry Summers and Robert Rubin urged Congress to pass the Gramm-Leach-Bliley Act, which overturned the Glass-Steegal Act. Rubin then later made 126 million working for CitiGroup. In my opinion this is unethical, and something should have been done to stop this act from being passed. Unfortunately nothing was done, and everything went haywire.

However, in 1998 some people did try and do something about it. The CFTC, (Commodities Future Trading Commission) attempted to regulate. Up until now bankers would gamble on whatever they could to make more money using derivatives. The change in oil prices and the bankruptcy of a company, were just a few of the things. However, in the end, the CFTC was shut down by Larry Summers and friends. This was just another bump in the road before the financial crisis in the late 2000’s.

By 2001 a new system was put in place. It was called securitization. Basically it let the lender sell the mortgages to investment banks and then the investment banks sell them to make complex derivatives. The complex derivatives were bundled with a few other things and they were then called CDO’s (Collateralized Debt Obligations). So it got more complex and a little more confusing, but then got it worse. The investment banks would pay the rating agencies to put a top rating on the CDO’s. The more CDO’s, the more money the investment banks make. Investors are then the ones who buy the CDO’s, mostly because of their rating and the people paying their mortgage are now paying investors. Not many people knew of this. Eventually this kept happening and is what led to everything collapsing.

Most of the banks and companies performed unethically and made decisions that have put us were we are now. I have no idea how not one of them didn’t get in trouble. All of them got off scott free. This is the one thing that makes me very mad. They knew what they were doing and didn’t want to stop because all they were interested in was money. If I had to do something about it I would try and make sure that no more companies would become to big as to where if they failed, they would bring everyone down with them. That’s why we had to bail them out because if we didn’t, then we would have been in an even stickier situation.

If I could make sure that there was no company to big, I would want the government to help and step in. I think that the government should be a part of the markets, but up until a certain point. They shouldn’t get to involved where they start to make all of the decisions, but should oversee that ethical decisions are being made and that the market is regulated. Now I don’t know necessarily how I would do it but would do my best to see it get done.

My views haven’t really changed about the government being involved but there is something that might get me to change my mind in the future. If the government was insufficient in helping regulate the markets and making ethical decisions, then that is when I would want them to stop. I also do not believe that the government is a Wall Street government, at least not yet. However, there is always the possibility that in the future they might become one.

All in all, this movie educated me on how the financial crisis happened, and a lot of the events that led to the eventual downfall of the economy. I enjoyed it, but it did make me angry. It made me angry only because of what all the companies did and how congress and the government just let it all happen. There is no reason that we couldn’t have stopped this from happening. Hopefully we can learn from our mistakes and make sure that this will never happen again. Well at least for a long time.

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