November 4, 2010
Get ready to gin up some righteous anger at Wall Street and the dog’s breakfast it has made of the economy in Inside Job, a documentary about the causes and effects of the financial crisis.
At one point in the movie — perhaps you’ve seen this in the trailer — a former member of the Federal Reserve is haltingly trying to explain how his office looked into some of the financial problems and the interviewer cuts him off saying, essentially, that’s not possible. If you’d looked at all, you would have found something.
Inside Job seems to be about problems that would have been obvious to anyone who had looked. Or, even, stopped to think — is it a good idea if an investment bank is both selling sub-prime mortgages and betting against them? Is it smart to allow banks to make crazy gambles and have, basically, no money to cover their potential losses? Should something made of sub-prime mortgages really be rated Triple A? It doesn’t take too much financial understanding to suspect that a lot of money is being thrown at some really bad ideas.
Except that, of course, most people didn’t suspect or, if they did, didn’t talk about it. Or, if they did talk about it, they were Eliot Spitzer. The movie walks us through the deregulation that made a bunch of bad ideas possible and how most attempts to put the brakes on them came to naught (again, Eliot Spitzer).
The movie does a good job of taking us through the Reagan years and showing how, since the 1980s, the same group of people have been making Wall Street more dangerous and less responsible — creating the moral hazard that comes when all the big risks are being taken with other people’s money (in this case, ours). Though the movie clearly has a point of view, it isn’t a necessarily Republican or Democrat one. It points the finger at all the administrations from Reagan on and basically argues that not only is government not an effective watchdog but it no longer has the ability to even try to be.
Where the movie falls down is in the blame section. You want, ideally, to be able to talk to one or two people who have opposed and perhaps prevented regulation over the years and ask them to explain themselves. You want a Larry Summers or a Tim Geithner or a Robert Rubin or somebody who has bounced between government and finance to explain, basically, what the hell. The movie, of course, can’t get that. It can’t get anybody who has really been behind all the financial funny business and government permission of same to talk. So instead, it goes after the academics. Economists at noted business schools have also been bouncing around between government and finance, sometimes writing papers supporting some economic instrument or policy that will improve the fortunes of the company that pays them for “consulting.” They are experts but they don’t disclose these relationships and so poison the well of economics as a discipline, the movie argues. It would be like doctors writing papers to support drug companies without disclosing their financial relationship with those companies.
OK, I’ll buy that. It happens that, as I drove home from the movie, listening to Marketplace on the radio, I heard one of the very experts lambasted for this practice (Glenn Hubbard, a former George W. Bush administration official and the current dean of Columbia University’s business school) discuss the size of the government. These people don’t go away and it’s important, as they add their advice to the overall discussion, to know where their alliances are. But this isn’t the big crime. The movie goes after them, angering, I think, specifically Hubbard and others. But it feels petty. The movie piles on the “declined to be interviewed” statements about everybody you’d truly want to hear the truth from. This late-in-the-game professor hectoring feels like a poor substitute for the interrogation the movie really wants to conduct.
Short of a good Robert McNamara-type “we were wrong,” what I want in a documentary like this is some idea of how to fix it. Throw those bums, the repeat offenders like Summers or Greenspan, out, is kind of the movie’s position (and if you think that is possible, I have some unicorn futures I’d like to discuss with you). The movie is clearly pro-regulation and it gives just enough information that we might be able to digest some discussion of what regulation is needed, but all I came away with is that the most recent bank reform act is toothless. OK, then what would have teeth? We get a big build-up about the problem, the crash, etc., but the need to do “something” is summed up with some pretty words and a shot of the Statue of Liberty.
Despite that, Inside Job is worth watching, perhaps in some kind of double feature with Client 9: The Rise and Fall of Eliot Spitzer, another movie with the schemes of Wall Street giants at its heart. Inside Job might not be the perfect financial crisis explainer — sorry, but the Planet Money team and This American Life have set the bar very high — but it is a great way to keep the discussion going even after the heat of the election dies down. B
Rated PG-13 for some drug- and sex-related material. Directed by Charles Ferguson and written by Chad Beck and Adam Bolt, Inside Job is an hour and 48 minutes long and distributed in limited release by Sony Pictures Classics.