"Inside Job" by Charles Ferguson

See . . This . . Movie

Calling Charles Ferguson's "Inside Job" a documentary is like calling The Gettysburg Address a speech.

Bar none, it is the clearest, most succinct explanation of the Wall Street-engineered financial crash -- whose aftermath we are still very much dealing with -- that I have seen.

More than a movie, it is a public record -- a brilliantly spare narrative (with pictures!) explaining what happened, how, and who the principals were.

No Consequences

And still are.

As Ferguson correctly notes, the culprits are still mostly running things, with the exception of a handful of CEO's who were allowed to resign . . with eight figure golden parachutes (that would be between $10 million and $100 million).

"Inside Job" gets all the villains right -- people and institutions like Alan Greenspan, Goldman Sachs, Richard Fuld, Angelo Mozilo, AIG Financial Products, Robert Rubin, Phil Gramm, Larry Summers, and the credit rating agencies.

It also gets the much shorter list of heroes and good guys right: Brooksley Born, Paul Volcker, and Nouriel Roubini.

Ferguson also, I believe, correctly characterizes how history will perceive Barack Obama, at least when it comes to the economy: as the President who, instead of reforming Wall Street, recruited from and deferred to it (same as his predecessors, to be sure, but less acceptable from someone so identified with "change," in office when effecting real change was actually a possibility).

Academics-for-Hire

The only surprise, if you can call it that, is the spotlight the movie shines on the despicable -- albeit supporting -- role played by some of the nation's leading economists, in leadership positions at some of the nation's most influential universities.

Just like physicians who shilled for the pharmaceuticals without disclosing their lush consulting fees, people like Summers and Martin Feldstein (Harvard) and Glenn Hubbard and Fred Mishkin (Columbia) provided Wall Street with intellectual cover while getting rich serving as consultants, board directors, and academics-for-hire.

At least for me, watching "Inside Job" inexplicably conjured up emotions I recall from almost 40 years ago: a mixture of admiration, fascination, and disgust watching people like Howard Baker and Sam Ervin on TV conduct Congress' investigation into Watergate.

Echoes of Watergate

Watching them home in on the Nixon administration's deceptions, one got a sense that truth was finally being served, and that power was being wrested -- however painfully and slowly -- by the good guys from the bad guys.

Which also underscores the difference between Watergate and now: unlike the select Senate committee that Baker and Ervin served on, Ferguson is (only) a movie-maker.

Whether the indictment he so clearly lays out will be acted upon very much remains to be seen.

Obama & Wall Street: 'Moderation in the Pursuit of Justice'

The Limits of Triangulating

Now that Congress has passed financial reform legislation, aren't people upset about past Wall Street abuses just being scolds and cranks?

Shouldn't they -- we -- just get over ourselves?

My answer is "no," because the abuses aren't past.

On the contrary, shockingly little has changed (never mind accountability for misdeeds).

Financial Reform Scorecard

To review, here is a litany of all the things that went wrong leading up to the crash:

Wall Street actively encouraged subprime lenders to lower their already low standards — and then bought those loans knowing they were likely to default, but not caring. Traders up and down Wall Street made millions in bonuses selling products that were “ticking time bombs.” Moody’s, one of the three big credit ratings agency, quadrupled its profits in seven years by handing out triple-A ratings like candy. Regulators ignored impassioned entreaties to investigate fraudulent lending practices and excessive leverage. These were not anomalies. This was standard operating procedure in the years before the crisis.

--Joe Nocera, "Still Stuck in Denial on Wall Street"; The New York Times (10/2/2010)

So all that's different now, right?

Not exactly.

The big banks aren’t being broken up, the way they were in the 1930s. Bankers aren’t being hauled off to jail. No serious effort has been made to rein in executive compensation — or even to claw back millions of dollars in bonuses that were based on what turned out to be illusory profits. Most of the financial practices and products that brought us to the brink remain legal under the new Dodd-Frank legislation — though they will, finally, be regulated.

--Joe Nocera, "Still Stuck in Denial on Wall Street"

Splitting the Difference

When confronted with knotty social issues -- gays in the military, abortion, immigration policy, etc. -- splitting the difference (dubbed "triangulating" in the Clinton years) is smart politics.

When confronted with overwhelming evidence of egregious lawbreaking and greed, the consequences of which have cost millions of people their jobs, homes, and savings -- triangulating is a terrible political strategy.

FDR understood that when he said, "“Wall Street is unanimous in its hate for me — and I welcome their hatred."

So did Barry Goldwater, that bleeding heart Socialist, who famously said: 'extremism in the defense of liberty is no vice. And moderation in the pursuit of justice is no virtue.'