Studio: Sony Pictures Classics
Program Length: 108 minutes
Aspect Ratio: 2.35:1 1080p
Languages: English 5.1 DTS-HD MA
Subtitles: English, English SDH, French, Spanish, Arabic, German, Hindi, Turkish
In the preceding decade it was not only possible but relatively easy to obtain a home mortgage with no credit check and no verification of income. This had to be baffling to homeowners who had gone through the traditional arduous mortgage application process involving W-2 forms, copies of tax returns, banking statements and verification of IRAs and 401(k) plans. Why would any mortgage company issue a home loan to someone who could not establish the ability to make the monthly payments? The reason, as demonstrated in the Academy Award-winning documentary Inside Job, is that the banks and mortgage companies did not care if the loans were repaid, because they were pocketing fortunes in fees while passing all of the risk of default along to others. Easy financing led to feverish demand to satisfy the American dream of home ownership, and that demand drove housing prices up to unheard of levels - hence, the housing "bubble" which burst and resulted in millions of home foreclosures throughout the United States. precipitating a worldwide financial crisis.
Start a conversation about derivatives and credit default swaps and you are likely to see the eyes of your companions rapidly glaze over. Director Charles Ferguson, whose debut film No End in Sight (2007) earned him an Academy Award nomination, has managed to take a dry subject about complex financial dealings and turn it into a compelling film which is both illuminating and infuriating. Inside Job clearly lays out what happened, how it happened, why it happened, and who was responsible. Sadly, it also points out that those who caused this mess have mostly emerged with their fortunes intact and without paying any penalties for their misdeeds. Ferguson also makes the case that there has been no meaningful reform to make sure that those misdeeds are not repeated.
Inside Job opens with a look at Iceland, a country most Americans have rarely given a thought to. Iceland is a small country which was relatively prosperous, with low unemployment and little crime. In 2000, the government of Iceland went on a binge of deregulation, opening up pristine areas to polluters and privatizing the country's three largest banks. Over the course of several years those banks, no longer shackled by government regulators, managed to borrow $120 billion - this in a country which had a Gross Domestic Product of just $13 billion. In 2007, the largest financial rating firms gave the three banks in Iceland ratings of AAA, the highest rating possible. By the end of 2008, all three banks were insolvent.
What happened in Iceland is a microcosm of what was happening in the United States. Financial institutions shielded themselves from losses by using the mortgages to create collateralized securities which were sold to investors. In effect, those investors became the lenders. The investors had little knowledge about the strength of the underlying mortgages. They had to rely on the rating agencies such as Moody's and Standard & Poor's, which routinely gave the securities high ratings - even the ones which were backed by high-risk sub-prime mortgages. At the same time, investment firms such as Goldman Sachs protected themselves further by persuading American International Group (AIG), the world's largest insurance company, to sell credit default swaps, which essentially were guarantees that AIG would redeem mortgage-backed securities which went into default. AIG famously never set any money aside to pay for defaults because the company had predicted that there would be no defaults. Instead, AIG collected the premiums and lavished its employees with cash.
Ominous clouds developed early in 2008. First the U.S. government took over control of Fannie Mae and Freddie Mac, the quasi-government agencies which were heavily involved in the mortgage market. The venerable Wall Street firm Merrill Lynch nearly went under before being purchased by Bank of America. When the investment banking firm Lehman Brothers was forced into bankruptcy in September, 2009 the financial house of cards was in danger of complete collapse. There was no money to pay the investors who had purchased the collateralized securities, and AIG suddenly found itself on the hook for billions of dollars which it did not have. American taxpayers had to step up to bail out the banks and AIG.
There is no shortage of guilty parties to point fingers at. Director Ferguson takes on every President since Ronald Reagan for perpetuating a spree of deregulation which led to less and less oversight of the financial sector. The rating agencies, which are paid by the companies they rate, still had Lehman Brothers, Merrill Lynch and AIG rated as AA investments just days before the collapse. Firms which were selling the mortgage-backed securities to their customers were at the same time betting against those securities by purchasing credit default swaps.
Ferguson cleverly uses archival footage to show how American's financial gurus were insisting that everything was fine almost up to the breaking point. Frederic Mishkin, formerly one of the Governors of the Federal Reserve, co-authored a study in 2006 called "Financial Stability in Iceland." In it he claimed that Iceland's "prudential regulation and supervision is generally quite strong. Fiscal imbalances are not a problem in Iceland." Less than two years later, Iceland's economy was in shambles. Other interview subjects squirm as Ferguson peppers them with probing questions.
Ferguson also demonstrates how many of the people now in charge of the nation's economy were complicit in creating the financial crisis. Among them are current Secretary of the Treasury Timothy Geithner and current Federal Reserve Chairman Ben Bernanke. Ferguson accuses Geithner and Bernanke of conspiring with then Secretary of the Treasury Henry Paulson to ensure that Goldman Sachs would be paid every cent that was owed to the firm for credit default swaps it had purchased from AIG, obligations which then were paid with taxpayer bailout money. Paulson, of course, was the CEO of Goldman Sachs prior to becoming Treasury Secretary under President George W. Bush.
One of the surprising elements of the film is the scrutiny given to the economists at America's most famous and prestigious business schools. Most Americans might assume that university professors are above reproach, but Inside Job shows how many of them earn many times their university salaries by consulting for businesses in the financial sector. It is hardly surprising, then, that those universities have in recent decades tended to promote the concept of financial deregulation.
In a sense, Inside Job is the story of the biggest bank heist in the history of the world. Forget about Bonnie & Clyde, John Dillinger, Willie Sutton and the rest. Even Bernie Madoff's Ponzi scheme was small potatoes compared to what happened on Wall Street. This is an important film which needs to be seen by as many people as possible.
The 2.35:1 1080p Blu-ray transfer is outstanding. One normally would not look to a documentary for spectacular cinematography, but some of the shots of Iceland and New York City are exquisite. Of course, the film also includes archival footage which comes from standard-definition sources, although all of it is in excellent shape. The interview segments are sharp and highly detailed. The picture is accurately framed and looks every bit as good as it did in theaters.
The lossless 5.1 DTS-HD MA audio is limited in scope but is excellent in most every respect. Dialogue is directed to the center channel and is clear and understandable. The film includes a very evocative and pleasing musical soundtrack which is given a wide soundstage. The excellent narration is by Matt Damon.
This Blu-ray disc includes an informative commentary track by director Ferguson and producer Audrey Marrs. They make some insightful comments about a number of the interview subjects.
A 12-minute featurette, entitled "The Making of Inside Job," is in some respects the Reader's Digest version of the film.
Those who want even more detail about the financial crisis will be pleased to see that the Blu-ray disc includes more than an hour of deleted scenes from interviews with ten subjects, including former New York Governor and Attorney General Eliot Spitzer.
Sony has also included the original theatrical trailer, as well as the trailer for Get Low. BD-Live features will be enabled on the release date.
The single Blu-ray disc is packaged in a standard Blu-ray keep case.
The Final Analysis
Inside Job is, as the title suggests, the story of the high-tech robbery of America's largest banks and investment houses. What differentiates this film from other bank robbery movies is that the bloodshed is economic and emotional, and here the crooks get away with it. Sony must have known that it had an Academy Winner on its hands when it scheduled the release of the Blu-ray and DVD for the first week in March.
Equipment used for this review:
Panasonic DMP-BD50 Blu-ray player
Panasonic Viera TC-P46G15 Plasma display, calibrated to THX specifications by Gregg Loewen
Yamaha HTR-5890 THX Surround Receiver
BIC Acoustech speakers
Interconnects: Monster Cable
Release Date: March 8, 2011