Inside Job
After working in the financial industry for nearly 30 years, and observing the financial crisis first hand; watching a nearly two hour long documentary on it was not high on my list of things to do. But since it won the Oscar for Best Documentary, it is now posted online for Free, and I had some time I didn't mind wasting, I gave it a gander. You can watch it here:
There is some knowledge to be gleaned, but overall I found the movie's smug moralizing and condescending attitude off-putting.
The best parts of the movie hit on the excessive leverage being employed, how deeply entwined politics and Wall Street are, and how easily economics professors can be bought.
Unfortunately the movies negatives were hard for me to overcome.
Portraying Elliot Spitzer (aka Client #9) as a "good guy" was simply farcical (especially when you spend so much time highlighting expensive NYC prostitutes).
Portraying Barney Frank as a proponent of regulation is laughable, he argued constantly for "less" regulation of Fannie and Freddie, not more ("Tightening regulation would weaken affordable housing"). While the movie was correct in talking about "predatory lending," it failed to talk about the thousands of borrowers knowingly committing felonies (liar loans). It also failed to talk about the long history of mankind's inherent greed, I'm sure director Charles Ferguson and narrator Matt Damon are just as greedy as the next guy).
The movie tries to lay the entire debacle at the feet of deregulation, and while the repeal of Glass-Steagall was a factor, it was only one of many factors.
Overall the most troubling part of the movie was the correct acknowledgement that nothing much has changed, our financial system is just as risky or even more so today. Our banks are now even "Too Bigger To Fail", and the players that got us into this mess are still in charge; from the CEO's, to the regulators, to the politicians (especially Bernanke, Geithner, and Summers).
Be careful out there, and keep the lights on,
Chris Wiles, CFA
412-260-7917
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This article contains the current opinions of the author but not necessarily those of the Rockhaven Capital Management. The author’s opinions are subject to change without notice. This article is distributed for informational purposes only. Forecasts, estimates, and certain information contained herein are based upon proprietary research and should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. Information contained herein has been obtained from sources believed to be reliable, but not guaranteed.
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