On September 15, 2008, one of the most venerable and storied financial institutions in the world, Lehman Brothers, declared bankruptcy. Charles Ferguson smelled a rat.
Like he had done with No End in Sight, his 2007 film about the failed U.S. war effort in Iraq, Ferguson set out, in his clear and unblinking manner, to document what actually caused the monumental financial collapse.
As was the case in Iraq, not everything was at it seemed during the financial crisis. Ferguson spoke to me about Inside Job, and what he thinks is in store for America, and New York City.
Inside Job features footage of the Goldman Sachs congressional testimony in April. CEO Lloyd Blankfein is questioned as to whether or not his firm behaved improperly. He replies, "In the context of market-making, no." Can market-making be squared with morality?
Market-making can be, but what was deeply deceptive about his answer was Goldman weren't just making markets. When you make a market, when you're doing it properly, you create an arena where buyers and sellers can come together and transact on fair terms. That's not what they were doing.
Goldman was taking one side of a transaction that they were themselves creating and structuring so that it would cause the other side of the transaction to fail. Then they could profit from their side of the transaction. That is not market-making. They were claiming that it was because they wanted to pull the wool over the public's eyes, and more importantly, wanted to avoid criminal prosecution.
Inside Job doesn't paint a pretty picture of post-crisis America. Will things change?
I am optimistic that the American people are going to respond to this. It's going to be slower and more gradual than certainly I would like. I think we had an opportunity when President Obama was elected, and he had an opportunity and a mandate, in fact, to really do something transformative about this, and he blew it. And that's a huge tragedy for this country.
He really did have an opportunity at a historically important moment and he had the power to do it, I think. Now that he has chosen not to, it's going to have to be a much more gradual process of the American people becoming more informed and angry and activist and eventually forcing their leaders to act.
Is that what the Tea Party is?
So far I would not say so. So far I don't think they are a very prodcutive reaction. But there are many people in the United States, including quite influential people, who are very distubed at all of this.
What's your perspective on Obama?
He had an opportunity to behave very differently. It's extremely disapointing that he didn't. He said things that made a lot of people, including me, very hopeful. But it turned out to be more of the same. Why? I don't really know, but I've been told a number of things that seem plausible.
One is that he had very little experience with these issues when he was elected. Very little training in economics or finance, never held a private sector job. He never had a significant personal fortune so he knew what management of assets was like. He hadn't had much contact with the financial world. He comes into office in this huge crisis, and I am sure people told him that he needed to appoint people that Wall Street could deal with and respected because otherwise the markets would fall further, and we'd have an even worse crisis.
Some people have also said he just made a cold-blooded political calculation. If so, he made a mistake. I don't think it was in his long-term political interest to behave this way. It's going to show in the mid-term elections and I think it is going to show even more strikingly when he tries to run for reelection.
"Inside Job" opens Friday, October 1 in New York City.