52 thoughts on “The Grim Reality of “Inside Job”

  1. PM says:

    Kind of hard to imagine it, but I am actually beginning to develop some sympathy for Spitzer, after reading some of that crap about Stone. I mean, Spitzer has no one to blame but himself for what happened, but…

    (full disclosure–he was a college classmate of my little bro)

    1. The Spitzer saga is a classic example of how if you throw “the media” (commercial variety) a sex angle they’ll completely ignore the more relevant “nuancy” stuff. Everyone thinks they understand hookers, while almost no one understands deregulated derivatives trading. I’d happily have Spitzer running the SEC.

      1. Mike Kennedy says:

        OK, read it.

        Did Spitzer want to investigate Countrywide and Fannie and Freddie or just the banks? We all know investment banks created these securities. Old news.

        Why were there such a thing as sub-prime to begin with? Why were banks encouraged to lend to people who didn’t qualify? Why did quasi government agencies buy this shit?

        If we are going to dig up bodies, let’s dig em all up.

  2. Mike Kennedy says:

    You didn’t ruin may day. You made it. Thanks for the post, especially the Chamber part.

    Halloween is just around the corner — watch out for that Chamber of Commerce bogeyman.

    1. Mike: Any suggestion that you’re agreeing with me — or even less than outraged at something I say — gets my day off on the wrong foot. Stay contrarian, damn youi!

      1. Mike Kennedy says:

        Brian:

        Like most of your posts, I’m on and off board.

        You are spot on with the payoffs of academic people. We like to say that because there is a study or research, it is infallible when we know that data is easily manipulated.

        I also agree with the derivatives being a major cause of the meltdown but then what caused them?

        We as a nation have to get out of our intellectual laziness to examine the environment and conditions that made them useful. Government fiscal and monetary policy has a direct effect on what vehicles are used and not used.

        Also, I disagree on the assertion that prescience played much of a factor in Spitzer’s role. He saw problems with AIG accounting but I don’t think he nor anyone else saw the scope of what was to come or all the inter-connectedness globally.

        As for the Chamber, I am no more worried about that than I am the fact Obama has plenty of campaign money that he failed to disclose — legally. The same with Clinton’s Asian connections.

        They just don’t work me up much — especially when they are legal. Now, illegal, that would send my heart aflutter (actually my B.P. and pulse both are way below average so I might need some jolt of excitement).

  3. Not that it will ever happen … the only way out of this is a Constitutional amendment requiring the “separation of business and state” (“Congress shall make no law allowing public corporations to influence the conduct of government in any way, directly or indirectly.”)

    With this, all attempts by corporate interests to influence public policy would become illegal (as any read-with-comprehension assessment of the Constitution says they always were, but that’s a long rant, not a Reply).

    Anything short of a Constitutional amendment and the Roberts court will rule in favor of corporate interests.

    I’m pretty sure even this court wouldn’t try to rule that a Constitutional amendment is unconstitutional.

    Would it?

  4. leftymn says:

    I am not sure where i read it recently, but in an article on the mortgage foreclosure debacle (which is a sword of Damocles over many companies at the moment) an author blankly said that the USA could never go back to a system where mortgages were not sliced and diced into securities, as if the nation didn’t do that for decades before CDO’s and MBS’s were invented in the 80’s. (I will have a double Glass Steagle on the rocks PLEASE) Its the lack of any shame like this that is appalling when it is obvious the biggest beneficiaries of such a derivative game are hedge funds, investment banks and institutions and investors who already hold 85% of the countries wealth. Lip service is and was paid to the honorable outcome of more families owning their own home… and many re-election campaign funds were enriched so the politicians involved could invoke that canard.

    1. The film — correctly, I believe — directs viewer attention to “the bonus culture” of the current system, where traders and execs can grab their millions as soon as sales are marked (however bogusly) as “profit”.

  5. Newt says:

    I noticed that Brian’s obsession with business bailouts conveniently missed the whale in the room — the impending bailout of the government’s own Fannie-Freddie, which is predicted to dwarf Goldman Sachs, AIG and CitiBank combined.

    Brian also omitted that Obama himself was the SINGLE HIGHEST political recipient of Wall Street campaign donations.

    Liberals have this annoying habit of focusing on — and placing disproportionate weight on — the wrong facts.

    1. I notice Newt refers to “the government’s own” Fannie and Freddie, conveniently overlooking the takeover two years ago to prevent a complete collapse. No doubt Newt had a better idea at the time. Also, I suspect Newt is still trying to make that Barney Frank-is-to-blame bit work, probably by standing facts and logic on their heads.

      Moreover, while the cost of keeping Freddie and Fannie afloat is staggering, the (private) banking industry’s unwillingness to accept reality and write down losses on toxic mortgages and give homeowners some reason to continue to pay, as opposed to walking away, might be a more sensible idea all the way around.

      But as Newt may or may not know, those banks, bold entrepreneurs and patriots each and every one, are so furiously robo-signing foreclosure forms they really can’t be bothered to consider that 2005 house prices may not return for another 20 years.

      So-called conservatives have this annoying habit of thinking the rest of their audience is as clueless and bored with detail as their Tea Party drinking buddies.,

      1. Newt says:

        Housing prices need to be allowed to bottom out. Defaulters need to be evicted. Postponing the bottom only means deferring the pain. All else is window dressing.

      2. Newt says:

        Do I really need to resurrect the youtube clip where Barney Frank insists Freddie-Fannie are financially sound and should not be regulated more strictly?

        My God, Brian.

      3. Fine. Let prices reach a … natural … bottom. But considering how prices were cooked going up, why don’t we at least assure ourselves that they are NOT being cooked going down? Or, among your other peculiar views, should I put you down as in favor of “robo-signing”?

        And please Newt, illuminate us all as to how that statement by Barney Frank, from 2003, disproves the narrative laid out in “Inside Job”, or isn’t that even your point?

  6. To Newt: I suppose now-President Obama should have raised his campaign funds individually, with tin cup, on street corners….

    I suppose the President could have by-passed this public service thing of his, with all the grief accompanying, rather becoming one of those on-the-fast-track-to-billionaire on Wall Street. He was perfectly positioned to take that kind of job when just a kid out of Law School, best I recall.

    Oh well, he didn’t. Thankfully for us.

    1. Here’s a recent Roll Call story on recent campaign contributions from Wall Street.

      http://www.rollcall.com/issues/56_37/lobbying/50618-1.html

      I love this part”

      “Industry lobbyists said the financial institutions are still furious over the Wall Street reform law signed by President Barack Obama in the summer. While the administration and Congressional Democrats said the measure was necessary to prevent future economic meltdowns, the industry views the new regulations as excessively burdensome.

      “And Wall Street executives are still chafing from some Democrats’ anti-big-bank rhetoric while debating the measure.

      ‘No other industry has had this bull’s-eye on their back,” one banking lobbyist said.

      The lobbyist said many corporate PACs give to the majority party under the rationale that they don’t want to anger key committee chairmen or party leaders who could have the ability to shape future legislation that affects their businesses.

  7. Mike Kennedy says:

    Let’s all face the facts.

    The Fed didn’t think it was it’ job to control the money supply during the biggest bubble since Tulip mania.

    Politicians were being bought and paid for — Obama is no worse or better than any of the rest who hoarded cash while talking out of all six sides of their mouths.

    Wall Street saw easy profits and little risk in derivatives — as long as someone else was holding the bundle of dynamite when it went off and as long as home prices defied economic gravity. To be sure, there was no past history of performance of subprime mortgage investment vehicles as we had not had a housing crash for 70 years.

    And most Americans were ignorant, lazy and economically retarded to think that housing prices could defy gravity (and their W-2 statement).

    “Geez, ma. Our house is worth three times what we paid for it. Let’s sell it, buy a bigger one, then borrow against it and buy all those things we want. Nobody gives a shit if we lie about our income and assets……….whoaaaaaaaaa.”

    Who in their fucking right mind is surprised at the hole we dug for ourselves?

    And if anyone in this distinguished crowd thinks that only a select few in this country could have pulled off all this…..you better give me the name of the dealer you use because you’re getting some good shit.

    1. Well, before you get to carried away with that “we thing” Kemosabe, let’s keep our eye on who dreamed up the system you describe, and who used what kind of influence to deflect oversight, and which administration has at least made an attempt at reform and which ones couldn’t even be bothered to acknowledge a problem. The treadworn “they all did it” argument really is a rationalization for the status quo.

    2. Does anyone know how many mortgages are defaulting because people bought too much house, as opposed to their defaulting because people lost their jobs?

      Didn’t think so.

      Pay attention to the “meme of the week.” Each is an exercise in misdirection. Since the foreclosure crisis started, the misdirection has been a typical Republican blame-the-victim meme — those awful borrowers are to blame.

      The poor bank underwriters had nothing to do with all the bad loans. and the 30:1 capital ratios had nothing to do with the financial institutions going under when the loans went bad.

      1. Look, I confess we re-financed (in ’03) to grab some dough for improvements around Lambert Manor. Maybe everyone else bought Escalades and suites at the Bellagio, I know plenty of that went on. But if I remember correctly, all that borrowing was damn sweet for the overall economy, and the usual (gasbag) pundit class is still upset that Obama-nomics hasn’t returned us to those heady days.

      2. Mike Kennedy says:

        Uh, it’s called planning ahead.

        Back in the heady days of the 1990s and the semi fake economy we had, our realtor told us based on our income we could sell our house and buy three times what our current house was worth. Thanks, but no thanks.

        Two facts: people absolutely were using their houses as cash machines, number one. And two, too many people owned a house when the couldn’t afford one, working or not working. There is a thing called apartments. They exist for a reason. I didn’t attempt to buy a house until I was 30 because I couldn’t afford it. When I could have afforded much more, I passed.

        Have many people lost houses because of misfortune? Yes. Is this the majority? Highly doubtful.

  8. Mike Kennedy says:

    Brian:

    I love your writing, but you get blinded by your own ideology instead of the facts. Who did create it? Who signed on to deregulation?

    Did anyone hold a gun to anyone’s head and insist they buy more house and then more and more and then use it as a cash machine?

    That’s why I love reading you — you usually get it half right, but your love of liberalism prevents you from getting the other half.

    BTW, what his his/her name?

    1. Mike Kennedy says:

      Also, pretty funny that the administration you credit came to the party after the blowup. Where were the Democrats warning about all this before? Was not President Obama Senator Obama?

      Who fostered the growth of Fannie and Freddie? Who declined to put forth any legislation regarding them or anything else from 2006 on? Who was in control of the legislative process a whole two years before Mr. Obama became president?

      Sure, they did something after the fact, but as Rolling Stone discusses, it isn’t just Republicans that share the blame.

      1. Mike: You did read the part in my post about Obama, Summers, Geithner, etc., right? And if it helps, I’ll throw in (as the film does) Bill Clinton signing Phil Gramm’s December 2000 de-reg legislation — with approval from Robert Rubin. Whether Clinton understood what that bill (like the TeleCom Act of ’96) would really do is doubtful. But he signed it. And, yes, BOTH PARTIES are up to their eyeballs in bribe money … IT IS HOW THE WHOLE DAMNED PROCESS FEEDS ITSELF. All I’m saying, in Obama’s defense, is that he has spoken out against the recklessness, argued for reform and past (a pale beginning) in that regard. It ain’t much. I want the whole pie: Highly restrictive capital ratios, an end to the bonus culture AND someone carted off to jail for what has already gone down. Which Republican reflects those views?

        And please, enough with everything “the Democrats” (that monolithic bloc of like-minded legislators) could’ve/ should’ve done with those … two years … when they, what’s your word? “controlled”?the legislative process.

        Even you know better than to try and sell that.

  9. Mike Kennedy says:

    Rolling Stone piece is fun. Here is one of the best lines:

    “In public the parties stage a show of bitter bipartisan stalemate. But when the cameras are off, they fuck like crazed weasels in heat.”

    As Geoff the robot on the Craig Ferguson show says:

    “Looooooooooove it.”

  10. Mike Kennedy says:

    I know why he’s not, but that’s why it’s so fun to have internet access and be able to slide through the mainstream and read that kind of stuff. That’s why the best stuff isn’t mainstream.

    No, I’m not trying to “sell” the Dems sitting on their asses any more than I’m trying to defend Republicans in the whole mess.

    We absolutely agree that both parties are up to their eyeballs in bribe money.

    The old absolute power corrupts absolutely certainly was correct. But then throw in special favors and money into the equation along with the power and that’s why I fear politicians more than corporate CEOs.

    Finally, refinancing as you did responsibly to make improvements is a good idea. Buying more home than you can afford, then refinancing to take trips and buy depreciating assets is…….Well, I’ve used enough profanity here today.

      1. Mike Kennedy says:

        Well, dang it all. You got me stumped.

        If you are looking for an answer like:

        “The mainstream media is owned by conservatives and someone bashing them would never be on such shows” I ain’t drinking the Kool Aid.

        NBC nearly ejaculates over anything Obama and its certainly not known to be a bastion of conservative support — ditto for ABC and CBS, though they engage in slightly less butt sniffing than NBC.

  11. Matt Taibbi could not carry Vince Flynns racquet case.

    I bought RS for the Keef cover and I couldn’t make it past the first page of the insipid “Case for Obama”.

    I mean, really, does ANYONE take Jann Wenner seriously anymore?

  12. Ellen Mrja says:

    You are all crazy if you think this Democrat/Republican/liberal/conservative name-calling makes even one iota of difference.

    Brian, how could it be a shock to someone as intelligent as you that the rich run this country? They have for more than a century, nearly a century-and-one-half. This is hardly shocking news.

    Now I’m going to be nailed by someone for arguing “classism” or class warfare. Not at all. But you’re a fool if you don’t admit that this country is a plutocracy, plain and simple. The rich don’t care if you’re St. Reagan or Socialist Obama – you dance to THEIR tune.

    1. In our current moment of anti-government hysteria, with thousands of citizens seemingly convinced “gummint” is robbing them of their “freedoms”, I just wanted to reiterate — via “Inside Job” — how the government dances to private industry.

    2. Actually, the USA has been controlled by the rich elite for the entire history of our country.

      And one of my biggest jaw-dropping moments when reading Zinn’s People’s History of the US was learning that the great Progressive Era of circa Teddy Roosevelt-Taft-ish was not launched by the progressives, it was launched by Conservatives because of fear of the growing global wave of socialism…that if they did not give the people some breaks, that they would become the USSA ala Russia.

      Guess they needed Rush and Fox Faux news to control the masses better like today. Speaking of today, we have more reason to be socialist today than we did in 1918.

  13. Mike Kennedy says:

    Money buys influence, no doubt.

    Of course branding each other doesn’t matter. It’s been what I’ve said all along.

    What I find funny is people actually think a “party” or ideology has the corner on the moral high ground while the other side or sides is/are evil.

    We have too much money in politics, period and too much influence through money. Mix that with the ability to make laws and it’s a dangerous concoction.

  14. Mike Kennedy says:

    Surely, you jest. People really don’t care as long as they get “theirs ” – – conservative or liberal.

    People like those on this blog speak out against this influence and money in politics.

    But are those who benefit by the current system really interested in changing it ? I think not. There needs to be change, alright, but not the kind of warmed over, repackaged, business-as-usual change we’ve been sold.

    1. Mike: We’re all ears, man. Tell us, finally, what kind of change you think we need? And if you’ve got any space left over, where even an iota of that is coming from today.

      1. Mike Kennedy says:

        That’s my point. It isn’t coming from anywhere today.

        The weak campaign finance reform shit that passed just encouraged independent organizations to set up shop. Ban them. Trace every campaign dollar of over $100 or any meal, sports ticket or gift over that amount.

        I am not allowed to accept any gifts of over $100 from a wholesaler, a client or anyone else, and I’m a piddly little financial advisor.

        Term limits — we have them at the presidential level, why not at the lawmaker level?

        What are your ideas?

      2. Mike Kennedy says:

        Gotta love this.

        Nothing Cuomo (or any other tired pol) can say compares to this guy’s delivery. You can see the look on Cuomo’s face.

        “The Rent Is Too Damn High Party.”

        Priceless.

  15. leftymn says:

    Money in politics is THE problem. Raising money typically comes from corporatist interests who have their own agenda , below the naked self interest of these interests that will support whomever is in power , there is the fund raising to the individuals… this is based on the political branding as noted, because the givers tend to be people at the full believer edge of both ideological slants, so fundraising letters and appeals tend to paint parades of horribles from both sides. This perpetuates the public right/left exchanges and the media gladly participates. The answer to regaining some semblance of democracy is to remove money from the equation through campaign finance reform, limits on spending, limits on actual campaign times, limits on advertising etc. The grim reality is the prevailing winds at the Supreme Court and in Congress are blowing the opposite way… because the system works nicely for the enfranchised (politicians, lobbyists, corporatist interests) who control the politics and 85% of the countries assets. I think the only solution is pitchforks and torches, but Macarthur cleansing Washington of “Bonus Army” WWI veterans in 1932 is a mild precursor of what would happen today.

    1. Sorry, no. Money in politics is A problem. Just an opinion: Tribalism is a bigger problem. The near-perfect ability of most voters to make excuses for the flaws, corruption, hypocrisy and idiocy of those they perceive to be on their team, coupled with their equally acute ability to see flaws, corruption, hypocrisy and idiocy on the of the opposing team is what allows the propagandists and their money to succeed.

      I’ve had political discussions in which I’ve talked about our having moved from each party considering the other to be the opposition to each party considering the other to be the enemy and was shocked (and I’m not easily shocked) to hear a friend express satisfaction with this state of affairs (“It’s about time my side finally came to this conclusion,” he said).

      Money exploits this. It exacerbates it. It doesn’t cause it.

      1. The “tribalism” effect of politics becoming another sporting activity, largely since the death of The Fairness Doctrine and the spectacle of sweet money to be made spoon feeding bullshit to the ADHD masses, is another one of my pet peeves. Come to think of it, I’ve got a lot ’em. … Like the Metro Mobility buses that are ALWAYS in front of me on the freeway.

  16. Newt says:

    An activity for Brian and his friends …

    ‘Government Doesn’t Suck’ march planned

    Amid growing dissatisfaction with federal employees, a group of younger, web-savvy feds are planning to march on Saturday in defense of their coworkers on the sidelines of Jon Stewart’s “Rally to Restore Sanity.”

    Organizers of the “Government Doesn’t Suck March” (their choice of words, not ours) were inspired in part by last week’s Washington Post poll that revealed widespread negative perceptions of federal workers.

    “We hear it day in and day out: the government sucks, federal employees are lazy and their positions are redundant,” said march organizer Steve Ressler, founder of GovLoop, a social networking Web site for public servants.
    Steve Ressler
    Steve Ressler, center, chats with fellow federal workers at a recent conference. (Katherine Frey/Post)

    “It’s time to turn the tables and remind the world that government employees just happen to be people — people that don’t suck,” Ressler said in a message sent to The Federal Eye on Sunday announcing the march. Government workers “are a lot of cool cats” who work hard, listen to good music and watch Stewart’s “The Daily Show,” “but that’s all after they’ve spent a whole day keeping the country running,” he said.

  17. Mike Kennedy says:

    Two excellent books on the financial crisis — “All The Devils are Here: The Hidden History of the Financial Crisis” is the first. “Crash of the Titans” is the second.

    The first was co-written by Joe Nocera, financial reporter and columnist for the NYT and Bethany McClean of the Financial Times and co author of the book on Enron — “The Smartest Guys in the Room,” one of the best business books of all time.

    Nocera and Mclean cover in great detail all the players in the crisis, from the leaders of Fannie and Freddie to the owners of the mortgage companies to the titans of Wall Street to the lobbyists and members of Congress, the rating agencies, several admininstrations and the Federal Reserve, all who played a role.

    Some were dupes; some were greedy for either power or money or both and some were well intentioned but couldn’t see the big picture.

    No one comes away looking or smelling very good.

    A surprising fact I didn’t know: It was government, not Wall Street, that first securitzed mortgages. The authors trace the root of the crisis back 30 years. They manage to tell quite a tale in 365 pages.

    I’ve read — I don’t know — mabe a dozen books on the crisis but this is the most complete perspective that goes back to the very beginning.

    The second book is all about two firms in particular, Merrill Lynch and Bank of America, one great firm that now ceases to exist and one that almost went under itself. It’s written by Greg Farrell, also a reporter with the Financial Times.

    The book is the tale of how ambition, greed and a combination of both could nearly abolish two great companies and many of the behind closed doors conversations and the drama. In one incident a senior BOA guy was briefing his Merrill counterpart on the way things were going to be now that Merrill was being integrated into BOA.

    The BOA guy was telling his counterpart that he was going to micromanage everything he did and he better beware. In the middle the BOA guy gets called upstairs, gets canned, escorted to clean his desk out and walked down into the underground parking lot by security.

    You couldn’t make up some of the stuff in there. It’s also an indirect tribute to companies that manage to survive through decades and adapt.

    It’s interesting to look at the companies that made up the S&P 500 40 or 50 years ago. Many of them are gone, either bought or gone because their business no longer fit or was mismanaged.

    All the more remarkable that some have managed to stay relevant for so long — GE, IBM, Coca Cola etc.

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