By Craig Leask

In this second in a series on “Corruption in the Movies” I am focusing on movies about Economic Corruption. Economic corruption generally results from the misuse of public power to benefit big business and private interests – generally at a detrimental cost to the average citizen. Although there are countless movies pertaining to real economic corruption, these are three of my favourites:

Inside Job (2010)

Focusing on the factors and personalities that created the global financial meltdown of 2007-08, director Charles Ferguson introduces Inside Job by looking into the 1990’s casebook example of Iceland following their deregulation. Due entirely to this change in banking regulations, the tiny nation quickly degraded from their once stable financial system to near destitution within a period of five short years.  Using this as a base, Ferguson extensively researched and interviewed financiers, politicians, journalists, and academics, identifying the contributing factors which led up to Reagan era deregulation and the resulting collapse of insurance companies, banking and brokerage houses.

Inside Job concentrates on the blatant pressures from the financial industry on the political process and on politicians themselves to eliminate regulation of their businesses in the decade proceeding the economic meltdown. The changes to these laws circumvented 45-year old regulations that were designed to control systemic risk and eliminate the abuse that had been occurring throughout the financial industry. As history has demonstrated, the stringent regulation which had provided the industry over four decades of corporate success and stability prior to the Reagan era deregulation were working exactly as intended.

Ferguson does not shy away from including an in-depth analysis of the parameters and rationale for the government bailout of the exact firms responsible for the carnage caused to the world economy and the lack of restrictions placed on how financial institutions were able to utilize the funds.

Narrated by Matt Damon, the film sets out to demonstrate that federal regulators were just as responsible for the breakdown of the system as those executives of the financial companies themselves (namely Goldman Sachs, Lehman Brothers and Bear Stearns). Additionally, Inside Job does not hesitate in identifying those participants in the scheme who declined to be interviewed, inadvertently casting a level of doubt on their own innocence.  These elusive individuals were unable to escape scrutiny. Ferguson ensures, they were still included in the film through press clips.

The film ends by contending that despite recent financial regulations, the underlying system has not changed. The remaining banks are only bigger, while all the incentives to corrupt remain in place.  It is interesting to note that not a single top executive has been prosecuted for their role in the global financial meltdown.

Following the release of Inside Job, Business Insider Magazine completed a fact checking exercise on the claims made in the film.  They concluded that, although liberties had been taken with presenting the information, for the most part the claims in Inside Job were fairly accurate, namely:  the industry is making more money now following the crisis than it was making leading up to the crisis, indicating that the corruption has not only continued, it is now generating even more funds; the merger of Citi Bank and Traveler’s Insurance was illegal as it violated the Glass Steagall Act, which prohibits the merger of a bank holding company and an insurance company – Alan Greenspan, then Federal Reserve chairman, although knowledgeable about the merger, did not prohibit it; and the fact that AIG (American International Group), one of America’s largest insurance and financial services firms, used $13 billion of the $85 billion taxpayer bailout to pay off loans it had with Goldman Sachs, as well as using $315 million of taxpayers money to pay severance to ousted executive Joe Cassano who has been identified as the key figure, largely responsible for the financial crisis of 2007–2008. For their roles, Lehman’s CEO took $485 million, and Merrill Lynch CEO Stan O’Neal received a severance package worth $161 million.

Too Big to Fail (2011)

The movie Too Big to Fail, based on the book of the same name by New York Times columnist Andrew Ross Sorkin, recounts the catastrophic, man-made events which led up to the 2008 U.S. financial meltdown. Director Curtis Hanson establishes the drama with film clips of speeches from Presidents Reagan and Clinton as they outline their reasoning behind the need to deregulate the financial sector – in particular their strong desire to eliminate the laws which were established to provide a stabilizing separation between commercial banking and investment banking.

The film proceeds to identify this very decision as the catalyst which sets in motion a landslide of contributing factors, making the meltdown essentially unavoidable. Trust is a key factor for markets to function, but trust is better accepted if there are clear rules and regulations governing the actions and accountability of those involved.  Ignoring blatant conflicts of interest, financial institutions, with the blessing of the Feds, proceeded to rape the system, securing enormous profits for themselves and their clients.  The corruption, backroom deals and risk-taking activities which were now permitted under deregulation, violated the very trust the mandate of the institutions was to have been based.

What should have been a great “against all odds” success story, Too Big To Fail depicts very true events, which can only be described as failure upon failure.  Focusing on the actions of U.S. Treasury Secretary Henry Paulson (William Hurt), Chairman of the Federal Reserve System Ben Bernanke (Paul Giamatti) and New York Federal Reserve head Timothy Geithner (Billy Crudup), the film concentrates on how these three experts and leaders completely missed the warning signs of the financial crisis, had no plan to deal with it and thus were completely unprepared to resolve or avoid it.

Similar to the documentary Inside Job (2010), Too Big to Fail presents the ubiquitous suggestion that, following a crisis which led to the near collapse of the U.S. economy, pretty much nothing was learned, and certainly nothing has changed. In the aftermath of the greatest credit bubble in history, government regulators protected creditors at almost every turn. They provided bailout money to the banks responsible for the crisis, without voting rights or any restrictions on how the money was to be used – ultimately not preventing the banks from using the funds to pay dividends or bonuses. The Treasury Department provided essentially a blank check.

In contrast to Inside Job, this film is fiction and, for reasons unknown to me, director Curtis Hanson makes the politicians and CEO’s, empathically human beings who greatly care about the people being negatively affected by their decisions. As proven, this was not the case. These decision-making individuals remain among the richest in the world, and their decisions ensured they would be unaffected regardless of how the crisis played out.

Too Big to Fail ends following the meeting in which the nine banks have reached the agreement to accept the $125 billion Federal bailout. The scene has Bernanke and Paulson discussing the meeting where Bernanke asks, “They will lend it out, won’t they?” to which Paulson replies: “Of course they will!” Then, deep in thought he stares out the window and repeats, less convincingly “Of course they will.”

The scene dissolves, replaced with several concluding statements, including:

  • Following the passage of TARP, banks made fewer loans and markets continued to tumble.
  • Unemployment rose to over 10 percent and millions of families lost their homes to foreclosure.
  • In 2010, compensation on Wall Street rose to a record $135 billion.
  • Ten banks now hold 77 percent of all US bank assets.
  • They have been declared to be too big to fail.

The Big Short (2015)  

Based on the 2010 non-fiction book The Big Short: Inside the Doomsday Machine by financial journalist Michael Lewis, the Plan B Entertainment produced movie attempts to explain and educate viewers on the events and personalities that created the U.S. subprime mortgage crisis of 2007-08. The fact-based script is due to the training and knowledge Lewis acquired while working at the Salomon Brothers investment bank in the 1980’s as mortgage-based securities were being developed into a lucrative product.  What Lewis discovered and based his book on is the knowledge that the investment industry changed when it was realized that the housing market was supported by subprime loans. These loans could then be packaged as securities and resold, thus ensuring larger and larger profits with potentially lower risks.

Director Adam McKay realized early that the success of his film was reliant on finding an entertaining and simple way of explaining the investment industry, its products and its terms (credit default swaps, bad bonds, synthetic Collateralized Debt Obligations, etc.).  Essentially he needed to figure out a way of dumbing down the industry and the housing crisis itself in order to properly support the story. Brilliantly, McKay came up with the idea to include celebrity cameos in which the fourth wall is broken for them to simply explain to the camera the convoluted mess of jargon – think Margot Robbie, in a bathtub, drinking champagne, explaining to the camera that “subprime” means “shit”, and were created by banks for the sole purpose of adding extra mortgages and profits to their plans. The absolute brilliance of the film is McKay’s talent in breaking down and deciphering economic chaos and the charlatans who promote them in such an entertaining and understandable way.

For authenticity, the characters in The Big Short are all based on real people and McKay does not hold back in laying the full blame on them as well as on Wall Street (Bear Stearns, Morgan Stanley, and many other investment houses), the regulating agencies delegated to police Wall Street firms, and even on Washington itself. Blame is also bestowed by McKay on the realtors selling the mortgages, the banks loaning at subprime which they bundle into valueless securities and even home purchasers who are all too eager believe what they want to believe and purchase far above their financial abilities.

The film finishes with a typescript stating that following the downfall, five trillion dollars from real estate values, pension funds, 401k, savings, and bonds had vanished, eight million people had lost their jobs and six million people had lost their homes. Frighteningly, in 2015, several large U.S. banks again began selling billions in collateralized debt obligations.

Many movie critics and individuals with strong financial backgrounds reviewed the film, deducing that (taking creative license into account), the film was 90% accurate as to its presentation and demonstration of real-life events, figures and timelines.

Corruption in the Movies – Part One: Corporate

Corruption in the Movies – Part Three: Political Cover-Ups

Corruption in the Movies – Part Four: Whistle Blowers

Corruption in the Movies – Part Five: The Reporters



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