NYFF Interview: Charles Ferguson (Inside Job)

Charles Ferguson (Left) and Charles Morris

With two films in three years, Charles Ferguson has emerged as the name in non-fiction political filmmaking. Mr. Fergsuon, who has been a policy advisor, a technology company owner, and now, a documentary filmmaker. His 2007 film, No End in Sight, took on the very complicated issue of the Iraq War, and, without ever launching into muckraking techniques, explained the crucial mistakes that had led to the disaster it was turning out to be. Mr. Ferguson’s new film, Inside Job, takes on another political issue—the 2008 financial crisis, which is explained in stunning detail with a number of amazing interviews that put the entire crisis into a shocking context. After a press screening, Mr. Ferguson sat down along with one of the documentary’s subjects Charlie Morris, the writer of The Trillion Dollar Meltdown: Easy Money, High Rollers and the Great Credit Card Crash, which predicted the crisis months before it happened, to talk about the making of the film and the future of our current crisis.

One of the things that struck me about the film was the through line that starts in the late 70s and early 80s that goes through Republicans through Democrats, back to Republicans, and now to Democrats. In a way, supposedly when considering how partisan our government is today, it seems in this one area there’s a lot of agreement.

Ferguson: Unfortunately yes. The basic problem is definitely disturbing…I think that the problem is fully and completely bipartisan also makes it much more difficult for people to understand what to do.

What happen to the whistleblowers like Charlie [Morris] and the others, the people who were talking, like Alan Sloan and a few others you point out? How do people look at them now?

Morris: There’s a person in the film, [Raghuram Rajan], at the University of Chicago of all places. He was at the 2005 IMF conference, run by Alan Greenspan. He gave a paper that said you guys are heading for the biggest crash we’ve ever seen, and he laid out chapter and verse on how and when it was going to happen. And people like [Former Harvard President and Former Director of the White House National Economic Council] Larry Summers stood up and called him names, and he was almost booed off the platform. And I think even now he doesn’t get a lot of credit for it. I mean people like us know, but he’s not known for that kind of thing. But when the crisis finally hit, it was such a God-awful mess that no one could point to anyone about any of it.

Clearly when you are making a film like this and you’re interviewing so many people, word has to get around like “Hey there’s this guy Charles Ferguson, made this well regarded film about Iraq, and he’s asking a lot of questions.” Why didn’t people talk—did you do them all on the same day?

Ferguson: I was terrified that would be a problem, and in some cases it was. Some of the people who declined to be interviewed clearly knew what I was doing and didn’t like it. In the case of  [Columbia Business School professors] Glenn Hubbard and Frederic Mishkin, we interviewed them three days apart, Hubbard first, and I crossed my fingers for 72 hours that they weren’t going to talk during that period. One thing—this is funny and it’s also not funny—what helped me in this regard, in the case of Hubbard and some others who aren’t even in the film, is that they were so embarrassed and ashamed, and fearful, at the end of their interviews, the last thing they wanted to do was tell everyone what had happened.

In the downfall of Lehman and the downfall of [Henry] Paulson [Former Goldman Sachs CEO and Treasury Secretary from 2006-2009], why didn’t you look at some of the antagonism in why he decided not to save it?

Ferguson: The question of why Lehman was forced into bankruptcy is like one of those questions, “Why did the Bush administration start the Iraq war?” There’s 20 possible explanations, each of them probably has some degree of truth. I would love to be Henry Paulson’s psychiatrist, and unfortunately I’m not. But let me give you the list. One is everyone hated [Lehman CEO] Richard Fuld. I’ve never met him myself; he obviously declined to be interviewed. He just about antagonized everyone on the entire planet, which is his personality—arrogant, abrasive etc. The second is unlike most of the other Wall St firms, the top management of Lehman Brothers with just one exception—a cousin of President Bush—was composed primarily Democrats, who were substantial contributors to the Democratic party. Third, Paulson did care about the moral hazard argument and wanted to make an example of his company. Fourth, which is clearly true, is that he didn’t have the faintest God damn idea of how much Lehman’s bankruptcy would cause. Fifth—there’s a lot—that Lehman had been emerging over the previous decade to a competitor to Goldman Sachs. Finally, there’s also the possibility that there was an ego issue that Paulson got in, in which there was no easy way for him to back down personally when the British said they wanted a guarantee, so it was a testosterone issue. So that’s the list—choose what you like.

Was [New York Senator] Chuck Schumer ever a role in the film, or is not relevant in the discussion?

Ferguson: Schumer is certainly relevant. He has a mixed record. There’s many ways in which he’s been an advocate for the financial services industry, including some ways that are not entirely tasteful. He also a couple times tried to do something good…One time he tried to get mortgage loans back under bankruptcy costs, to get mortgages covered in the result of bankruptcy which they currently are not, as a result of lobbying by the mortgage lending industry. In that, he failed, but he tried.

In regard more generally, there are many things I would have liked to put in the film. I’d like to put more about congressional cases that were blocked by lobbying by the financial services industry. There are so many things I’d have loved to put in the film, and there just wasn’t the time.

Chuck [Morris], was there anything you would have loved to see in the film that you did not?

Morris: Actually, I should say, when I originally talked to Charles about this, I thought this is a film that you just couldn’t make. It’s too complicated, too much stuff, too hard to capture all the conversations and stuff. I think it came out just fantastic. I like the whole thing. I really like that it wasn’t a partisan blow at that party...

Let me just give you some numbers here. The way the commerce department measures national product is something called value added. Over the years, the value added by the financial section has been somewhere between 12% and 14%. The same time, the share of corporate profits by the financial sector has always been higher than their value added, it looks a little too higher. In the 2000s, they were getting 40% of all corporate profits, and you only get that with huge amounts of leverage, with huge amounts of risk. And you saw that happen, it really started at 2002 and stayed at the 38, 39% level, and of course that’s why you see this huge surge of income to the top 1%, and they’re not putting any of it back—it’s just money for them. And the real problem is that they did it again in 2009. In 2008, it went down to 8.5%, but in 2009 it crept back to 30%.

And another thing I should mention is that, and we’ve not begun to deal with this at all, is the no cutbacks in the financial sectors jobs. And we’ve really got to cut all those places down. I realized that the sector has lost more jobs than any other place, but its all been outside of New York City in the smaller banks, regional banks, that are actually doing banking, and the guys at the top have covered themselves, and they haven’t changed at all.

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When you were making this film did you have any plan to add anything about the Tea Party and whom they really represent, especially since they really want to deregulate everything? And what about [Blackstone Chairman] Steven Schwartzman, who has become a representative of Wall Street? [Schwartzman recently called President Obama’s planned taxed cuts similar to Hitler invading Poland].

Ferguson: Again, there are many people who deserve mention and aren’t in the film just for time priority, and Schwartzman is one, since he is the founder of Blackstone. Another, Jimmy Cayne, the found of Bear Sterns was certainly someone who was in an earlier cut for black humor purposes….When Bear Sterns was going down the drain, Cayne was too busy to pay attention because he was playing bridge in a tournament in Chicago with two Italian professional bridge players, who he pays half a million dollars a year to play bridge with. There are many stories about Jimmy Cayne—stories about marijuana… There are many stories that I wanted to include.

With regard to the Tea Party, one was just time—we had to finish the film at a certain point—and the other is that it’s not clear yet how important that movement is. I would say I’m agnostic about that area as of now.

How did [narrator] Matt Damon get involved?

Ferguson: Two ways. We asked him, and he said yes. He was the only person we asked; we thought he would be better than anyone else we could imagine. So why did he like him? He’s someone whose voice and character are well known obviously, and he’s known to have political concerns in an intelligent way. And why did he say yes? I had no idea this was the case. He had seen my first film. He had made a thriller action film called Green Zone set in Iraq and while he was preparing for that role, he saw my documentary on the occupation of Iraq and clearly liked it. So when he saw our and my name on the request he was thrilled, and turned out to be absolutely great, not just for the narration.

He had clearly read the transcript of the entire film quite carefully, and had made a number of intelligent suggestions about the precise places that we ourselves had regarded as problematic. And we had this very quirky convoluted ending, and the one you see in the film owes quite a lot to his suggestions and discussions on the film. And needless to say, the total budget of this film is less than $2 million, and he worked for substantially less than his normal wage.

Would you consider this a story that is basically about addiction? Addiction to money, sex, power, drugs, and a story about the abusing powers rejection to recover.

Ferguson: I think that’s actually a very interesting question and a very perceptive one. The material in the film about that is in they’re for two reasons. One is I do think there’s something to this. And the other is that this environment led these guys to be disconnected that if you and men had tried to behave in a similar fashion and get into a car in the streets of Manhattan, floor it at 200mph and crash, this didn’t happen to these people, because they had so much money, and insulated themselves in this bubble. I personally find it strange, that someone who already has $4 million would risk in order to get more. I find that stupid.

Morris: I just have say at the same time, I’m sorry that you even said that, because if any of these guys see this, instead of going to jail, they’ll go to rehab instead.

In terms of looking forward, do you see for consumers, the appointment of Elizabeth Waren [the new head of the Consumer Financial Protection Bureau], as another case like Brooksley Born [who attempted to regulate derivatives and was stopped], and do you see Larry Summers going back to Harvard [as a professor] where we’re instilling the same type of education that’s going back up the chain?

Ferguson: Elizabeth Warren’s appointment is probably not going to do much good. Her appointment is temporary. She has a dual appointment in reporting to President Obama and the treasury secretary [Timothy Geithner], whom she is not friends. It’s pretty clear, given the overall pattern we see in the administration, we’re not going to expect much or get much from this agency in this administration. In regard to Summers going back to summer, yes it is quite ironic that he’s going to do as much good there as he did in the previous administration.

Morris: Anyone who’s in awe of this, that things are getting bad, you need to get the economy stirred up before the next midterm, and the easiest way to get that done is to throw money at banks. There needs to be major changes and shifts from in which we buy everything from overseas that Wall St. really started, because they like to lend against houses. We really pushed that since 1989. To get off that track, there’s going to need to be lots of changes, and that’s really hard.

One thing I like very much is how you bring in international perspectives, the IMF, the interviews with Singapore, China. I’m wondering how your idea of bringing that aspect in, and were there more international agencies?

Ferguson: There were many more, and that’s one of the regrets I have about length limitations on the film. There were a large amount of extremely interesting people, several of whom are about to be indicted. The former prime minster of Iceland, who I was told last night, is soon going to be arrested and tried. He was trained as an economist in the United States. We interviewed him, and one thing I very much regret is that I asked him if there ever been a time in economic history when an entire nation’s banking system in a five year period has borrowed 10 times its GOP. And the pained laughter he responded with was just priceless. But somehow it didn’t make the cut.

We spoke with many people at great lengths. I wish we could have included more of our interview with the prime minister of Singapore, who’s an incredibly intelligent and articulate guy who said many intelligent things, including that one of the ways to avoid the lobbying and revolving door problem is that they pay their civil servants extremely well. Civil servants as a career and banking regulators make about a million dollars a year, so their need to cater to the banks is limited. And Andrew Shang, brilliant and amazing man from Malaysia, was the deputy of the Central Bank in Hong Kong, now is a very powerful for the World Bank in China, knows Larry Summers. He said so many interesting and powerful things and I regret that he’s not in the film.

Have you considered what’s not in the film in TV shows, the Internet, and other places where this can still find an audience, and second in particular, there’s not very much one can do moving forward realizing the true political situation that exists in the world.

Ferguson: The answer is yes—both on the DVD and on the website being constructed (www.insidejobfilm.com), the part we are constructing now is what one can do. And people have spoken out about them, and Charlie is one of them, and several of them have blogs, so there will be ways to assist those who are taking action.

One of the things that’s startling about this film and No End in Sight is these very public problems that are presented that have never been shown in such a way before. I wonder if you could talk about the media, which is absent from both movies, and their complicity in both Iraq and this story. Do you think they were lied to, or their interests are complicit with their subjects, and how do you see non-fiction filmmaking as a remedy for that complicity?

Ferguson: It’s a complicated situation. On the one hand, its certainly the case that this subject and the media, especially the financial papers, did not do as good of a job as they could have done, and the nature of this problem has not been explained as widely as discussed, not as deeply investigated while they were building. It is not the case that you couldn’t read about this anywhere. There have been actually, quite a number of good articles and books about different aspects of this subject. Charlie published a book, I read its manuscript in late 2007, and it was published in February 2008, called The Trillion Dollar Meltdown, which was before Bear Sterns. The second edition, The Two Trillion Dollar Meltdown, was published a year later, and I said to Charlie, “Please, no more editions.” But, it is unquestionably true that the majority of the specialized press, the relevant specialized press—and this was also true of Iraq with our foreign policy military press—did not go as deep, did not push as far.

Part of the problem I believe is the nature of access journalism, as significant measures come to be, what makes you good as a journalist is that you get an exclusive interview with this powerful guy, he gives you some fact, and you published it tomorrow morning since you’ve got the scoop. It’s hard to practice that on a long-term basis if you are tough and critical. And perhaps because of the financial pressures on the media, or other reasons, investigative journalism is not in bountiful supply in the traditional media. And I hope and believe that the web and documentary film are taking up some of that slack.

Morris: I write books, and I saw Charles’s first film, and they’re actually a number of good books on Iraq, George Packard, and many others, and I remember sitting there feeling very, very gloomy. These were things that I thought I had read, but they never had the same power as they came through the same media. And this is an extraordinary medium. And you could read a number of this books, and you could read this or that, and pull it together, and Charles does it really well is take those very complicated things and put it into this medium; that’s what we really need.

Do you have any words to say about the Wall Street Journal during all of this?

Ferguson: I have quite a bit of words to say about the Wall Street Journal. The future of the Journal, which is being slowly transformed by Rupert Murdoch, is unclear. But during this period, there were a number of quite good articles about this, including some important one.

Morris: There’s always been this complete split between the Wall Street Journal editorial page and the reporters, and they did a very good job.

Ferguson: That split is getting less clear.

As Elizabeth Warren certainly has Obama’s ear, are you doing anything specific to get her to see the film and make her comment in any way? And is Frederic Mishkin really back teaching at Columbia?

Ferguson: Yes, Mr. Mishkin is certainly at the Columbia Business School, and this might stun you, but if you were to see the full interview that we did, he would look much worse. Actually what happened was that we had an earlier cut, and a couple people including Robert Walker of Sony, came back and said you can’t do this, because people are going to have sympathy for him because you have destroyed him so completely. You’ve got to ease up. So we actually did. I won’t go into details. Mr. Mishkin does not come off well in the film. He and everyone else in the film has been invited to see it. He declined to come but sent a public relations executive to come report back.

In regard to Elizabeth Warren, I’m sorry this might pain a number of you, and its somewhat politically incorrect, but Elizabeth Warren is not the solution to all of our problems. I admire her; I admire her work, but the only way she’s been able to get to where she is, is by being extremely careful not to criticize the Obama administration outside the extremely specific issue that she is now, kind of sort of half in charge of. I spoke with her privately at great lengths, and she declined to go on camera for exactly this reason.

Were you pressured in any way to not put any of these interviews in, or was there anyone trying to influence the film?

Ferguson: The simple answer is no—no one tried to pressure us. Several people tried to retract the permission for their interviews but we already had their signed released forms and that was that. In regard to pressure, I have to say something about the Sony guys—Michael Barker and Tom Bernard. They have been, and excuse me I’m going to a bit vulgar to make my point, they’ve been totally fucking amazing. I was really scared when I started to making this film I would get calls like this guy is my neighbor, this guy is a major shareholder, etc. Never once. Never once. And they are now supporting this film extremely strongly. I have my quibbles with the movie distribution business but they have been incredible.

When did the five-act structure of the film come to you? You obviously had a very high ratio of stuff you shot to what you actually used. Did you know what your through line was or did it come at the end when you had all this footage?

Ferguson: I would say it’s about half and half. By the time we started editing, I had done a good deal of research and I knew what was in the interviews because I had conducted them. At the same time, there was an extraordinary amount of material. We filmed about 70 or 75 interviews, and most were about an hour and a half long, and some were two or three hours long. In addition, we had an incredible mass of documentation of every kind—books, articles, government documents, academic articles—huge quantity of stuff.

So the editors were critical. The two editors, Chad Beck and Adam Bolt, are much greater than what you think of editors as extraordinary people. The structure of the film really emerged. I had about half when we started editing, and the rest emerged while working with them. And they worked really hard. The last four months, they were working 12 hours a day, and I was typically in there with them for about 6-8 hours a day.

Where do you see the economy in five years, and do you think there will ever be any convictions?

Ferguson: I think we have a rough five years ahead of us, and a rough generation. The American economy and society are troubled, and there’s all of this, which is a big thing, and then there are all the other important things that aren’t being attended to because the people responsible can’t care about them attending them. The high school graduation rate in South Korea is 96% and in the US its 78%, that’s a problem. With regarding convictions, I think there will only be convictions if the American people get angry enough.

Morris: I see most of the likely outcomes on the bad side and the range of possible negative outcomes is very large. Most likely, I think we’re going to have a long and slow stagnant period.