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.

Click below to read the rest of the interview

NYFF Review: Inside Job

Inside Job

Directed by Charles Ferguson

United States

            It’s easy to make a documentary that targets people and makes them into villains, especially when you have a good topic, such as the 2008 financial meltdown. Consider Michael Moore’s Capitalism, which was conveniently released only weeks after the collapse of Lehman Bros, and the real sign of worse things to come. Yet Mr. Moore, for all his earnestness and narrative skill, never really explained what had happened, he just pointed fingers.

            Enter Charles Ferguson, who may be able to compete for one of the smartest scholars alive (he used to be a senior fellow at the Brookings Institute), or at least in his ability to think critically about situations. In his 2007 film, No End in Sight, Mr. Ferguson took on the complicated task of examining how the Iraq War went wrong, and what were the key factors that caused it to go from a peaceful occupation to a war zone. Mr. Ferguson’s findings, which took aim at things that might not seem that bad, showed the key mistakes in an engrossing way, and left his audience simply shaking their heads.

            In his latest film, Inside Job, those heads are about to be boiling in blood. Mr. Ferguson might be a couple years later than most to take on the topic of the 2008 financial meltdown, but he does it with a clarity and genius that few films reach. Rarely pandering to his audience, and keeping us invested in the narrative with interviews with scholars, politicians, bankers, hookers, and everyone who one could possibly need to do about 40 dissertations on the subject, Mr. Ferguson compacts it all into an under-two hour movie, and in a devastating fashion. There are many great films, but this should be required viewing.

            Inside Job neatly divides itself into five acts, like a good Shakespearean tragedy should, and begins in the strangest of all places: Iceland. A brief prologue basically shows what happens when things become deregulated (hint: they are bad, and especially for Iceland). The prologue serves as a reminder for the rest of the film—deregulation leads to more dangerous activity, and those activities become more and more ludicrous until the people actually paying for the mistakes are not the ones that caused it.

            Some of the materials, for those who have read a dozen articles or listened to an NPR story, are a little redundant. Of course, those who haven’t will be shocked at out ridiculous the system is. However, there are also some other truths that I did not know about that really pissed me off. One involves credit rating agencies, which determine which stocks, mortgages, and other credit-backed securities, are safe buys, and how their “opinions” shaped our financial future. The one that certainly gets the most blood though involves professors at top business schools, such as Harvard and Columbia University. Mr. Ferguson basically depicts how these top economics were paid by banks to write positive articles so they could continue and expand their deregulatory practices. When confronted, the professors respond with anger, bafflement, and embarrassment.

            One should note—Mr. Ferguson is not interested in current political bickering, and neither Inside Job nor No End in Sight blame a specific party for their alignment. In fact, the cold truth at the heart of Inside Job is that both parties, for the last 30 years, have continued to play into the game controlled by the major financial companies, and there seems to be little hope in the current administration, and no promise in the recently passed financial regulatory bill.

            Inside Job ends on the note that some how, these top bankers need to go the jail. It’s a note that seems a little difficult to say the least, but the journey there is simply baffling. Mr. Ferguson jumps from interview to interview without ever losing us. It’s sometimes darkly funny, but mostly just immensely raging. This is the type of film that reaffirms that things are not going to be okay, and that this is not the end. It is only the beginning. Mr. Ferguson sublimely shows that muckraking isn’t a mundanely banal approach, especially when you come backed with more evidence than one would ever need. This is a shot right into the heart, and truly from a non-filmmaking point (though the craft of the film doesn’t hurt either), the must see film of the year.