Inside Job (2010) narrated by Matt Damon, takes a closer look at ...

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Inside Job (2010) narrated by Matt Damon, takes a closer look at what brought about the financial meltdown Economics archive.org

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[–] MegaZeusThor • 76 points 3 years ago

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I watched this a while back. It's well done. Related: The smartest people in the room (Enron) permalink

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[–] qedb • 53 points 3 years ago

The smartest people in the room close... Enron - The Smartest Guys in the Room permalink

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[–] TheFourthHour • 34 points 3 years ago

close... it's actually Rembrandt - The artist and his broom permalink

ah

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[+] [deleted] 3 years ago (3 children) [–] MegaZeusThor • 1 point 3 years ago

Thanks. permalink

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2,282 currently online

[–] fweng[S] • 1 point 3 years ago

You are loved.

Brilliant. And it'll happen again permalink

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Welcome, friends!

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[–] drraoulduke • 1 point 3 years ago

Check the top of the subreddit for a request thread

Yep, always has always will IMO. Check out Jeremy Irons' monologue in Margin Call, it's a nice encapsulation. Of course that's not to say there aren't specific lessons to be learned from each individual crisis. permalink

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[–] TheRiverStyx • 1 point 3 years ago

Another one is Inequality for All. They don't go into a lot of depth with it, but he discusses how deregulation is probably the biggest factor in corporate shenanigans. permalink

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[–] [deleted] • 1 point 3 years ago permalink

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[–] randy9876 • 10 points 3 years ago*

You realize that McLean wrote the most brilliant book on the 2008 mortgage crisis? Every chapter is packed with fascinating stuff. "All the Devils are Here" by Bethany McLean and Joe Nocera (Mclean also co wrote "The Smartest Guys in the Room" about the Enron debacle.) From the "Why Everyone Loved Moody’s" chapter in the book:

Misc: Biography • Disaster • Drugs • Offbeat • Sex • Sport • Travel/Places Trailer • Request • Discussion

Community guidelines 1. Posting format: Title (year) - "optional short description" [HH:MM] Length and a [CC] tag is strongly encouraged. Correct title and year of release are mandatory. [Trailer] tag is mandatory for trailers

Ratings shopping was a classic example of why Alan Greenspan’s theory of market discipline didn’t work in the real world. The market competition between the rating agencies, which Greenspan assumed would make companies better, actually made them worse. “The only way to get market share was to be easier,” says Jerome Fons, a longtime Moody’s managing director. “It was a race to the bottom.” A former structured finance executive at Moody’s says, “No rating agency could say, ‘We’re going to change and be more conservative.’ You wouldn’t be in business for long if you did that. We all understood that.”

2. No reposting within 3 months

“It turns out ratings quality has surprisingly few friends,” Moody’s chief executive, Raymond McDaniel, told his board in 2007. “Ideally, competition would be primarily on the basis of ratings quality, with a second component of price and a third component of service. Unfortunately, of the three competitive factors, ratings quality is proving the least powerful.”

3. This is a free speech zone. Don't like it? Don't click it. But don't be a jackass. 4. Please upvote if it adds to intelligent discussion, downvote if it doesn't.

Ratings agencies used to be paid by subscribers, who were the buyers of bonds and wanted to be protected from risk. THEN, in the 1970s, they did a 180, and switched to a fee based revenue model, in which they were paid by whoever was issuing a bond! For years, they actually maintained fairly high standards, then Moody's went public in 2000. Buffett bought 15% of the stock. This made profits the big motivator, rather than compliance. In Bethany Mcleans book she named a chapter "Why Everyone Loved Moody’s", which is a play on an article in Barrons in the early nineties called "Why Everyone hates Moodys". Back then, Moody's gave tough ratings whether a company liked it or not. A lot has changed. permalink

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5. Soliciting for donations or linking to your own YouTube channel is annoying and prohibited. 6. Documentaries only. The following are not considered documentaries on this subreddit: TV news, articles, interviews, lectures, amateur home videos, mockumentaries, biopics, and vlogs.

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7. Mods reserve the right to apply the don't be a jackass rule. Please be respectful to other users... if they're wrong, tell them why! Personal attacks or comments that insult, demean or threaten users will be removed and result in bans.

[–] formfactor • 12 points 3 years ago

yea The smartest people in the room (Enron). A pretty good film I did not expect. Very well done. To think the asian dude is off retired on a beach somewhere (you know the one). More money than he will ever be able to spend. Its so... Ironic! permalink

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8. No file lockers, torrents or linkjacking: site must stream video.

[–] [deleted] • 11 points 3 years ago

9. Any brigading or continual harassment of one user against another may result in a ban. Always message the mods instead of attacking users in public.

Didn't he also marry a stripper, though? Not sure how that turned out! He's probably 50% down, haha. permalink

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10. If your submission is popular, please don't delete it. Respect the community, and do not consign their comments to the memory hole.

[–] Foge311 • 6 points 3 years ago

He got a stripper pregnant actually. That was a entertaining part of the story. Great doc permalink

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11. "I have decided to stick with love. Hate is too great a burden to bear." MLK

[–] [deleted] • 9 points 3 years ago

http://en.wikipedia.org/wiki/Lou_Pai#Post-Enron

Want to submit a video which is not a documentary?

Sounds like they're still together. I do like a happy ending. permalink

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Meal Time Videos

[–] [deleted] • 10 points 3 years ago

A happy ending would be him falling down an abandoned well and his wife running away with the money. permalink

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[–] [deleted] • -1 points 3 years ago

Lectures

He seemed like the least scummy of them all, though. And he was addicted to strippers... Shows how bad the rest were.

TrueReddit

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[–] [deleted] • 5 points 3 years ago

How is that ironic? permalink

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[–] kcg5 • 1 point 3 years ago

He was the REAL smart guy. William something? permalink

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[–] slapknuts • 1 point 3 years ago

Such a great movie. Saw it in class in high school, college, and also on Netflix in my spare time. It's one of those movies where you notice something new every time. permalink

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[–] whitedit • 9 points 3 years ago

I have also watched a number of these documentaries, but had not seen this one before...and it may be the most powerful to date. How has this film eluded me for four years? Someone should post this video every single day. Screw the duplicate post bots. We need to stay angry and not let these fuckers slide. permalink

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[–] truth-is-treason • 9 points 3 years ago*

1 thing that the documentary misses is how much low interest rates contributed to blowing up the bubble. 1% Fed funds rate made Adjustable Rate Mortgages w/ initial 1% teaser rates possible. under government regulation Fannie and Freddy could only purchase mortgages not originate them. The banks packaged trillions of dollars of these subprime unverified liar loan mortgage bonds specifically to sell them to the GSEs. the derivatives that blew up were based on the mortgages. 1% fed funds rate enabled the banks to heavily leverage up and encouraged reckless speculation with very cheap credit. the entire mortgage market was corrupted by easy credit. People were buying multiple houses with near no money down and in many cases no job. We are still bailing out banks with 0% interest rates, the Fed has given the banks the ability to borrow main streets' money for free, so they can speculate and create all types of derivatives and blow more bubbles, then lend the money back to us at 18%, then pay themselves huge bonuses. When the Fed pumps money into the financial system and interest rates are too low resources are diverted from Main St. and the real economy to Wall Street and the luxury economy. Finance now consumes over 40% of all profits in the US economy. This is a huge wealth transfer, if interest rates were higher, all of the interest income would have went in main street's pockets via savings accounts and we would have saved more, instead of over-borrowing and spending ourselves into financial ruin. Higher interest rates greatly increases the cost of reckless speculation (which curbs the banks' bad behavior). Iceland put their criminal bankers in jail and instead of passing out corporate welfare through stimulus, they went through austerity. now they are growing again. permalink

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[–] ChristopherShotgun • 13 points 3 years ago

thanks for sharing this with us. Watching it my be the most infuriating thing I may have ever watched ever in my life. I think this film does a good job highlighting the problems in the system, and how they hold all the cards in their hand still. How the financial system has become an organization of "I'll scratch your back if you'll scratch my back." I'll leave ti at that I'm frustrated enough at this point. Going in I had an idea that everything that did happened, but now that I see what all the things that did happened, I am better informed, and have a clear overview of all the players and events that orchestrated this disaster. Thank you for sharing. permalink

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[–] deficient_hominid • 22 points 3 years ago*

Inside Job gives a good overview of the financial crisis and it motivated me to try and understand more, so I found other docs help provide more in-depth & comprehensive analysis at ELI5 perspective. More comprehensive explanation of financial crises: FRONTLINE: Business / Economy / Financial Debt: The Good, the Bad and the Ugly The Corporation (2003) Enron: The Smartest Guys in the Room (2005) Maxed Out: Hard Times, Easy Credit and the Era of Predatory Lenders (2006) The One Percent (2006) In Debt We Trust: America Before the Bubble Bursts (2006) I.O.U.S.A. (2008) The Ascent of Money: A Financial History of The World (2008) The End of Poverty? (2008) Inside The Meltdown (2009) Casino Jack and the United States of Money (2010) How the Rich Beat the Taxman (2010) (Astro) Turf Wars (2010) Heist: Who Stole the American Dream? (2011) The Flaw (2011) Hot Coffee (2011) Fault Lines: The top 1% (2011) The Crisis of Civilization (2011) We're Not Broke (2012) Money, Power and Wall Street (2012) Poor Us: An Animated History of Poverty (2012) The Tax Free Tour (2012) Money for Nothing: Inside the Federal Reserve (2013) Interesting Ideas on Economy: Overdose: The Next Financial Crisis (2010) Four Horsemen (2012) 97% Owned (2012) Inequality for All (2013) - My personal favorite, available on Netflix. various other socioeconomic & sociopolitical docs. right-wing

My personal summation imo: Wealthy rules to benefit their self-interests.

individuals (not always working in concert) lobby governments to change

edit: added years permalink

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[–] burnone2 • 4 points 3 years ago

Thank you for taking the time to compile this. permalink

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[–] sn34kypete • 10 points 3 years ago

Man I loved when that professor got sassy after being questioned about all the "work" he had done for banks but denied doing. "What is this, an inquisition? You've got three minutes, give me your best shot" Fuck you too, buddy. permalink

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[–] [deleted] • 4 points 3 years ago

Glad to see this getting more attention. permalink

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[–] BankingCartel • 8 points 3 years ago

This link is not a documentary, it's a speech given to a group of mortgage bankers, telling them that their entire industry is about to implode, and more importantly - WHY. It was given in November of 2006: http://www.youtube.com/watch? v=jj8rMwdQf6k permalink

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[–] dchup • 2 points 3 years ago

I had never seen this before, thanks permalink

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ah [+] [deleted] 3 years ago (5 children)

[–] phantom8er • 3 points 3 years ago

I prefer this video to the this one. More straight forward and no pointing fingers. The 11 minute running time is much better also. http://www.youtube.com/watch?v=bx_LWm6_6tA Edit: END the FED permalink

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[–] irdbri • 1 point 3 years ago

Good video, thanks for the link! I'm surprised it has less than a million views. I also wish it would have included info on the bail out by the government. Still great summary though. permalink

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[–] phantom8er • 1 point 3 years ago

One thing that this video doesn't do is tell why the Fed lowered its interests rates to to 1%. Edit: well not an indepth explanation permalink

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[–] irdbri • 2 points 3 years ago

True, a better explanation of how/why that's done would have been nice. permalink

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[–] Centais • 3 points 3 years ago

Watch it. God damn well done and truely giving some interesting facts to think about. I can also recommend the documentary called "The Corporation" ! Enjoy permalink

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[–] phishn37 • 21 points 3 years ago

The only real reason I will watch this documentary, despite disagreeing with a lot of points it makes, is that I like how it shows the reaction that anyone involved in a crisis has after the fact. The people who got out early, before everything went to shit -- whether because they actually saw a crisis coming, or just for other reasons -- will adamantly demand that everyone could see what was coming for a million miles and anyone that denies it is just lying. On the other hand, people that were still involved in the industry when the crisis hit are the opposite -- they insist that no one could predict what happened and that they had no idea. It reminds me a lot of the film Judgement at Nuremberg about the trials of the Nazi judges. permalink

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[–] infamousboone • 10 points 3 years ago

What points do you disagree with and why? permalink

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[–] Bird_Flu_Sandwich • 7 points 3 years ago

That it was solely the banks. It was also mortgage companies, mortgage buyers, local small banks. Tons of people made poor financial decisions. To blame just large wall st banks is wrong. permalink

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[–] infamousboone • 24 points 3 years ago

I don't think the film blames only the banks. It talks about many steps along the chain that (fed, rating agencies, insurance, etc) led to the meltdown. But because the banks gained the most, prior to the crash, that it is fair to give them the lions share of the blame. permalink

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[–] simstim_addict • 8 points 3 years ago

The market for idiot mortgage buyers was always there, is always there, will always be there. Whatever happened there was not a sudden demand for mortgages from irresponsible buyers. permalink

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[–] blok1 • 1 point 3 years ago

Don't forget they are all operating in an environment created by the government. permalink

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[–] brighterside • 3 points 3 years ago

I liked it best because it's clear and thorough regarding what the 'melt down' was. permalink

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[–] [deleted] • 8 points 3 years ago

Maybe I'm just madnessed, but when I hear words like "everybody" and "nobody," there is no clear designation as to who they are referring to. For the people in the circles of those that got out, everybody in their circle seemed to understand. The people that are getting pointed fingers at or perhaps were completely ignorant to it, aren't in the circles of the people using the term "everybody." Therefore, "nobody" refers to people they don't know. It's used in a context to relieve oneself of guilt and is in no way a false statement. It all comes down to categorization and reactions to types of behavior that may be aggressive or not. I suppose I'm identifying the circle jerk that makes the whole discussion on the matter moot. From the bigger picture, identifying the conditions that allow this circle jerk to emerge, one, such as myself, can take the stance of apathy, allowing me to do nothing and not care and/or resolve, that encourages me to continue my path toward the construction of a world that doesn't utilize a system of rules allowing for these potential outcomes. If I were to question you in particular as to your involvement or feelings of involvement on the matter, how would you categorize or view yourself in terms of a participant in the entire situation? Loaded questions: Are you throwing a paper note into the ocean? Are you encouraging the growth of people involved in these situations with the power positions allowing them to do such things? Are you participating in a circle jerk with no resolution in site? What is it you hope to accomplish with your comment? What do you do outside of this Reddit post irl? permalink

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[–] phishn37 • 0 points 3 years ago

I guess what I found interesting about the documentary is that many people who happened to not be working in the financial industry at the time of the meltdown seemed to claim that the only reason that they were not was because they knew that a financial crisis was coming. Many of them seemed to imply they got out of the financial industry because they were outraged at the things that were being done. While that may be true for some, I am skeptical that they are all being totally honest about it. I'm sure that many of them were not in the industry for various reasons, but now can safely claim moral high ground by claiming that they left on their own because they opposed these wrong practices. On the other hand, you see people that still were in the industry when the crisis struck that almost act like they weren't in it at all because they talk like they could have never forseen a meltdown happening. I'm also very skeptical of that. All I mean to say is that the interviews in the movie, from people on both sides, are mostly butt-covering. Some of it justified, sure, but much of it probably not. That's all, I guess. permalink

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[–] coolbutt69 • 5 points 3 years ago

The people being interviewed in the film were chosen for their opinions and professional input because they were some of the leading voices against the subprime mortage crisis during and after the crash. The rest of them are politicians or lobbyists. The information is extremely accurate if you do your research, though I would understand any professional financial advisor may be annoyed by the laymen terms used to explain most of the details. I didn't see anyone from the industry say anything about not knowing what happened. Please don't arbitrarily state you disagree with some of the points if all you have is skepticism. Keep Reddit clean. permalink

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[–] killerkadooogan • 2 points 3 years ago*

What about the guy who was a doctor turned day trader who said he saw it coming bet on the losses and made a fortune? and apparently others they say earned. It's very interesting to see how they give the perspective on it. permalink

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[–] Prophet_of_the_Bear • 4 points 3 years ago

Oh...I was just gonna watch because of Matt Damon... permalink

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[–] UnknownArtist_ • 3 points 3 years ago

First thing I thought when I saw this, was Matt Daaamon. permalink

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[–] when_doves_cray • 2 points 3 years ago

Matt Damon. permalink

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[–] Mrs_Damon • 1 point 3 years ago

His voice makes me melt. permalink

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[–] SoThereYouHaveIt • 1 point 3 years ago

Just when I was feeling good about my own art.... permalink

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[–] anon108 • 5 points 3 years ago

This was one of the most detailed and informative documentaries I've ever seen. permalink

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[–] jaglo87 • 1 point 3 years ago

I agree they tried to explain everything very well. permalink

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[–] naked_short • 14 points 3 years ago

This is an interesting documentary that gives a good overview of the crisis. However, it doesn't get into any of the details which is where the root of the crisis lies. Instead they focus on surface level arguments that have been championed by the media which can be summed up by The banks did it Derivatives did it Republicans did it That's about as deep as it gets. The fact of the matter is that none of these things are going away. The truth is that a number of smaller cracks, far beneath the surface, exacerbated a large but normally manageable crack at the surface. The ideas championed by this movie were all smaller cracks beneath the surface. The bigger crack is never mentioned. permalink

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[–] [deleted] • 11 points 3 years ago

Well, which do you think is the "bigger crack"? The deregulation of the derivatives? All these factors play a very important role in the origin of the crisis. Do you think that there is some unmentioned predictor that hasn't been covered? permalink

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[–] naked_short • 1 point 3 years ago

Definitely not. Derivatives weren't deregulated ... they were just never as regulated as other securities. The big crack in the surface was the two entities primarily responsible for blowing the housing bubble - fannie mae and Freddie mac. permalink

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[–] xodus52 • 6 points 3 years ago

Derivatives were never beholden to any iota of scrutiny. permalink

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[–] naked_short • 1 point 3 years ago

That's not completely true. The point was thought that they were never deregulated. They just weren't very regulated to begin with. permalink

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[–] xodus52 • 3 points 3 years ago

I understand the point; it needs no further clarification. And it is indeed true that they were never regulated. There was and is zero regulation of derivatives. The extent of which there is even oversight consists of a single sheet of paper in which the seller states the value of the trade and signs at the bottom. There was a point in the 90s in which derivatives almost destabilized the entire market, resulting in the head of the Commodity Futures Trading Commission, Brooksley Born, vying for regulation of the derivatives market. Not only did her request fall on deaf ears, she was outright vilified by Greenspan, Summers, and Rubin (figureheads of monetary policy) before congress. permalink

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[–] zoop_zoop • 1 point 3 years ago

Just want to clarify when you say there is no regulation of derivatives. There is now, regulations in to derivatives came in to place through the Dodd frank act 2013 which banned / regulated certain derivatives. permalink

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[–] naked_short • 1 point 3 years ago

That's just not true. There was and always has been some regulation of derivatives. For the most part it was industry regulators but the government was involved peripherally. I mean, Future's are a derivative so how can bring up the CFTC (the people responsible for regulating derivatives) and say there's no fucking regulation? You can keep arguing with me if you want but I'm going to go ahead and guess that you've never bought or sold a derivative in your life and your knowledge is coming from hyperbole-laced articles on Huffington post. And there is a whole mass of government regulation in derivatives now with the Dodd-Frank act. permalink

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[–] [deleted] • 4 points 3 years ago

the two entities primarily responsible for blowing the housing bubble - fannie mae and Freddie mac. This is simply not accurate. Here is a great rundown on the problems with this claim. Fannie and Freddie participated in the crisis, sure, but they were by no means the cause. permalink

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[–] naked_short • 5 points 3 years ago

Their argument refutes the republican argument which isn't very good. I agree with them. The problem is that they ignore everything else. The fact is that Fannie and Freddie were and are the largest holders of US mortgages in the world. So much so in fact that they own over 50% of all mortgages in the US. Around $5 trillion worth. They owned these mortgages on razor thin capital with a leverage ratio of 75-1. Lehman Brothers, the most levered investment ba k, had a leverage ratio of 40-1 ... most investment banks had less than half Fannie/Freddie's leverage ratio though. But Lehman had very one large advantage over F&F - They held assets other than mortgages. Diversification is king in risk management and Fannie/Freddie had NONE. Due to these facts, Fannie and Freddie were very fragile. The fact that they issued less risky MBS and bought less risky mortgages matter very little in this context. It didn't stop them from going insolvent long before Lehman or even Bear Stearns. The problem with the two firms that own 50% of all assets in a market should be clear - if they go insolvent anyone who owns those assets are completely fucked. If the assets they hold start going down and they can't take much pain then everyone is going to head for the exits and blow up the market. And that's exactly what happened From the Financial Crisis Inquiry Report - Commentary from White House Chief Economist Jason Thomas on F&F fiscal 2007 results Any realistic assessment of Fannie Mae’s capital position would show the company is currently insolvent. Accounting fraud has resulted in several asset categories (non-agency securities, deferred tax assets, low income partnership investment) being overstated, while the guarantee obligation liability is understated. These accounting shenanigans add up to tens of billions of exaggerated net worth. Yet, the impact of a tsunami of mortgage defaults has yet to run through Fannie’s income statement and further annihilate its capital ... With shareholder capital depleted, a government seizure of the company is inevitable. Again ... that was 2007 results. That's what the wonks fail to address because they lack background in financial markets. But they aren't the only voices ... thankfully there are guys like Nassim Taleb who have the academic and wall street credentials to spare and say things like this "The government-sponsored institution Fannie Mae, when I look at its risks, seems to be sitting on a barrel of dynamite, vulnerable to the slightest hiccup. But not to worry: their large staff of scientists deem these events 'unlikely'". - The Black Swan The chief advantage of a well-functioning market economy is that they are robust and can withstand crisis. They adapt and change shape to fit the needs of society. We need markets built like a fortress. The US housing market, because of Fannie/Freddie, was built out of un-tempered window panes. Yes, Wall Street threw the rock that broke it but they were just doing what they are supposed to do. There's one other problem as well. You see the timeline everyone likes to lay out just doesn't fit. The fact is that yes, Fannie and Freddie were pushed out of a lot of the lower end issuance (punishment for accounting fraud, but that's a whole other thing). But do you know how they made up for that with their housing goals? They bought Wall Street Issued PLS, of course! More from the FCIC Separate from their purchase and guarantee of mortgages, over the course of the housing boom the GSEs purchased $690B of subprime and Alt-A private-label securities Why were they doing that? The White House already knew they were insolvent. It's because they were doubling down - they needed Fannie/Freddie to buy up everything they could as one last ditch effort to support the housing market. ... Fannie and Freddie were "the only game in town" once the housing market dried up in the summer of 2007, Paulson told the FCIC. And by the spring of 2008, "[the GSEs,] more than anyone, were the engine we needed to get through the problem." This is the same Hank Paulson btw who said that the GSEs were a disaster waiting to happen in 2006. It goes on to talk about how the GSEs, it was decided, would prop up the failing mortgage market. Meanwhile, their balance sheets got worse and worse The value of risky loans and securities was swamping their reported capital. By the end of 2007, guaranteed and portfolio mortgages with FICO scores less than 660 exceeded reported capital at Fannie Mae by more than seven to one; Alt-A loans and securities, by more than six to one. Loans for which borrowers did not provide full documentation amounted to more than ten times reported capital. But this didn't stop regulators from loosening their controls on the two giants even further, allowing them to dig themselves into even deeper holes ... As the year progressed [2007], Fannie and Freddie became increasingly important to the mortgage market. By the fourth quarter of 2007, they were purchasing 75% of new mortgages, nearly twice the 2006 level. With $5 trillion in mortgages resting on razor-thin capital, the GSEs were doomed if the market did not stabilize. According to Lockhart, "a withdrawal by Freddie Mac and Fannie Mae or even a drop in confidence in the Enterprises would have created a self-fulfilling credit crisis." Again ... self-fulfilling crisis is exactly what happened. I mean it doesn't really get any better than this. You have Fannie/Freddie's own regulator (Lockhart was head of the OFHEO at the time) in 2007 that Fannie/Freddie were going to cause a financial crisis. Now let's talk about risk assessment at F+F At the end of December 2007, Fannie reported that it had $44 billion of capital to absorb potential losses on $879 billion of assets and $2.2 trillion of guarantees on MBS; if losses exceeded 1.45% it would be insolvent. Freddie would be insolvent if losses exceeded 1.7%. Moreover, there were serious questions about the validity of their "reported" capital. [/quote] This didn't stop them. In February, Congress passed the Economic Stimulus Act, which raised the limits on the size of mortgages that Fannie and Freddie could purchase ... The push to get the OFHEO to loosen requirements on the GSEs also continued. Schumer pressed OFHEO to justify or lower the 30% capital surcharge ... Lockhart announced that OFHEO would remove the portfolio caps on March 1, 2008 ... despite Lockhart's reservations, OFHEO announced the deal [to reduce the capital surcharge from 30% to 20%], unaltered in any material way, on March 19. What this is saying should be clear. The government was a) propping F&F up and temporarily allowing their account fraud to continue and b) they were doing so with the implicit instruction that they were to buy every piece of dogshit security that Wall Street shoveled down their throats. Is it any wonder then that this is where the worst of the abuses occurred? That crap all ended up on Fannie/Freddie's balance sheet. Good thing the republicans and the democrats both have a good incentive to wrap this up in a bow and hang it on Wall Street's neck. In reality they are the ones who really fucked up. Mostly the republicans but the democrats ignored problems with F&F for a long time. The Bush administration made the complete wrong call by trying to double down in 2007 as F&F were blowing up. I read the FCIC cover to cover. I don't know how you read that and come away from it thinking anything other than Fannie/Freddie were at the center of the crisis. I place the blame on a fragile market that had new conditions introduced to it (Wall St) that it wasn't built to withstand. My conclusion is the same as Nassim Taleb's ... we need robust, fortified markets, not ones made of glass. permalink

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[–] [deleted] • 0 points 3 years ago

To your first point regarding F&F's fragility, I'm not sure I'm seeing the significance. The fact that F&F were exposed to a lot of risk in the event of a housing market collapse is obvious, but that really has nothing to do with the question of what sort of role they played in the crisis itself (which, as pointed out above, was minimal). And arguing that the collapse (or threat of collapse) of F&F had repercussions elsewhere, while technically accurate, is confusing the issue since F&F's position in and of itself was fine. It was the massive amounts of largely invisible risk pumped into the market by private companies that made it dangerous. The US housing market, because of Fannie/Freddie, was built out of un-tempered window panes. Because of Fannie and Freddie? Again, this statement is simply not justified. The crisis was precipitated by a radical departure from GSE's (what Fannie was doing for decades) to Mortgage Backed Securities. "The GSEs were guaranteeing nearly half of all mortgages in the late 1990s and early 2000s. But from 2002-2005, they saw a fairly precipitous drop in market share, going from about 50% to just under 30% of all mortgage originations. Conversely, private label securitization [PLS] shot up from about 10% to about 40% over the same period. This is, to state the obvious, a very radical shift in mortgage originations that overlapped neatly with the origination of the most toxic home loans." That same article goes on to discuss how those same PLS's defaulted at over 6x the rate of GSEs. It was this massive influx of risk, much of it tucked away in opaque trading instruments and the shadow banking sector, that set the stage for the collapse. Also pointed out in that article is that F&F actually faired a lot better in the crisis with their GSEs than private firms with their PLSs. As a broader point, there's a big problem with citing analysis performed at the beginning or during the worst days of the crisis. At that point, it looked like the sky was falling no matter where you were sitting, and no one had any clear idea what exactly was going on. Very few people appreciated the kind of risk that had been accumulating in the shadow banking and mortgage backed security sector. Certainly things looked really bad at F&F in 2007, but that's to be expected (since they were bad everywhere) and doesn't really tell us anything about what caused the crisis. A lot of work has been done since that time to figure out what exactly unfolded, and that's what I'm citing. permalink

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[–] naked_short • 2 points 3 years ago*

To your first point regarding F&F's fragility, I'm not sure I'm seeing the significance. The fact that F&F were exposed to a lot of risk in the event of a housing market collapse is obvious, but that really has nothing to do with the question of what sort of role they played in the crisis itself (which, as pointed out above, was minimal). And arguing that the collapse (or threat of collapse) of F&F had repercussions elsewhere, while technically accurate, is confusing the issue since F&F's position in and of itself was fine. It was the massive amounts of largely invisible risk pumped into the market by private companies that made it dangerous. No, no ... Forget about market collapse scenarios. They were exposed to "if MBS decline 1% we are insolvent" risk. That's not "market collapse risk", that's "a healthy sneeze will tank us" risk. It is insane to try and justify the amount of risk they were taking with the size of balance sheet they had. A market collapse scenario is neither here nor there because F&F couldn't survive a small downturn. F&F's position was not "fine" in and of itself ... they were insolvent. How is that "fine"? Because of Fannie and Freddie? Again, this statement is simply not justified. The crisis was precipitated by a radical departure from GSE's (what Fannie was doing for decades) to Mortgage Backed Securities. "The GSEs were guaranteeing nearly half of all mortgages in the late 1990s and early 2000s. But from 2002-2005, they saw a fairly precipitous drop in market share, going from about 50% to just under 30% of all mortgage originations. Conversely, private label securitization [PLS] shot up from about 10% to about 40% over the same period. This is, to state the obvious, a very radical shift in mortgage originations that overlapped neatly with the origination of the most toxic home loans." Your link actually has a really nice graph that neatly proves my point about F&F ramping their exposure to PLS - http://rortybomb.files.wordpress.com/2010/02/gse_shadow_bailout.jpg And here's your blogger trying to spin it the other way - "Poor Fannie/Freddie, it isn't their fault the government forced them to buy crap" ... completely missing the point that this is the entire problem with F&F. http://rortybomb.wordpress.com/2010/02/17/gse-losses-as-shadow-bailout/ They are confusing terminology here. They compare guarantees to originations which are two completely different things. If they are talking about MBS origination then that's just confusing but I assume that's what they mean. So, let's give them the benefit of the doubt and say they were referring to MBS issuance (this is the problem when you let economists do finance). Let me break this down for you: Origination/Originator - This is the act of/who actually makes the loan. This would be like a Countrywide. Securitizor/Issuer - These are the guys who buy the mortgages from the originators, repackage them and then resell them to investors. Secondary Market - This is the market on which issued securities are bought/sold. Fannie and Freddie were simultaneously the largest sellers (issuers) and the largest buyers (investors). To the tune of both buying and selling around 50% of the entire market place at times. Yes, private label issuance took a large chunk out of Fannie/Freddie in the issuance business. Why? Because F&F who previously were allowed to buy more risky loans (subprime), stopped being allowed to in like 2002 or 2003. For the most part everyone was locked out of this market for years because no one could touch F&F's financing (they got better financing because of their pseudo-government status). But once they were locked out, Wall St. saw their chance and stepped in. So yes, F&F's market share absolutely shrank, benefitting Wall Street. Their second point is that this period overlaps with the most toxic issuance is just misleading. The toxic lending mostly occurred from 2006 - 2008, not 2002-2005. They also neatly gloss over the fact that while F&F were no longer issuing these MBS they were actually instead buying the private-label MBS from Wall Street. Not only were they buying it from 2002 onward but they were accelerating their purchases of Private-Label Securities into 2006, 2007 and even 2008 (that's what all those quotes I gave you were about). In fact, from 2005 - 2008 F&F were the largest buyers of both subprime and alt-a private label MBS from Wall Street. The point is that it really doesn't matter if you aren't issuing the MBS to the secondary market if you're buying up half of everything issued on the other side. F&F, more than any other entity, drove the demand for toxic MBS from Wall Street. Regardless of your thoughts about the rest of my argument, that fact is undeniable. That same article goes on to discuss how those same PLS's defaulted at over 6x the rate of GSEs. It was this massive influx of risk, much of it tucked away in opaque trading instruments and the shadow banking sector, that set the stage for the collapse. Also pointed out in that article is that F&F actually faired a lot better in the crisis with their GSEs than private firms with their PLSs. Again, they are talking about the MBS that F&F ISSUED not the MBS that they BOUGHT from Wall Street. What they actually bought from Wall Street defaulted at 6% like the rest of the what Wall Street issued. And, as I mentioned before, they were the ones buying most of it. Also pointed out in that article is that F&F actually faired a lot better in the crisis with their GSEs than private firms with their PLSs That's pretty hilarious since F&F were technically insolvent as early as 2007 and possibly before. You either misinterpreted what they said or they are completely wrong. On no planet can that statement ever be considered correct. I think, again, you're confusing what F&F issued vs. what they brought onto their balance sheet. It isn't the same thing. The banks were worried in 2007 but they were all solvent. And they remained solvent until the government stopped propping F&F up at which point Lehman went insolvent. As a broader point, there's a big problem with citing analysis performed at the beginning or during the worst days of the crisis. At that point, it looked like the sky was falling no matter where you were sitting, and no one had any clear idea what exactly was going on. You're missing the point. Government analysts drove a conscious decision to prop F&F for almost two years rather than taking them into conservatorship. In those two years we saw the worst of the mortgage abuses. If they hadn't propped F&F up then the crisis would have happened in early 2007 and would have been a lot more tame. What Lehman, Merrill and Bear all did wrong is that they placed massive bets that the government would be able to stabilize the market and not have to nationalize F&F. They went belly up because the government wasn't able to stabilize the market. Shadow bank participants all got worried once some of their peers went down because they had all these interconnected derivatives with one another to hedge their risk from all of this. Once the government gave up, Lehman went down which threatened the rest of the system ... causing AIG to go under. Fannie and Freddie were the initial cancer and Shadow banks were the lymph nodes. Very few people appreciated the kind of risk that had been accumulating in the shadow banking and mortgage backed security sector. The shadow banking thing is neither here, nor there. That was one of the smaller cracks I was talking about. It exacerbated the crisis after the housing crash occurred because of the interconnectivity. F&F were a shadow bank anyway so they certainly had a role here as well. People did under appreciate the risk in the mortgage sector though. A lot of work has been done since that time to figure out what exactly unfolded, and that's what I'm citing. You're taking a single group of economists and holding them up as the absolute authority on the subject. Guess what? These guys aren't mortgage industry experts - they are ivory tower economists with no practical background in the industry. Your blogger links are using arguments from a lawyer to counter an industry expert, with a background in mathematics, economics and finance who helped create Freddie's risk models during the 80s and 90s. Since when does anyone care what a lawyer thinks about anything in finance? Go read Arnold Kling, he worked there and he has all of the background in economics and finance. The government has released a bunch of reports saying it wasn't their fault? Wow ... shocker. I'm going to lay this out one more time … Hopefully this will at least get my argument across. Fannie & Freddie were the largest owners of mortgages in the US by a huge margin. For most of their history they bought and issued low-risk loans where they had a competitive advantage. However, as the market moved towards riskier loans (non-conforming) F&F saw their market share drop. This was unacceptable to their CEOs and the government as they wanted F&F to maintain market share. So they jumped on the bandwagon and started making higher risk loans. They weren't as risky as the banks but it was still way too risky for them. Once the cracks started showing in F&F, the rest of the market headed for the door. Their collapse would mean the end of the market and so everyone panicked and ran for the door. It was a bank run in a single asset class. The government tried to step in and stabilize things by, as your blogger points out, forcing F&F to buy nearly everything as everyone else was selling. This resulted in the worst and most toxic PLS and originations ending up on F&F's balance sheet. permalink

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ah [+] [deleted] 3 years ago* (5 children) [–] J808 • -4 points 3 years ago

the federal reserve oil dependancy abandoning the gold standard fractional reserve banking fiat money permalink

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[–] [deleted] • 3 points 3 years ago

Unfortunately, Democrats did it too. In a big way. The de-regulation of the financial markets happened under Clinton's rule I'm sad to say. permalink

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[–] [deleted] • 5 points 3 years ago

Not saying you're wrong but.... what's the bigger crack? permalink

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[–] naked_short • 2 points 3 years ago

The two entities primarily responsible for blowing up the housing bubble - Fannie Mae and Freddie Mac. permalink

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[–] [deleted] • 3 points 3 years ago

But with revolving-door politics, aren't the federal banking/loan programs and the finance industry themselves basically one and the same? I'm not saying you're wrong, but I don't think that Fannie and Freddie should bear all of the blame. It's an even deeper issue, a systemic issue of govt. and business in bed together. permalink

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[–] naked_short • 0 points 3 years ago

You're completely right. But fannie/freddie are the worst by that metric. Some federal programs performed admirably during the crisis (LIHTC) others created perverse incentives that lead to issues as regulations and standards were relaxed. GSEs buying private label CDS to hit their HUD goals was one bad one. permalink

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[–] [deleted] • 3 points 3 years ago

Republicans did it The Goldman Sachs bankers are deeply embedded into both political parties, if I was from the USA I'd be voting elsewhere. permalink

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[–] naked_short • 1 point 3 years ago

Can't keep a good banker down. permalink

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[–] sloppyjoes7 • -1 points 3 years ago

So it completely ignores the fact that Democrats pushed Fannie Mae and Freddie Mac to push loans to low-income families? So the #1 cause of the financial meltdown was ignored? permalink

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[–] cos • 0 points 3 years ago

That's a crazy right-wing talking point that has only a tangential relationship to any real explanations of what went wrong. It has been thoroughly debunked, which is more credit that it ever deserved in the first place because it was obviously an after-the-fact fabrication that made no sense. Nevertheless, it got taken seriously enough for serious people to thoroughly debunk it. But it'll never go away because in the right wing anti-information bubble, it has a lot of advantages of deflecting attention from real problems or real solutions. permalink

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[–] sloppyjoes7 • 4 points 3 years ago

September 10, 2003, at G.W. Bush's request, a hearing was held due to worries about a potential housing/foreclosure crisis, focusing on Fannie Mae and Freddie Mac. Ranking member, Representative Barney Frank, Democrat: "I want to begin by saying that I am glad to consider the legislation, but I do not think we are facing any kind of a crisis. That is, in my view, the two government sponsored enterprises we are talking about here, Fannie Mae and Freddie Mac, are not in a crisis. ... I do not think at this point there is a problem with a threat to the Treasury. ... I believe that we, as the Federal Government, have probably done too little rather than too much to push them to meet the goals of affordable housing and to set reasonable goals. ... I want Fannie Mae and Freddie Mac to continue as government sponsored enterprises with some beneficial arrangement with the Federal Government in return for which we get both the general lowering of housing costs and some specific attention to low-income housing. ... So I am prepared to look at possibilities here, but in particular — and this is the major point I want to make; I saw this in the letter from the homebuilders—I do not want to see any lessening of our commitment to getting low-income housing." So, what did you say again? "It has been thoroughly debunked, which is more credit that it ever deserved in the first place because it was obviously an after-the-fact fabrication that made no sense." Yes. "Obviously." It's not as though, in 2003, Republicans were concerned about a foreclosure crisis, called a hearing, and had Democrats say that there was no impending crisis and the real problem was that the Federal government needed to encourage more low-income housing. permalink

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[–] silencer82 • 2 points 3 years ago

Just finished watching this. Thanks for the link, it was very interesting and informative. permalink

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[–] rddman • 2 points 3 years ago

12 Deregulatory Steps to Financial Meltdown https://www.commondreams.org/view/2009/03/07-3 Over the 1998-2008 period, the financial sector spent more than $5 billion on U.S. federal campaign contributions and lobbying expenditures. This extraordinary investment paid off fabulously. Congress and executive agencies rolled back long-standing regulatory restraints, refused to impose new regulations on rapidly evolving and mushrooming areas of finance, and shunned calls to enforce rules still in place. permalink

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[–] ghost261 • 2 points 3 years ago

It is tough to watch this documentary. I get filled with such rage because of the blatant bullshit, and people walked away. This is why I say fuck the system. We need Bane. permalink

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[–] maokei • 2 points 3 years ago

All of the responsible people should be pounding rocks in a quarry chained together for the rest of their lives. permalink

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[–] StampAlbum • 20 points 3 years ago

This documentary completely ignores government guaranteed loans to people who couldn't pay them back, coupled with the artificially low interest rates at the Federal Reserve under Alan Greenspan following the 9/11 collapse. This is what bid up the bubble and caused the actual problem. It just runs a generic "deregulation" argument, rather, than the more accurate argument that the problem was caused by proactive government policy. permalink

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[–] [deleted] • 6 points 3 years ago

PBS Front Line - The Warning attempts to explain the role of Alan Greenspan --among others-- in the crisis. Worth a watch. permalink

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[–] GreenyLFC • 2 points 3 years ago

I was waiting for it to tell me "You can't watch this outside of the US", pleasantly surprised! Thanks for the link, you should submit it as it's own post. permalink

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[–] [deleted] • 44 points 3 years ago

government guaranteed loans to people who couldn't pay them back I presume you are talking about GSE securitization or FHA loans? The vast majority of the improper lending did not qualify for either of the major mortgage assistance programs created by government edict. It was private mortgage securities which were the first to fall when the bubble burst with government backed loans only failing in excessive amounts after housing prices crashed and unemployment rose. the artificially low interest rates at the Federal Reserve under Alan Greenspan This argument has more weight, although its implications are much more complicated. Just because there is more liquidity in the market doesn't mean that rational private interests are justified in taking leave of their senses. Greenspan and many others were confident that market forces would prevail by incentivising firms against making systematically poor investments. Instead we saw a system so eager for returns that it self-organized to obscure the sources of risk. The "deregulation did it" argument is admittedly insufficient as it fails to recognize that the regulations came with problems of their own and it is quite possible that the system could have found itself in a similar mess, if structurally different, even under previous regulation schemes. However, the attractiveness of this simple argument is based in an ideological view of the world just as much as the "government policies did it" argument is. I think the plain reality is that large, complex markets are incapable of sufficient self-regulation, but defining a system of regulations is both difficult and susceptible to significant error and corruption. permalink

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[–] [deleted] • 7 points 3 years ago

It seems to me that the best kind of regulation is straightforward risk limitation. That means keeping firms manageabley small (basic anti-trust, no more "too big to fail"), and prevent a single firm from simultaneously moving into different markets that, taken together, greatly increase the odds of perverse incentives arising (e.g. Firm X makes loans to home-buyers and Firm X also has an investment arm that profits from gambling with said loans). Regulation (and law in general) runs into trouble when you design convoluted half-measures that make it difficult to determine whether or not the law is actually being followed. That's how you wind up with the "revolving door" on Capital Hill and in the regulatory agencies themselves. When no one but the industry can understand the rules that are supposed to apply to the industry you are left with no choice but to hire insiders to regulate, and people, in general, are awful at recognizing potentially dangerous behavior in their friends. All of this to say that your already difficult to enforce regulations become even less effective. True, broad strokes style regulation comes at a price, but, given the alternatives, it seems one worth paying. permalink

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[–] NurmaKhan • 0 points 3 years ago

Thankfully we are rapidly nearing a time where this whole economic system we have going on will be outmoded. It's not going to be much longer before we can synthesize everything we need out of waste. Nano structures are real as it is and nano machines are on the way. We've already got one aspect of it down pretty well, 3d printing. We're 3d printing organs and manufacturing new better versions of organs as we speak. This will likely result in an intense capitalist struggle against free resources that will ultimately fail in a pathetic fashion as people become bored with the idea of money. That said this is simply my prediction, I'm not a scientist (science enthusiast I suppose) nor an economist, but I keep up with what's going on and draw my conclusions accordingly. permalink

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[–] JettaGLi16v • 2 points 3 years ago

Wow, I wonder why you got downvoted so hard. I too, agree that the nanotechnology revolution completely restructures the things we consider valuable. Currently, we rely on our work to make little pieces of paper which we trade for the goods and services we need. If we can restructure everything, and build what we need to eat and survive, feedstock becomes the primary commodity. permalink

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[–] NurmaKhan • 1 point 3 years ago

I think many people read stuff like what I said and hear craziness. I mean, we've been doing the lucre thing for as long as we've been around pretty much. But we are for sure approaching something that will be more drastic a change than the internet, or the industrial revolution. The timeline of societies is cyclical, new discovery, adjustment period, new discovery. Things change and empires fall. We are in for one hell of a ride my friend. The world economy was fucked to begin with and it's only gotten more fucked by people who purposefully over inflate and pop economic bubbles, which has been going on for a long time. Most "depressions" or "recessions" are not incidental. On top of that, due to rampant, archaic systems of capitalist production, unchanged practically since the industrial revolution, save for the scale, are destroying what little land we have left to inhabit. Nuclear Power for one, it's literally just a fancy steam engine, a steam engine with a chance to blow and make large swathes of the land uninhabitable. Overfishing is another problem, one that feeds back into the Nuclear Power problem, overfishing kills jellyfish predators, so now we are overrun with jellyfish, and jellyfish like to get stuck in nuclear power liquid intakes. A lot of people believe humans are greedy, but I say that is ignoring the real problem. We have organized a society for ourselves which promotes self involvement, we still have a hefty dose of "Identity", "tribe", "Me", and "them", ideas and built our society on them. So our society incentives selfish behavior, the idea of objects you must possess, whatever totem or meaningless bauble that tells you and everyone else that you're "successful". Pretty much all of that will change in the very near future. We are on the cusp. I can feel it in my blood. All of the horrible shit that's been going on lately, prolonged wars, horrible genocide, insane regimes helmed by insane men, are birth pangs for our new world. People are freaking out and shit's changing. The old guard with two feet firmly in the old way who can see the writing on the wall are trying to cash out as quickly as possible before things change. Sad, pathetic behavior considering the way things are changing. permalink

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[–] Hot_Zee • 19 points 3 years ago

you are correct, but it was the combined total debt by consumers, plus the out of control predatory lending to people who didn't have a clue (mortgages) AND the fact that the banks, just simply sold most of the loans, which were then chopped up and put into BS derivatives that were rated as A, when they were toxic and sure to fail....it was all of this and more...and the sad thing is nothing has really changed, and this will surly happen again and again.... permalink

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[–] [deleted] • 5 points 3 years ago

It would seem that proactive government policies and the deregulation of the industry are two sides of the same coin. They both benefit business. It's obvious that the govt. and business are in bed together, and those 2 things are just symptoms of that. permalink

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[–] goatman_sacks • -4 points 3 years ago

Dumb libertarian spotted. permalink

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[–] seasalt7 • 3 points 3 years ago

I watched this in my graduate accounting class this past fall. Really opened my eyes to many things I wasn't originally aware of--especially about Alan Greenspan being the economic adviser to multiple presidents and how many Ivy League professors were/are corrupt. As any documentary, it has some bias, but I thought it was well done. Also, I need to watch it again as I can't remember the whole thing so forgive me if I made a mistake. permalink

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[–] tucci007 • 2 points 3 years ago

Matt Taibbi wrote some amazing in-depth well researched articles in Rolling Stone about this mess. Several of them over the last few years. Very informative. permalink

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[–] umilmi81 • 2 points 3 years ago

Haven't seen it yet. Does it explain congress's role in encouraging reckless loans by federally insuring loans to people who obviously couldn't pay them back? If it's narrated by Matt Daemon I'm going to assume it comes to the conclusion that the crisis was caused by business alone and our glorious and virtuous legislators had nothing to do with it. In fact they could have prevented the whole thing if only they weren't restrained by pesky laws. permalink

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[–] dustinsmusings • 3 points 3 years ago

Matt Daemon service matt-daemon start permalink

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[–] [deleted] • 2 points 3 years ago

Someone needs to write a daemon that is called matt-daemon that just produces the sound of the Matt Damon character from Team America saying "MATT DAMON!!!" permalink

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ah [+] [deleted] 3 years ago (6 children)

[–] JohnGillnitz • 5 points 3 years ago

This is an excellent film. I do think it tries too hard to spread blame too evenly to avoid charges of bias. If there is one person who should have been singled out more it is former Sen. Phil Gramm. He is the one who got the laws changed (by secretly attaching it to a larger bill) so that the Great Recession was allowed to happen. permalink

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[–] oini • 2 points 3 years ago*

If you enjoyed this film, Charles Ferguson goes much more into detail in his book which should be read as well. The book is called "Inside Job" as well. ISBN: 978-1780745480 permalink

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[–] nocnocnode • 2 points 3 years ago*

Not bad, but seriously, are they going to just point fingers at Alan Greenspan? I'm halfway through and Matt Damon sounds like some ratty 5 year old that keeps tattling on one person without looking or even refusing to look at the bigger picture. Edit: I finished the rest of it today. It's mostly sensationalist witch hunting, which I should've suspected since it's backed by Hollywood. Hollywood is known in the US to be as vile as Washington DC. They offer no solution, except some hollywood-esque ending like, "We have to fight them no matter the costs, because liberty. Murica... freedom... freedom fries... pepsi." permalink

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[–] gullible_guy • 3 points 3 years ago

Well, when the government forces banks to give loans to people who can't afford it...thats what happens, of course everyone saw this coming. permalink

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[–] [deleted] • 6 points 3 years ago

it's not like they had to twist the banks' arms. It was mutually beneficial for them, at the expense of, well, everyone else. permalink

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[–] lee1026 • 3 points 3 years ago

The banks did lose a ton of money in the process. Citi and BOA have yet to recover to precrisis levels in their stock. permalink

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[–] [deleted] • 1 point 3 years ago

Ok, well "ton" is subjective, since those institutions make billions a year. And why didn't anybody go to jail? This was white-collar crime of the highest degree. permalink

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[–] lee1026 • 1 point 3 years ago

Bank of America, for example, lost around 200 billion in the crisis. Citibank lost 75% of its value from the crisis. They didn't go to jail because prosecutors failed to prove that any of them actually did anything that is actually criminal. permalink

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[–] [deleted] • 1 point 3 years ago

Hm.. yeah they really showed him http://en.wikipedia.org/wiki/Vikram_Pandit#Post_Citigroup permalink

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[–] lee1026 • 1 point 3 years ago

I know that he isn't destitute, but that doesn't look like anywhere near as good as a gig as being CEO of Citibank. He probably isn't too overjoyed in how things turned out. permalink

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[–] gullible_guy • 1 point 3 years ago

Banks were fined. It wasn't beneficial for the banks, they didn't get their money, had to sell the sub prime loans off to investment firms. When it fell though, boom. permalink

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[–] [deleted] • 6 points 3 years ago

As others have pointed out, government mortgage assistance programs played a very minor role in the crisis. Virtually all of the improper lending was engaged in by private banks, under no government obligation at all, because they knew they could turn around and simply sell the bad loans at a profit. Assistance programs are a popular scapegoat among financial industry types, but there would have been no crisis if the only "risky" loans being handed out had been those that qualified for assistance. permalink

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[–] gullible_guy • 2 points 3 years ago

Actually, go look at the numbers. The bad loans were sold and bought up by investment companies, mostly retirement funds. When these fell out, the money was gone. We were selling fake money. permalink

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[–] [deleted] • 1 point 3 years ago

Yes, retirement funds tend to buy supposedly "safe" assets. Since these mortgage backed securities had AAA ratings from the credit agencies they were attractive to many risk averse investors. And, sure, I suppose "fake money" is one way of thinking about bad assets. But I'm not really sure what this has to do with what was said before??? permalink

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[–] gullible_guy • 1 point 3 years ago

They are "AAA" when they have the good with the bad. permalink

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[–] [deleted] • 2 points 3 years ago

What are you referring to? Is AAA not the top of the scale? permalink

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[–] AlphaDad • 1 point 3 years ago

To anyone concerned about information left out the director also wrote a very good Book as sort of a companion to the film. Predator Nation, I recommend it. permalink

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[–] thurg • 1 point 3 years ago

good post, too bad i'd already seen it. wish i could brainwash myself and watch it again. permalink

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[–] adenoid • 1 point 3 years ago

Matt Damon! permalink

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[–] ELcup • 1 point 3 years ago

What's wrong with using geothermal for smelting? That's like the greenest way we could possibly do smelting... permalink

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[–] ScugTuggerSw4mp • 1 point 3 years ago

It's all his fault! permalink

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[–] david1610 • 1 point 3 years ago

Good to see a accurate documentary about the GFC. There are so many bad documentaries on the subject it is hard to find the good ones. BTW the lack of regulation after the GFC in the states is criminal. There is nothing stopping asset inflation bubbles happening in the future. If I remember correctly only two pieces of regulation with real power were created after the GFC. I smell invested interests, bubbles make a lot of people very rich. permalink

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[–] JesusDied4HisSins • 1 point 3 years ago*

This is also a very good 60 Minutes report on what made the near economic depression a lot worse than your normal downturn in a business cycle. While the GOP blamed the financial markets collapse on high-risk loans to poor blacks and made it a racial issue, it was really the white dudes in suits on Wall Street that caused the dominoes to fall hard (e.g., Merrill, Bear Stearns, Lehman, AIG, etc.) permalink

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[–] drMorkson • 1 point 3 years ago*

Slightly related: the Joris Luyendijk banking blog he is a Dutch anthropologist who conducts anonymous interviews with people in the banking industry. It's really cool way to learn about how the financial world works. The interviewer starts of as someone who knows nothing about finance and you slowly learn how the world of banking fits together. permalink

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[–] superduper30929 • 1 point 3 years ago

I enjoyed this documentary about how billionaires made their money. I thought it was very informative and extremely interesting. If any of you enjoyed this I think you should watch this as well. https://www.youtube.com/watch?v=rGWI7mjmnNk permalink

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[–] Litecoin-CEO • 1 point 3 years ago

This is very high quality documentary. I love seeing the faces of interviewees twist in the hands of Matt Damon, he really knows how to call on their bullshit. Definitely worth watching! permalink

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[–] WorldCupSucks • 1 point 3 years ago*

Seriously? They interview Christine Lagarde and George Soros?? I wanted to watch this film, but that pretty much changed my mind. George Soros alone shorted the British pound to oblivion and made $1B. Lagarde heads the IMF which wants to be the Central bank of Central Banks. They also push an agenda of water privatization, collecting resources from struggling countries as collateral to loans from fiat SDR currency. Not to mention further enslaving the citizens through "austerity measures" A.K.A. push the burden onto the citizens in higher taxes when they're already struggling with unemployment and inflation. Basically think bankers at the scale of entire countries, and you've got the IMF. I'm not going to listen to people like these preach about inside jobs. Hilariously ironic for this movie. permalink

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[–] Jest2 • 1 point 3 years ago

I can't wait to see this!! permalink

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[–] Incognanusible • 0 points 3 years ago

Decent doc. Pretty biased. permalink

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[–] inbouesports • 7 points 3 years ago

most documentaries are biased but it still gives you the facts and it is how you perceive those facts given from a biased party. But regardless this was a good documentary and now I have a reason to re-watch. permalink

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[–] Incognanusible • 2 points 3 years ago

Agreed. I just find people take docs like this at their word instead of investigating further. It's been a while for me too and I'll end up re-watching it as well. permalink

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[–] Hard58Core • 1 point 3 years ago

I remember trying to watch this a few years ago and having to stop because I could barely follow. I remember it being riddled with so much jargon, but maybe 4 years wiser I can see what everyone else saw. ah

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[–] howzit-tokoloshe • 1 point 3 years ago

Excellent film permalink

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[–] iainabc • 1 point 3 years ago

whole site down right now - pity :( permalink

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[–] fweng[S] • 10 points 3 years ago

Direct Vimeo link here - http://vimeo.com/39617101 permalink

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[–] iainabc • 1 point 3 years ago

Thanks very much! permalink

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[–] ric1889 • 1 point 3 years ago

While we're on the subject...does anyone know of any good books on the economic crash? I enjoyed this doc when I watched it a year or so ago, but with it being so short (..well, standard documentary length) they can only scratch the surface on a lot of the story. permalink

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[–] dtiftw • 3 points 3 years ago

The Big Short by Michael Lewis (Panic is a good collection of short articles, but is better after someone has a solid understanding of the crisis) The Quants by Scott Patterson All the Devils Are Here by Bethany McLean and Joe Nocera The Lost Bank by Kirsten Grind And if you're into podcasts, here is the best collection of interviews on the topic. permalink

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[–] BankingCartel • 5 points 3 years ago

Crash Proof by Peter Schiff permalink

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[–] JohnGillnitz • 1 point 3 years ago

Vultures' Picnic by Greg Palast gives some interesting insights. He was one of those Chicago economists who came up with the whole concept that eventually caused the melt down. He saw it as a dire warning. Milton Friedman saw it as an opportunity. permalink

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[–] [deleted] • 1 point 3 years ago

Nope sorry, Milton Friedman would have never supported government intervention in the housing market nor artificially low interest rates by the FED. You can attribute this to democrats and republicans pushing Keynesian economic policies. permalink

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[–] dudeitsabe • 1 point 3 years ago

Mark Wahlberg's voice is so soothing! permalink

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[–] Pixeled_Squid • 1 point 3 years ago

Isn't this the movie about the Tobacco companies, and it has the actor who played scarface? permalink

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[–] TheAdoraAlles • 1 point 3 years ago

No, that's not a documentary. But it is a great film. One of Michael Mann's best. permalink

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[–] Deeze_Rmuh_Nudds • 1 point 3 years ago

I wrote a magazine article on this when I was in college. It's a very infuriating documentary. There were people crying in the theatre near me. permalink

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[–] twotard • 0 points 3 years ago

MYAAAT DEEAAAMON! permalink

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[–] smegmonkey • 0 points 3 years ago

That lobbyist knows hes made of slime permalink

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[–] Trini_redd_Mk_II • 0 points 3 years ago

Brilliant fuckin documentary. Watched it about a half dozen times. permalink

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[–] ear_spiders • 2 points 3 years ago

You and me both buddy. permalink

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[–] Neoxide • 0 points 3 years ago

I'll watch it tomorrow. Kind of skeptical though since I have difficulty taking Matt Damon seriously anymore since the blatant socialist propaganda that was Elysium. permalink

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[–] [deleted] • -1 points 3 years ago

I made a ton of money during this time, so I don't really have a problem with it. Sorry. permalink

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[–] anon108 • 1 point 3 years ago

Can you explain how? permalink

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[–] [deleted] • 2 points 3 years ago

I was a small time landlord. Correction..I am STILL a small time landlord. Anyway...before the housing bubble I had a couple of modest rental properties...nothing fancy..just two small older homes. They were fairly close to being paid off...and more importantly.my renters had paid all the equity over the previous 8-10 years(EDIT for clarity..what they paid in rent was well above the mortgage, so I paid it WAY down in this time). I had decided to take some of that equity and buy a couple more rental properties, put some more renters in them just as the bubble was brewing. When it became clear to me what was coming, I quickly stretched myself and did the same thing, only this time on 6 small condos that were really new, but very small, so I could put very little down on each one. Well, fast forward a few years. Essentially I went from having about 160K in equity and owing about 35K on mortgage balances to about 1.2 million in equity and owing about 200K on mortgages in that time. Never one to be greedy and try and time the market "perfectly" I sold them while the bubble was still expanding. This was all taxed as capital gains at 15% instead of as my regular income. Nice thing about investing in real estate..or investing in general. This is not a "loophole"..this is the well established tax code. PROTIP: Own your properties with a specialized C corp you create which owns them and pays you a salary as the "property manager". permalink

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[–] rddman • 1 point 3 years ago

what they paid in rent was well above the mortgage, ... not a "loophole"..this is the well established tax code. That's your "mostly just harder working". permalink

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[–] [deleted] • 1 point 3 years ago

Sigh. No...the mostly harder working part was when I was working 1-2 jobs all the way through college and then many, many evenings/weekends doing repairs, remodels, and general fixes to properties I had while most people were watching tv, playing Playstation, or whatever it is that people do to fill the time allowing them to bitch about people like me 20 years later and how I'm some sort of "rich guy" that doesn't know how tough people have it. I lived in a car part of the time growing up..well...a gutted out mini bus to be exact. I joined the service the day after my 17th birthday, and saved every dime I made before going to college. You'll pardon me while I laugh at your assertion that I made it via tax code or whatever your delusion is. Sorry, kiddo..try again. permalink

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[–] notraccoons • -3 points 3 years ago

Maybe people shouldn't have taken out mortgages they couldn't afford. People blame bankers for being greedy but lazy smucks only making $60k with a $400k mortgage and $50k worth of new cars are at fault. permalink

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[–] Jiggahash • 2 points 3 years ago

You do realize the only function banks serve to society is to responsibly distribute credit, don't you?. If people were self regulating and perfectly responsible, we wouldn't need banks. We would just hand over IOU's to whomever we wanted and trade in that manner. permalink

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[–] zoop_zoop • 2 points 3 years ago

Banks are privatised so they can distribute credit in whatever way they like. If they do it in an irresponsible way they'll lose money, customers and possible go bankrupt. Obviously the problem we have now is that they no longer have the threat of going bankrupt or even losing customers in the long term. If you want a bank to be the way you described it you would have to set up a state bank. permalink

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[–] Jiggahash • 1 point 3 years ago

I completely agree with you, I'm trying to tell notraccoon that its stupid to think that the general population will just hold themselves to sustainable levels of debt when they have the ability to borrow whatever they like. I believe we are saying the same thing, I'm talking about the role a bank serves to a society as a whole not their sole purpose. permalink

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[–] partiallypro • 0 points 3 years ago

Not exactly a balanced documentary, it's like watching a Michael Moore film but with less show boating. permalink

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[–] The_Arctic_Fox • 5 points 3 years ago*

Not balanced? FFS would you like a "balanced" documentary on the holocaust, too? For the record the great recession hurt billions of people. So that analogy isn't quite as outrageous as it appears on the surface. permalink

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[–] zoop_zoop • 1 point 3 years ago

Well honestly, yes of course you want a balanced documentary, even on the holocaust. I would want to know who were the main instigators, the people who helped make it happen, the people in the nazi regime who tried and failed to stop it, the people who got caught up in it and didn't speak up and the people who did nothing, not simply just grouping all Germans in. Personally I would have preferred the documentary not repeatedly going back to ex CEOs and traders because the problem was caused by politicians, reporters, mortgage providers AND those who took up mortgages as well. permalink

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[–] [deleted] • -1 points 3 years ago

I wish it was Narrated in Matt Damon's Brooklyn cop accent. permalink

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[–] cyphadz • 3 points 3 years ago

Mean his Boston cop accent permalink

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[–] mexican_classic • 0 points 3 years ago

just in case anyone ends up enraged after watching this documentary, i recommend watching Assualt on Wall Street. it's decent revenge porn. permalink

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discussions in r/Documentaries

822 · 28 comments

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