BLOG5 Inside Job: Storyville

In this movie, the financial crisis was caused by ＄120 billion loans which is 10 times the size of Iceland’s economy from the Three Icelandic Banks which gives investors the illusion, but the credit rating agencies in the United States still think Iceland's credit is perfect reached 3A. This points the finger at investors and Banks in the United States and also the cause of the financial crisis in the United States.

The first cause of the financial crisis was that financial institutions ignored their own ethics  in order to obtain greater profits and lack of accountability. In order to speed up the issuance of subprime loans, some financial institutions deliberately relaxed the examination of the borrowers' qualifications. In addition, in order to gain an advantage in the fierce competition, some financial institutions reached some agreements with real estate developers, where lenders could buy houses with no down payment and everyone could apply for a mortgage, which increased the demand of the real estate industry and the economic bubble. Not only did Goldman sell subprime bonds that were at risk of default, but it also advertised them as good investments to clients while buying up credit default swaps, betting that the bonds would eventually default

On the other hand, Some experts are paid to write reports that benefit their payers and some credit rating agencies lack ethics and accountability. These experts ignore their own credit and ethics in order to gain profits, but this is not good for the credit rating agencies. This is because it affects the credibility of the entire company. They make artificial assessments based on historical data, and Iceland was a classic example. In the movie, some credit rating agency gave those 2A or 3A but it was just an ‘opinion’. When the director wanted to interview them, they refused. In other words, ratings agencies' ratings are also recommendations and they are not legally binding.

Although these institutions lack ethics, the main problem is the lack of accountability of regulators and collusion between government and businessmen. This allows their power to be magnified. The chairman of the federal reserve, the Obama administration and other executives have ties to Wall Street financiers, customizing or loosening policy for them. Like tax cuts for the rich and The gap between the rich and the poor has widened Moreover, the financial industry contributes billions of dollars in political contributions.

Deregulation profits and a lack of ethics contributed to this crisis. The performance of investment banking executives, government officials and academic elites are sanctimonious. But why this happens is worth thinking about. Was it intentional or accidental?

Reference:

Inside Job: Storyville, 21:00 07/12/2011, BBC2 England, 100 mins. https://learningonscreen.ac.uk/ondemand/index.php/prog/02273547?bcast=75111663 (Accessed 24 Nov 2019)