Charles Ferguson is the policy wonk of the documentary film world. A self-made millionaire with a PhD in political science, Ferguson made his debut with No End in Sight, a persuasively insightful examination of the faulty intelligence that led the United States into war with Iraq. His approach is more analytical than similar filmmakers. With compelling interviews and data, the Oscar-nominated No End in Sight cites specific problems and details their implications. Ferguson’s follow-up is Inside Job, a scathing indictment of those responsible for the ongoing financial crisis. It articulates complex financial machinations in easily digestible terms, and its alarming conclusions make Inside Job one of the year’s most important movies. When I talked with Ferguson about his latest film, I was struck by the lucidity of his answers, as well as his quiet outrage over what he uncovered.

http://www.youtube.com/watch?v=X2DRm5ES-uA



What event in particular inspired you to make this movie?

Lehman weekend, or should I say Lehman, Merrill Lynch, and AIG weekend? When three of the largest financial institutions in the world collapse simultaneously, people begin wondering whether they’re going to be able to get money out of the ATM. By that time, I already had conversations with many people about the subject. Two of my friends, both of whom are in the film, cogently warned me in 2007 about the oncoming crisis. And when it did occur, one of my first thoughts was, “Well, I’ve got to make a movie about this.”

One of the more shocking aspects of Inside Job is its indictment of academia. What impact do you think unethical academics will have on the newest generation of students?

I hope there is going to be some action taken about this problem. One of the reasons I put it in the film is because it’s important and, as you point out, not very well known. There are many economists and students who are unhappy about it (they are also unhappy more generally about what economics has become), so I’m not despondent there will be any change. But as with change in government policy, it will have to come from below, from students and professors protesting the situation and forcing universities to take action.

Can you elaborate a little more on the state of economics a field of study?

The common critique of economics, particularly in the wake of the crisis, is that it’s become too mathematical, too theoretical, too in love with laissez-faire models/ideas. This has happened because such models are simple and mathematically-tractable, which has, in essence, made economics too distant from reality. There’s some merit to that critique. But there’s another critique, the one I made in the film, that the economics discipline has developed a major, systemic corruption problem. It is very similar to the critique people make about how money plays a role in Washington politics. Unfortunately, the second problem may be the more serious, fundamental one; that is, if the money and corruption issue didn’t exist, then economics would be more responsive to new information, new ideas, and the real world.

In your research and interviews, was there anything you were surprised by?

There are two categories where I found the most surprises. The first is the level to which Wall Street had sunk, the degree to which the behavior of mortgage lenders and rating agencies had become so nakedly shameless. If someone had told me back in late 2008 when I started making the film, “In six months, you are going to discover all the major investment banks were not only selling securities they knew to be defective, but also had begun designing securities that would fail in order to profit by betting against them,” I would have said, “No, that’s too much. Even in this environment, that wouldn’t be permitted. They would become pariahs and go to jail.” Well, it turned out everyone WAS doing it, and they hadn’t become pariahs because they are the whole industry. None of them have gone to jail. Literally, none.

The other big surprise, and it was a surprise, was the incredible incompetence and disorganization of the Bush administration in responding to the crisis. I thought having Henry Paulson as Treasury Secretary was an extremely bad idea because he’d been, in significant measure, responsible for causing the crisis. Therefore, he obviously had a great deal to hide. But at least I thought, “Since he’d been CEO of Goldman Sachs, he’s going to be competent. He might not do the things I consider ethically important, but at least he’ll be competent.” I turned out to be wrong about that. He, Ben Bernanke, and Timothy Geithner had done no planning whatsoever for a Lehman bankruptcy. They did not know that British and Japanese law would force the closure of Lehman’s London and Tokyo offices, or that the assets in Lehman’s London office would be frozen, which would then cause gigantic ripple effects throughout the financial system. They did not know a bankruptcy would have huge effects on money market funds and the commercial paper market. They didn’t know that – they really didn’t.

They also didn’t consult with foreign governments about what these effects would be. When I asked Christine Lagarde, the finance minister of France, when she heard Lehman would be going bankrupt, I didn’t know what answer she was going to provide. I assumed she’s say something like, “They called me two days in advance.” I was then going to ask her whether she had a debate with them about that, and what was the discussion like. Instead, she said she found out after the fact. You could have pushed me over with a feather when I heard that – my jaw was on the floor. In fact, in the film I put my reaction, which was to emphatically say, “Wow!”

You mentioned the consequences of Lehman going under, and for those who aren’t well-versed in how financial markets function, they can be difficult to understand. How much did you think about how best to communicate complex information?

We thought about it a lot. You tell me: did we succeed? From the very first day, it was my goal [for the film] to be as free of jargon as possible and accessible to a wide audience. There’s no need to make a film for me and my geeky friends. I wanted to make a film for the American people and, in fact, the population of the world. People need to understand why the economy is so messed up, why they themselves have lost their jobs, their life-savings, and their homes. I also wanted to make the point it’s both possible and necessary for everyone to understand what happened here. The details are complicated, but its essence is very simple and clear. It’s important to understand the problem because it hasn’t been fixed, so the American people must force their leaders to fix it.

You return again to the idea that the change happens from the bottom upward. What are some steps engaged citizens can make?

A lot of it depends on what position they occupy. There are things people can do in finance, politics, or media. For the rest of us, there are organizations that work on these things. There’s a new organization created by Harvard’s Larry Lessig called Fix Congress First, which is dedicated to changing the role money plays in American politics. Similar organizations are The Center for Public Integrity and Common Cause. There are other organizations that work specifically on finance – The Center for Responsible Lending is one.

Matt Damon is the narrator for Inside Job, who is more well known that Campbell Scott, the narrator No End in Sight.

We wanted someone with a recognizable voice and name, someone who was also known to be politically sensitive/aware in an intelligent way. Matt Damon proved to be all of those things. I didn’t know this in advance (although it was his public reputation), but he’s a wonderful guy to work with. He was very considerate and extremely professional. He had clearly read the transcript of the film carefully and had some very good suggestions for the film, which we adopted.

What were those suggestions?

I’m ashamed to say I wrote it, but the very end of the film was clunky and convoluted, which we knew was unsatisfactory. In fact, when Matt came in for his narration, practically the first thing I said was, “We know this is a mess. We’ll figure out how to fix it. We won’t force you to say it – it’s embarrassing.” He kind of laughed, looked at it again, and said, “It seems to me this is more complicated than it has to be. What you’re really trying to say it just this.” He then proceeded to say a close approximation of what the final words in the film are.

I read that some view Matt Damon’s narration as a symbol of Hollywood abandoning the Obama administration. Can you comment on that?

I don’t know whether that’s happened, but it wouldn’t surprise me. I think many people are getting very unhappy with the Obama administration, so it makes sense members of Hollywood would be among them. From reading what I read and conversations with my friends, I have a strong sense of disillusionment with Obama relative to his promise as a candidate.

Larry Summers recently announced he’s leaving a top post on Obama’s economic team [ed. note: Interview was held on 9/27]. If you could choose his replacement, who would it be?

There are many superior choices, so replacing him wouldn’t be hard. Actually, several of the people I’d choose were interviewed for the film. Simon Johnson, for example, who is a professor at MIT and who has been the chief economist at the IMF. Another strong candidate is Radghuram Rajan, a professor at the University of Chicago who was the one of the first people to warn about the financial crisis.

You begin Inside Job with a prologue about Iceland, and how it served as a model for what economics events were to come. What is the state of Iceland now?

Iceland has begun to take far more productive steps than the United States. It appointed a special investigative committee. They also appointed a special prosecutor. A number of people responsible for Iceland’s bubble and crisis are being pursued. Some of them have been sued by the government and had their assets frozen, whereas others are facing criminal prosecution. It’s not a perfect situation because a lot of these people now live in London and have hidden their assets in Switzerland, the Caribbean, and other tax havens. Again, the contrast with the United States is disturbing.

Do you think the United States could follow the Iceland approach?

The specific things we should do would be somewhat different, but should the President appointment an independent special prosecutor to look into the crisis? Yes. Should there be a large number of criminal prosecutions? Yes, absolutely. Should there be a serious attempt to take back their gains from the bubble? Yes. We are talking about tens of billions of dollars.

Thanks for talking with me!



Thank you for your interest.

Inside Job opens in theaters on Friday, October 22nd.