Inside Job Page #16

02:
37:34.26

BARACK OBAMA:
The era of greed and irresponsibility on Wall Street and in

Washington has led us to a financial crisis as serious as any that we have faced since

the Great Depression.

NARRATOR:
When the financial crisis struck just before the 2008 election, Barack

Obama pointed to Wall Street greed and regulatory failures as examples of the need for

change in America.

BARACK OBAMA:
A lack of oversight in Washington and on Wall Street is exactly what

got us into this mess.

NARRATOR:
After taking office, President Obama spoke of the need to reform the

financial industry.

02:
38:09.04

{SEPTEMBER 14, 2009}

BARACK OBAMA:
We want a systemic-risk regulator; increased capital requirements.

We need a consumer financial protection agency; we need to change Wall Street's

culture.

Inside Job transcript – Sony Pictures – September 2010

70

NARRATOR:
But when finally enacted in mid-2010, the administration's financial

reforms were weak; and in some critical areas, including the rating agencies, lobbying,

and compensation, nothing significant was even proposed.

02:
38:32.28

ROBERT GNAIZDA:
Addressing Obama and, quote, regulatory reform: my response, if

it was one word, would be: Ha!

There’s very little reform.

CHARLES FERGUSON: How come?

ROBERT GNAIZDA:
It's a Wall Street government.

02:
38:51.27

{APPLAUSE}

NARRATOR:
Obama chose Timothy Geithner as Treasury secretary. Geithner was the

president of the New York Federal Reserve during the crisis, and one of the key players

in the decision to pay Goldman Sachs 100 cents on the dollar for its bets against

mortgages.

ELIOT SPITZER:
When Tim Geithner was testifying to be confirmed as Treasury

secretary, he said, I have never been a regulator. Now that said to me, he did not

understand his job as president of the New York Fed.

{TIMOTHY GEITHNER DECLINED

TO BE INTERVIEWED FOR THIS FILM.}

02:
39:24.07

NARRATOR:
The new president of the New York Fed is William C. Dudley, the former

chief economist of Goldman Sachs, whose paper with Glenn Hubbard praised

derivatives.

Geithner's chief of staff is Mark Paterson, a former lobbyist for Goldman; and one of the

senior advisors is Lewis Sachs, who oversaw Tricadia, a company heavily involved in

betting against the mortgage securities it was selling.

02:
39:48.08 To head the Commodity Futures Trading Commission, Obama picked Gary

Gensler, a former Goldman Sachs executive who had helped ban the regulation of

derivatives.

Inside Job transcript – Sony Pictures – September 2010

71

To run the Securities and Exchange Commission, Obama picked Mary Shapiro, the

former CEO of FINRA, the investment-banking industry's self-regulation body.

02:
40:08.14 Obama's chief of staff, Rahm Emanuel, made 320,000 dollars serving on

the board of Freddie Mac.

Both Martin Feldstein and Laura Tyson are members of Obama's Economic Recovery

Advisory Board. And Obama's chief economic advisor is Larry Summers.

02:
40:27.25

ELIOT SPITZER:
The most senior economic advisors are the very people who were

there, who built the structure.

WILLEM BUITER:
When it was clear that Summers and Geithner were going to play

major roles as advisors; first, uh, I knew this was going to be status quo.

NARRATOR:
The Obama administration resisted regulation of bank compensation,

even as foreign leaders took action.

02:
40:48.26

CHRISTINE LAGARDE: I think the financial industry is a service industry; it should

serve others before it serves itself.

NARRATOR:
In September of 2009, Christine Lagarde and the finance ministers of

Sweden, the Netherlands, Luxembourg, Italy, Spain, and Germany called for the G20

nations, including the United States, to impose strict regulations on bank compensation.

And in July of 2010, the European Parliament enacted those very regulations. The

Obama administration had no response.

02:
41:22.15

SATYAJIT DAS:
Their view is, this is a temporary blip, and things will go back to

normal.

{AUGUST 25, 2009}

BARACK OBAMA:
And that is why I am reappointing him to another term as chairman

of the Federal Reserve. Thank you so much, Ben.

NARRATOR:
In 2009, Barack Obama reappointed Ben Bernanke.

BEN BERNANKE:
Thank you, Mr. President.

02:
41:40.11

Inside Job transcript – Sony Pictures – September 2010

72

NARRATOR:
As of mid-2010, not a single senior financial executive had been criminally

prosecuted, or even arrested; no special prosecutor had been appointed; not a single

financial firm had been prosecuted criminally for securities fraud or accounting fraud.

The Obama administration has made no attempt to recover any of the compensation

given to financial executives during the bubble.

02:
42:05.11

ROBERT GNAIZDA:
I certainly would think of criminal act-, action against some of

Countrywide's top leaders, like Mozilo. I'd certainly look at Bear Stearns, Goldman

Sachs and Lehman Brothers, and Merrill Lynch.

CHARLES FERGUSON: For criminal prosecutions.

ROBERT GNAIZDA:
Yes. Yes.

CHARLES FERGUSON: In, in regard to –

ROBERT GNAIZDA:
They'd be very hard to, to win.

CHARLES FERGUSON: Yeah.

ROBERT GNAIZDA:
But I think they could do it, if they got enough underlings to tell the

truth.

02:
42:31.05

NARRATOR:
In an industry in which drug use, prostitution, and fraudulent billing of

prostitutes as a business expense occur on an industrial scale, it wouldn't be hard to

make people talk, if you really wanted to.

02:
42:43.13

KRISTIN DAVIS:
They gave me a plea bargain, and I t-, I took it. Um, they were not

interested in any of my records; they weren't interested in anything.

CHARLES FERGUSON: They were not interested in your records.

KRISTIN DAVIS:
That's correct. That's correct.

02:
42:54.15

ELIOT SPITZER:
There is a sensibility that you don't use people's – uh, personal vices

in the context of Wall Street cases, necessarily, to get them to flip. I think maybe it's,

after the cataclysms that we've been through, maybe people will reevaluate that. I'm, I'm

not the one to pass judgment on that right now.

Inside Job transcript – Sony Pictures – September 2010

73

02:
43:15.28

{FEDERAL PROSECUTORS WERE PERFECTLY HAPPY

TO USE ELIOT SPITZER'S PERSONAL VICES

TO FORCE HIM TO RESIGN IN 2008.

THEY HAVE NOT DISPLAYED A SIMILAR ENTHUSIASM

WITH REGARD TO WALL STREET.}

02:
43:27.25

REP. MICHAEL CAPUANO: You come to us today, telling us, we're sorry; we didn't

mean it; we won't do it again; trust us.

Well, I have some people in my constituency that actually robbed some of your banks.

And they say the same thing! They're sorry, they didn't mean it; they won't do it again.

02:
43:48.11

NARRATOR:
In 2009, as unemployment hit its highest level in 17 years, Morgan

Stanley paid its employees over 14 billion dollars; and Goldman Sachs paid out over 16

billion. In 2010, bonuses were even higher.

02:
44:03.26

ANDREW SHENG:
Why should a financial engineer, uh, be paid, uh, four, four times to

a hundred times more than the, a real engineer? A real engineer build bridges; a

financial engineer build, build dreams. And uh, you know, when those dream turn out to

be nightmares, other people pay for it.

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