Behind our economic woes is a bigger issue that cuts right to the root of democracy, Charles Ferguson told a sold-out crowd at TheWrap's Screening Series
“Over the past 30 years we have seen a very quiet revolution by which the financially wealthy and the financial services industry took over American politics,” director Charles Ferguson told a packed house Monday night at the ArcLight Sherman Oaks.
The documenatarian, whose “No End in Sight” was nominated for an Oscar in 2007, was on hand to talk about his new film, “Inside Job” — a look at the great financial meltdown of 2008 — with TheWrap’s Editor-in-Chief Sharon Waxman.
Behind our economic woes is a bigger issue that cuts right to the root of our democracy, said Ferguson (pictured at left; photograph by Jonathan Alcorn) Politicians rely disproportionately on the financial sector for campaign contributions. Ferguson said. For each member of Congress, there are five Wall Street lobbyists.
“If you look at what it costs to run a presidential campaign,” said Ferguson, “that number has changed so astronomically that it really has transformed American politics,” Ferguson said.
But it goes farther than just politics.
He noted that the upper one-10th of 1 percent of society has constructed a partially separate business world comprising the hedge-fund industry, high-speed trading and dark pools in which large investors can move enormous share volumes without divulging their identities — advantages not open to the average citizen.
One of the film’s surprises is the collusion between Wall Street and academia. Ferguson talked to several academics, including Frederic Mishkin, a former Federal Reserve member who is currently a professor at the Columbia Business School, where he wrote a paper praising deregulation in Iceland, whose economy has been ravaged by deregulation since 2000.
Mishkin was handsomely paid for his efforts by the Icelandic Chamber of Commerce. According to "Inside Job," such experts are commonly rewarded for endorsing unsound business practices and helping to perpetuate a system of corruption.
Most agree that one of the principle causes of the crash in the U.S. was the slow and steady deregulation of the banking and financial services industry initiated during the Reagan era but continued under Clinton and Bush.
But with Obama and the subsequent passing of the financial reform bill earlier this year, many believed the problem would be fully addressed..
But the recovery bill, Ferguson said, mandates “very few things.” It gives potentially strong powers to existing regulatory bodies — but who are these regulators, he asked? “Derivatives are regulated, but how strenuously and strictly is left to the discretion of the regulators,” he lamented.
“Inside Job” gives several examples of regulatory bodies, like the SEC, refusing to act. And the film notes that very little has been done to bring to justice figures like Angelo Mozilo of Countrywide, singled out as the largest purveyor of subprime mortgages.
Stung hardest among his peers, Mozilo was forced to pay $67 million, a steep figure for most of us but only 20 percent of Mozilo’s net worth.
One issue that has divided Americans is whether bailing out the banks was the right thing to do. Ferguson (pictured left with Sharon Waxman; photograph by Jonathan Alcorn) believes it was, indeed, necessary, but he noted that the amount of cash that people at AIG and others in the industry made in bonuses during the financial crisis was in the hundreds of millions.
So is there any relief in sight? According to many, he said, the answer is stringent regulation, but: “I think the process is likely to be a much longer, more gradual, more painful, more difficult process.”
In his view, the answer lies in “something that comes from the bottom up that involves a large number of people who are not individually linked with power and requires a natural process of organization and giving voice from them to us.”