After reading Michael Perino‘s The Hellhound of Wall Street, I was wondering if we would ever see the likes of a Ferdinand Pecora who would explicate the figures and practices behind the financial crisis of 2008 as well as Pecora, the Manhattan prosecutor, did during the Depression for the Crash of 1929. Well, opportunities for a Congressional hearing may have come and gone; private lawsuits and actions by the attorneys-general of the various states may or may not bear fruit. Thank goodness we have Inside Job, the excellent documentary film by director Charles Ferguson (just short-listed for an Oscar). Clearly, succinctly, and pointedly, Ferguson shows how peeling away years of banking regulation left the financial system defenseless against people manipulating the mortgage lending process, twisting the securitization process, dealing in new and complicated financial products they only dimly understood, and generally accepting a ludicrous amount of risk. Among those most responsible are the government officials and regulators who moved as though in a revolving door between Wall Street and the government. Ferguson shows us that there was a terrible failure of common sense regulation complemented by a terrible explosion of greed. It shouldn’t have been a surprise; it wasn’t new. All the chicanery that Pecora uncovered returned to be uncovered once again by Ferguson. One of the points made most clearly by Ferguson is that all the investment banks have been guilty of major transgressions in recent years. They have all paid major fines, and gone on their way. Only a few, mostly if not exclusively involved in prosecutions by Eliot Spitzer when he was the Attorney General of New York, paid criminal penalties. It’s high time white collar crime should lead to people serving orange jumpsuit time. Three cheers for Ferguson, for so clearly describing how we got where we are, identifying the malefactors, and exposing the fatal flaws in the pro-market ideology promulgated these last three decades by Ronald Reagan and his followers.
