Is greed still good? Does greed still, for want of a better word, work?
Twenty-three years later, Gordon Gekko is back, still played by Oscar-winner Michael Douglas and now running short on money and even shorter on what he realizes is an even more valuable commodity: time. We see him being released from prison, his personal effects including a gold money clip (empty) and his old cellular phone (the size of a shoebox). He walks out into the sunlight toward a sleek black limo only to see that it is there for someone else, the also-departing rap star.
Balzac famously said that behind every great fortune is a crime. That is literally true in Gekko’s case; he traded on inside information. But it is also true in a larger sense because the real reason for Gekko’s wealth is a fierce and unquenchable passion not for money but for winning. He has had a long time in prison to watch and think and plan his comeback. And so he leverages his notoriety into television and in-person appearances to promote his book.
The sequel is so close to the same framework as the original that at times it feels like a remake. Again there is a bright, ambitious and essentially honest young man with a lower-income parent exemplifying the current financial upheavals who gets drawn by Gekko’s gravitational pull. It’s Jake (Shia LaBeouf), who has the added complication of being engaged to Gekko’s estranged daughter (“An Education’s” Carey Mulligan, LeBeouf’s real-life love). And there is another big-time financier like the one played by Terence Stamp in the first film, Bretton James, played by Josh Brolin. Once again, there is an old guy who is the movie’s repository of wisdom and integrity (a fine Eli Wallach). Once again, the young man thinks he can hold on to his values and once again he will find Wall Street is more treacherous than he thought.
In his brilliant book on the financial meltdown, The Big Short: Inside the Doomsday Machine, Michael Lewis muses that his first expose of the wild world of Wall Street excess, Liar’s Poker was instead viewed “as a how-to manual.” The same is true for the first “Wall Street.” As the costume designer noted, the wardrobe from the first movie was selected for dramatic impact, not authenticity. But it was adopted by the real Wall Streeters, who were as thrilled with Gekko’s look as they were with his bravado, and his wealth.
While Douglas continues to be enough to make the entire movie worth watching, there is little chemistry with LeBoeuf or between LeBoeuf and Mulligan. The first film was an intriguing look at a hidden world. But today, with business news on the front pages and the editorial pages, on 24/7 news channels and thousands of websites, Wall Streeters are less often seen as dashing buccaneers than as the people most responsible for bringing the United States to the brink of economic destruction. The movie itself seems as though it cannot make up its mind what it wants from Gekko.
The scariest — and most infuriating — movie of the year is “Inside Job,” the documentary about the financial meltdown from Charles Ferguson, the director of “No End in Sight.” With just two films, Ferguson, a PhD in political science who made a fortune in software, has become an extraordinarily accomplished director and journalist and an important participant in the conversation about definitional issues of policy. His films are exceptionally well-crafted. He has a true story-teller’s understanding of the material and, as his interviews of the friendly and not-so-friendly subjects of this film demonstrate, a fearless intellect and a gift for getting to the point — all of which made interviewing him a rare treat.
I have done a great deal of research myself on the subprime portion of the financial meltdown and I believe a core problem was that everyone at every stage of the Wall Street conveyor belt, had incentive compensation that was all upside and no downside — they all got paid for success with no risk of loss for failure. Is that what you discovered as well?
These people were rewarded enormously for doing the dangerous things they did and even on a net basis, despite the losses they suffered when their firms collapsed, they made more money then they would have if they behaved ethically. Harvard Law School professor Lucien Bebchuk’s study on executive compensation at Bear Stearns showed that it created incentives for excess risk.
I think it’s unquestionably correct at several different stages and several different levels in the system, beginning with the yield-spread premiums that lenders paid to mortgage brokers which incented mortgage brokers to put people in more expensive and more dangerous loans than they should have going all the way up to the structure of trader and sales and CEO compensation in investment banking, which are all exceptionally dangerous and give people huge incentives to take risks and/or commit fraud, both of which occurred on a gigantic scale. Even the nature of director compensation and corporate governance — the directors are essentially paid to be passive and to not challenge entrenched management.
How would you describe what went wrong?
Large-scale fraud became a core part of the financial system — a combination of deregulation and lack of enforcement of the law.
One of the big differences between the financial crises of the Enron/WorldCom era and the more recent one is that no one seems to be going to jail. Why is that?
The reason that they’re not going to jail is not that they didn’t commit crimes. It’s because there’s been no effort to enforce the law, an even more disturbing phenomenon.
What’s the solution?
The American people have to get angry enough and organized enough to force our political leaders to change. At the moment it doesn’t seem at all likely that it’s going to come from the current administration. It’s been a great disappointment that it’s turned out to be more of the same. And so far the American people have been remarkably quiescent in the face of this, given what’s occurred. I hope that that’s changing. There are good guys but they’re not organized. There’s no Chamber of Commerce for the good guys. That’s what we need, whether it’s a political party or some non-profit/lobbying organization that coordinates — there are a number of organizations but they are very scattered and divided.
How can Washington stand up to Wall Street, given the amount of money they spend on lobbying and campaign contributions?
Wall Street has certainly become very powerful. It’s depressingly the case that politicians are inexpensive to purchase. Three things are critical — changing the role that money plays in elections, paying regulators very well, which some countries do, like Singapore, which gives them no financial incentive to move to or give favors to the private sector, and third is law enforcement. One of the least well covered in media terms developments related to this is the politicization of law enforcement for white collar crimes.
As they say, if you rob a bank with a gun, you go to jail; if you rob a bank with a pen, you get to keep your job and your bonus.
And that’s a change. After the S&L crisis, many people went to jail. Now no one goes to jail.
Who should have gone to jail?
All of the major investment banks artificially concealed their liabilities, most of them inflated the value of their assets for quite a long period of time. We also know all the major investment banks were heavily involved in selling securities they knew to be defective and in many cases designing them to fail so they could bet against them or allow their clients to bet against them. In principle it’s possible to do those things without violating the law but as a practical matter it’s hard to sell hundreds of billions of dollars of those securities without committing fraud. If you’re honest and you don’t lie and you don’t commit fraud, it’s a tough sell. We know that Goldman Sachs executives were referring to these as “s***y deals” at the same time that they were selling them as very safe securities. I suspect that a very high fraction of the senior sales forces, the senior people on the mortgage tests, the senior mortgage traders, the senior management of the investment banking industry should be prosecuted.
What is the hardest part of explaining all of this to frustrated and angry Americans, where so many people feel that the system is unfair but whose eyes glaze over when they hear “credit default swaps?” How do you reach the people you want to get angry?
Keeping the jargon out and getting to the essence of things, not letting the jargon overwhelm you. We wanted to make the film interesting and accessible for the average person. We used good cinematography, cool images, great music, pacing, to make it appeal to the audience. I hope that many, many people will see this film.
You were a serious film fan before you became a film-maker. What are some of your favorites?
There are serious ones and silly ones. I love film noir, “The Maltese Falcon,” “The Big Sleep,” the newer incarnations like “LA Confidential.” I love heist movies. “Inside Man” I thought was great. And serious things, too: “Kagimusha,” “Ran.” My friend Jason Kohn’s movie “Manda Bala” about corruption in Brazil is beautiful, amazing. It’s about crime and corruption in Brazil and it’s gorgeous, really extraordinary. It’s so unusual in the way that it is visually gorgeous. It was made in anamorphic Super 16, 2.7 to 1 so a standard DVD will not do it justice. It’s really breathtaking.
Are documentaries the agent for social change the way Dickens was in the late 19th century and journalists like Upton Sinclair and Rachel Carson were in the 20th century?
It’s not the only place investigative journalism gets done these days but journalism is shrinking, and under a lot of pressure. Documentary film is taking up some of that slack and I hope it will become increasingly prominent.
Twenty years after his groundbreaking “Roger & Me,” documentarian-provocateur Michael Moore returns to some of the same themes with “Capitalism: A Love Story,” about the financial meltdown and what it shows about the failures of our financial and political systems. Before “Roger & Me,” about the shut-down of General Motors operations in Flint and other parts of Michigan, documentaries tended to be balanced, straight-forward, and dull, the kind of thing we’d snooze through in Social Studies class. But Moore’s movies are brash, confrontational, opinionated, and fearless. He has taken on guns, insurance companies, and the war in Iraq. Twenty years ago, he predicted General Motors would fail. He predicted that we would find no weapons of mass destruction in Iraq and that health care would become a central political and economic issue. And now he takes on the financial meltdown, and once again he is naming names and pointing fingers.
Like Balzac, Moore believes that behind every great fortune is a crime. And with one percent of the population having more money than the lower 95 percent put together, that feels like a crime, and a very foolish one, because there is not enough money even in that one percent to make up for the collapse of the entire society. Moore’s most telling argument is about the extinguishing of the middle class, and the consequences of losing the crucial foundation of not just our economy but our culture.
Once again, Moore gives us a collage of archival footage, stories of individual heartbreak, and more stories of institutional corruption and callousness. If it is not really a coherent, linear explanation of what went wrong. For that, see I.O.U.S.A. and “American Casino” and listen to the superb series of podcasts from Planet Money. Moore’s facts are about one small group of trees in a very large forest. But his film is a howl of protest, sturdily founded in a clearly authentic moral outrage. In a chilling parallel to “Roger & Me,” there are scenes of foreclosures and evictions that would make a pre-ghosts Scrooge burst into tears. Moore tells us that since that first film, the devastation of his home town of Flint has spread throughout the country. And then, in a goosebump-inducing revelation, we see that foreclosure letters are coming from nowhere else but Flint, in a pathetic and ultimately unsuccessful attempt to find some sustaining enterprise to keep its economy alive.
Moore also uncovers a shocking and apparently pervasive piece of financial engineering. Major companies took out millions of dollars of what they called “dead peasant” insurance policies on their employees without telling them. That means that if these employees died, the companies collected huge life insurance payments. It is one thing to have “key man” policies on the top executives. But companies like WalMart and Ameritech took out policies on the lowest-level employees, especially young, healthy ones, in the hopes that they would outsmart the actuarial tables and make a profit on the death of their employees. Moore even finds a memo apologizing that the death rate was only 72 percent, so the profits were less than anticipated. But, it goes on to say, let’s look on the bright side — there were three suicides and that kept our numbers from being even worse!
Moore devotes too much time on some tangential stories like the privatization of juvenile detention in Wilkes-Barre that led to a kickback scandal. As horrifying as the story is, he is unable to make a compelling case that this kind of corruption is the inevitable consequence of capitalism. Indeed, the same kind of kickbacks have been known to occur in government settings. His portrayal of the bailout as completely driven by unjustified fear is overstated and his recommendation that we all respond by breaking the law is silly and irresponsible.
But when he focuses on the stories of the people most affected by the economic meltdown, he knows how to make us feel their struggles without impinging their dignity. He shows us laid-off workers staging a sit-in to demand their back pay and a family living in a truck who, with a Capra-esque assist from their community, become squatters in what once was their home. Most wrenching is the story of a farm family from Peoria, Illinois, evicted from their home of four decades. When I spoke to Moore at the Washington, D.C. premiere this week, he said he had hired a lawyer at his own expense to get their home back. Moore is frank about grounding his positions in religious faith, taking on those who say that exploitative capitalism is consistent with God’s laws. He not only dubs an old movie to have Jesus endorsing bank deregulation, he consults with the priest who married him and other clergy to talk about whether our current system is immoral, even sinful.
Moore proves to be an able investigative reporter and an archivist, retrieving an old television commercial from Countrywide, the mortgage company at the heart of the subprime crisis, putting it in the context of the payoffs Countrywide gave to legislators and regulators through favorable VIP mortgages and fee waivers, even paperwork waivers, to keep them from paying too much attention to what was going on. And he uncovers some long-lost footage of Franklin Roosevelt, who was more successful in implementing the fundamental rights he fought for in the countries the US helped to rebuild after the war, including our former enemies, than he was at home.
The movie is rated R because of three bad words, or, rather, the same bad word three times. Trust me, teenagers already know this word. And this is a movie they should see, to begin their investigation of what has happened and to help them resolve to make sure it can never happen again. Moore’s film makes no pretense of being balanced, but with the Chamber of Commerce spending $100 million to defeat any effort at regulatory reform under the phony banner of “economic freedom,” in my mind a bigger abuse than the bailout (which was a loan and is already significantly repaid), it helps balance the debate by reminding us what that definition of freedom has brought us.
