The Inside Job - Review

Carney, Timothy P. (2009). Obamanomics : How Barack Obama Is Bankrupting You and Enriching His Wall Street Friends, Corporate Lobbyists, and Union Bosses .Washington, DC, USA: Regnery Publishing, 2009. Retrieved from http://site.ebrary.com/lib/ashford/Doc?id=10364572&ppg=13

Wall Street has been touted as one of the most accurate portrayals of Wall Street culture and recently spawned a sequel Wall Street: Money Never Sleeps. The character of Gordon Gekko and his obsession with greed is still prevalent today, especially during the fall of Lehman Brothers and Bear Stearns in 2008. Many of the executives of those firms as well as Wall Street executives in general were referred to as being the “Gordon Gekkos” of our generation. Most news coverage regarding government intervention in the economy has been about Wall Street intervention as of the past few years.

Insider trading became a more dangerous operation as the SEC and Department of Justice enforced American laws. Meanwhile, American politics became increasingly associated with wealth. Campaigns became more expensive and with the upcoming election, the Electoral College may select Jeb Bush, fulfilling his role as the third member of what effectively is the Bush dynasty or a Clinton to start the Clinton dynasty. The American government is eliminating the American Dream of individualistic success and instead conjoining economic prowess with political dominance. In practice, the stratified distribution of wealth and the American government system is evolving into a hierarchical regime with dynasties and minimal universal economic opportunities. Over the past thirty years over 50 percent of the wealth has been retained by the top .1% of Americans (Karimi). Instead of regular change, now scarcely does an inventor or hedge fund manager join those leading America. In practice, equal opportunity has become limited to those who already own capital. The American Identity no longer entails the American Dream, but rather is reverting to historical European practices. The United States’ government is an aristocratic republic with growing totalitarian powers. The current American identity is becoming a restricted form of economic determinism with minimal social

On July 21, 2010, President Obama signed the Dodd-Frank Wall Street Reform and Consumer Protection Act, which is commonly referred as the Dodd-Frank Act. This act was passed as a response to the Great Recession in order to prevent potential financial debacle in the future. This regulation has a significant impact on American financial services industry by placing major changes on the financial regulation and agencies since the Great Depression. This paper examines the history and impact of Dodd-Frank Act on American financial services industry.

In Taibibi’s opinion, Eric Holder’s return to Covington and Burling is an issue. The main issue is the fact that while working as a partner with said company the main clients that he defended were the major banks. Taibbi reports that while “Holder denied there was anything weird about returning to one of Wall Street’s favorite defense firms after six years of letting one banker after another skate on monstrous cases of fraud, tax evasion, market manipulation, money laundering, bribery and other offenses”, the way Holder handled the banking crisis makes the public question who his allegiances lie with ( Taibbi, p. 1). As Attorney General, part of Holder’s job description is to see that the laws of the states are uniformly and adequately enforced; he also heads the Department of Justice. In Holder’s opinion, the banks were too large to fail and would cause an enormous failure of the economy. Holder’s position

The story of Obama’s Presidency revolves around the economy he inherited. Prior to Obama’s election, major financial institutions had invested heavily in securities backed by bundles of home mortgages. While these investments performed at a high rate for an extended period of time, the bubble eventually burst when homeowners could no longer afford their mortgage payments. This led to the collapse of many large financial institutions, sending the economy into a state of disarray. As unemployment broke into the 6% range in September of 2012, the polls began to trend in favor of Obama. With the Republicans having held the White House for eight years and Congress for six (of those eight), the American people connected the economic downturn with the Republican Party, paving the way for Obama’s election. (Sides & Varveck,

This shows a major breakdown in managerial controls that a low level employee was able to take steal money over the course of a couple of years without ever being suspected. This is a prime example of why internal controls are so vital and why even the government needs to be audited. Ruiz

The great recession of the year 2007-2009 had a substantial adverse impact on the US Economy and the world. Charles Ferguson documentary narrates how politicians, bankers, and economist conspired to create a crisis that caused high unemployment, increased the United States global debt and contributed to the loss of investments and savings. He describes how banks resisted regulation in the early 1990's by CFTC and how successive regimes led to the crisis by enacting laws that supported the process.

Chris Cox the ex-security exchange commission chief, with his inability to enforce the rules, especially in the Madoff scandal, as if he did have the power to go after investment banks like Lehman Brothers, which was a product of the repeal of the Glass-Steagall act and Merrill Lynch for better disclosure, he simply chose to turn a blind eye to it. Interesting enough, the American consumer was fifth on this list, and that is because of the constant borrowing and living above the means of their income. So once the bubble burst, we realize that we had less money to backup all bills as stated within the article. The money we owed per individual increased to more than 130% of income in 2007, up from about 60% in 1982. As we continue through this article, we see Hank Paulson’s name, he was the treasury secretary in 2006, and Joe Cassano, the founding member of AIG financial products unit, which used the credit default swap (CDS) for companies to pay their debts was at the center of the downfall of AIG and as stated before costing the American public billions of dollars in bailouts. Ian McCarthy as the CEO of Beazer homes was exposed in the Charlotte Observer in 2007 for aggressive sale tactics, which included lying about borrower qualification in gaining loans

However, it is clear that these unethical practices served as catalyzers of the financial crisis. Even though many financial institutions that could be held responsible for the 2008 crisis no longer exist and that legislation, as the Dodd-Frank, has been passed in order to further regulate financial institutions, many of the institutions responsible for the crisis are still in the core of the economy, controlling a very big part of it. It might be impossible for the general public to fight against a possible future recession, as the power of an individual is close to insignificant in comparison to the power of an established financial

History has shown us again, and again that when power is left unchecked it becomes corrupt and out of control, that is the iron law of oligarchy. In the US we saw this happen recently in the 2008 economic meltdown. The banks and corporations should never have been aloud to become "to big to fail," and once they did grow to a point when they were there should have been more government oversight to make sure things did not get out of hand. After the great depression laws were put in place to try to prevent something like that from ever happening again, but we undid those restrictions and ended up in a place eerily similar to somewhere we had been before. In this paper I will cover a brief history of the great depression, and show how the situation in 2008 was all too similar. I will also discuss and analyze the factors that brought us to the tipping point in our most recent economic scare. And finally I will explain why the actions taken by the FED were necessary and kept us from an even more

An individual that played a part in the crisis include Banker Angelo Mozilo of Countrywide, his stated goal was to lower the barriers for American’s to own homes. Though intentions in such a goal are admirable, it created an environment of failures as homeowners defaulted on loans. Countywide was purchased by Bank of America in 2008. Banker James Cayne of Bear Stearns faced criticism as his institution crumbled under his leadership. He was accused of being absent as hedge funds collapsed. As an example as poor leadership during the period he stepped down, and Bear Stearns was purchased by JP Morgan in 2007. Richard Fuld Jr., Banker of Lehman Brothers Holding Inc., moved his institution in the commercial real-estate market years prior to the 2008 collapse of the market. 2008 after filing for bankruptcy Lehman’s was also sold. These are just a select few of the institutional leaders that had an impact during the crisis, but they represent how different personal and organization ethics can impact a company. Other key players involve elected officials that made key decisions to share the nation of financial depression. Henry Paulson, a policy maker with the Department of the Treasury, refused to save Lehman Brothers Holdings Inc. from bankruptcy. Paulson was involved in the Troubled Asset Relief Program that was used for the bailout of banks, auto companies, and other financial institutions. Ben Bernanke, a policy maker with the Federal Reserve, was a key player in approving the funding for J.P. Morgan to purchase Bear Sterns Co.

In the past hundred years, the United States has dealt with and overcome many difficult situations. Many believe that those specific situations revolved around wars or terrorist, but the sad part is that, many of those difficult situations were cause by the people who are in charge of our country. The culprits behind these problems are generally greedy people who have access to higher power or are in control. Examples of those people are individuals in congress, the white house and many people on Wall Street. A great example of a difficult and unfair situation is how Wall Street killed this hopeful financial reform. A few years ago, Obama signed the Dodd-Frank Wall Street Act and Consumer Protection Act. This Act was created so that the bad

The unprecedented government intervention during the massive economic crisis of the late 2000’s was met with varied sentiment of economists (Lee, 2009). For example, economist Marci Rossell felt that government intervention was arbitrary and lacked clarity as to which firms would receive government aid (Lee, 2009). She furthered her argument by stating that if the government bailed out homeowners and banks that were borrowing and lending “over their heads,” they were creating a dangerous precedent to set (Lee, 2009, p.40). However, Rossell praised the Obama administration for having a clear grasp on the economic situation and trusted in this administration’s guidance to recover from the economic crisis. Conversely, economist Steven Schwarcz said that though the government bailout in 2008 would cost more than it would have if the government had reacted more swiftly to early signs of recession, these institutions would collapse and fail without government aid (“How Three Economists,” 2008). If these institutions failed, the ripple effect of this failure to the U.S. economy would be irreparable.

Larry Summers who is an economic advisors wanted Barack Obama to take strong action against the bank, he suggested the idea of seizing a troubled bank. However, there was a divide on the ideas and suggestion among the president’s economic advisors. In Obama administration, Treasury Secretary Timothy Geithner requested Obama to take a more careful approach due to the high chance of creating a risk that would frighten off many independent investors due to the idea that the government is implement rules that will change the banks. Later, the top thirteen bankers of the nation were summoned to a room in the White House because Barack Obama wanted to have a word with them. As Obama comes in serious, the bankers are prepared to go along with what has to be done in order to fix this problem so they public can support America corporation.