INSIDE JOB- A DOCUMENTARY ETHICAL ISSUES

SUBMITTED BY: MAIMANA JAVED REGISTRATION ID.

SUBMITTED TO: SIR REHAN SHAKOOR

INSIDE JOB
INTRODUCTION The documentary movie Inside Job directed by Charles Ferguson narrates very well the ethical issues encountered in business during the era of global economic crisis 2008. Not only New York, U.S was affected by the crisis but it just went spread-out all over the economy of the globe. The widely highlighted issues that led to such crisis mainly included: Greed for wealth Irresponsibility Arrogance

Conflict of interests Poor accountability Lack of leadership Selfishness

The above mentioned issues subjected to the economic meltdown. A few got benefitted against the loss of millions of people.

In 2000s Iceland adopted the policy of deregulation in which they privatized their 3 major local banks. Those banks took billions of dollars of loans and brought advantage to their bankers ultimately. Financial regulators then preferred to go to banks to work as they could see huge profits.

PART I: HOW WE GOT HERE The most prominent issue seems to be deregulation, in which the customers savings are rolled back instead of partners raising up their own money. Deregulation led the bankers and financial authorities make higher profits. Regulation was banned as it would turn out to be unprofitable to the higher financial authorities. Bankers gambled on the money because of the use of derivatives. Laundering of money was an issue. Defrauding with the citizens. Faking the books of accounts. All those financial institutions, banks and rating agencies that were found to be involved in the fraud cases and were fined as well were the dominating institutions in the industry. Securitization of food chain was adopted by the banks. They gave loans actually subprime loans to the people that indulged a very high rate of interest, and even most of the loans were given to the people who werent able to pay back. Lenders sold the CDOs to the investors and were interested to provide more of loans to the people so that they could expand profits by selling CDOs. Bankers were busy in filling their treasuries but the citizens suffered a lot.

PART II: THE BUBBLE (2001-2007) Bubbling of house loans made a few people rich by billions. This system of securitization of food chain was utilized to make money out of it. SEC did not conducted on doing investigations. Legal authorities and regulators did not take any step to stop this massive looting that was going on which led the economic to meltdown. Leverage ratio was immensely high. No actions were made to limit them. AIG introduced Credit Default Swaps, through which they insured the CDOs by investors. They ultimately paid their workers massive bonuses. Prostitution, drugs etc. were seen as companys expenses to entertain traders. At the time of Bush Administration, Henry Paulson was made the Treasury Secretary. The tax policy revised at that time saved him and the others who were wealthy from paying taxes. The taxation policy unanimously favored the wealthy 1% of U.S but the rest 99% suffered. This was the high time for the wealthier part of society. The built up pent houses, mansions and bought all the luxuries of lives, private jets etc. Goldmann Sachs made huge money by backing up the AIGs investment of CDOs by selling the failed CDOs guarantying as safe investments. People were misguided and mistrusted by the false statements and assurance given by the institutions. Moodys and S&Ps were bribed with high amount of money to give AAA ratings to the unsafe CDOs.

PART III: THE CRISIS Bernanke was made the chairman of Federal Reserves as the time of Bush. He did nothing for the fake and low documentations made for the loans. As banks pledged to lend more they were not much concerned with the documentations as they werent up to the requirement.

Major companies went into crisis and had no cash left in which Lehman Brothers was also included. They decided to go bankrupt in order to calm the markets. Henry Paulson and Bernanke bailed out the banks. Lehmans also got bailed out whic h cost about $150 billion to tax payers. The result of bailing out concluded to be a big loss for the normal citizens as they were punished in the name of taxes instead of the ones who were actually a part of the crime. Defrauding was done by the mortgage lenders which led people into so many debts to recover with little income.

PART IV: ACCOUNTIABLITY Stocks were dumped before the corporation got failed. People who were involved in fraud cases were paid billions of dollars by the board of directors. No one was prosecuted nor investigated. No legal action was taken against them. Academic professors included those who were the top economists were also a part of these corporations. We can see in the movie that the integrity of scholars and professors have been compromised on conflict of interest. Such economists were hired as professors that they got create false image of the crisis and the consequences in the mind sets of students. Furthermore some academic professors were paid to write false papers on the economy. The price paid to them was never disclosed.

PART V: WHERE WE ARE NOW The presidency of Obama came into being where he declared the taxation policy again the same as previously was done. The policies favored the wealthiest. Estate tax was eliminated.

The 1% of society gained the utmost and the rest 99% went downside. Millions of people went homeless. During the presidency, economic financial advisors were those very people, like Larry Summers, who built this unjust system. After all crime and frauds being reported no action was taken and no one ever got prosecuted but instead their positions were made more better and more stronger than they were before.

No doubt it is an industry that has ran out of control. Not only business personnel have exploited the industry but the policy makers, government treasury and regulators and nevertheless the academic professors have played their roles at the most.