Waiting for Repo Man

By CHRIS FARAONE  |  October 13, 2010

It's no surprise that investment honchos and their academic co-defendants are crying foul, or that some, however futilely, requested that their interviews be cut. Ferguson's investigation is hardly exhaustive, but, in less than two hours, he exposes Wall Street's so-called risk-takers as cowards bent on fixing results though loopholes, lobbying, and criminal activity. As it turns out, most of the culprits fingered here are hardly the cowboy gamblers that they styled themselves to be — no matter how much they paid hookers to inflate their egos.


"I couldn't believe how low Wall Street had sunk," says Ferguson, a seasoned entrepreneur and software developer who sold a tech start-up to Microsoft in 1996 for $133 million. "I had a fair amount of contact with investment banking by virtue of my being in the software industry in Boston. But [I never would have believed] that investment bankers would design securities specifically to fail so they could profit by betting against them . . . I interviewed a number of investment bankers, and many had absolutely no sense of doing something wrong."

Despite some subjects' assertions that these issues are too complicated for mass comprehension, Inside Job dutifully explains a history that even most executives don't comprehend (or, more likely, that they don't acknowledge). Former president Ronald Reagan allowed and advocated for destructive deregulation. That sentiment was echoed by the Clinton administration, which, with help from such villains as former Federal Reserve chairman Alan Greenspan, freed investment bankers to wager fortunes over risky abstract derivatives. Following the detonation of the dot-com bubble, then-president George W. Bush co-signed an imprudent naked plunge into the mortgage and investment-banking industries, and so on.

Ferguson shows how, through it all, economic soothsayers sounded sirens about the virtual "Ponzi scheme" at hand. Still, there was no stopping the tsunami. "It's been a gradual process over the last 30 years of ethical and legal standards declining in financial services," says Ferguson. "With every generational change, new market, new technological change, and, unfortunately, every new administration, it's gotten a little bit worse."

The 'best' are the worst
If the children are our economic future, then it may be time to duck and cover. Because even if "Superman" saves early education, business and economics programs across America remain in grave jeopardy. In a section of Inside Job that looks beyond Wall Street, Ferguson takes aim at investment shills who masquerade as professors and department heads. His concern: proven failures like Columbia University Business School Dean Glenn Hubbard, a chief Bush advisor, are teaching aspiring economists and bankers how to crash all over again.

"As a graduate student and post-doc at MIT," says Ferguson, "I had seen the beginnings of this problem, and financial services have turned out to be the largest funder of the economics discipline, and the largest source of this conflict-of-interest problem . . . We wrote long and detailed letters to Harvard and Columbia, and to other schools as well, and the universities were totally unhelpful . . . But if you look at all of the 'best' business schools and economics departments, that's where you'll find the worst problems."

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