Course: with a loan they wouldn’t be able

Course:
Principles of Macroeconomics B

Instructor:
Gayane Barseghyan

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Student: Lilit
Harutyunyan

Topic: Inside
Job Movie

Date: 04.12.2017

 

 

Inside Job is a 2010 Oscar-winning documentary film,
directed by Charles H. Ferguson. The film focuses on the late 2000s financial
crisis. Charles Ferguson says that the film is about “the systemic
corruption of the United States by the financial services industry and the
consequences of that systemic corruption”. The film explores how banking
practices and changes in the policy environment helped to create the financial
crisis in five parts. The solution of every issue is possible when you know why
the issue was created at the first place. So: How We Got Here? In the first
part, we find explanations and details about the five main dominating banks and
the rating agencies, as they don’t have a reliable rating system for financial
institutions.

 The Reagan administration
of the United States began a thirty-year period of financial deregulation in
the early 1980s. By then end of the 1980s, many workers in the financial sector
were imprisoned for fraud and many people lost their lifesavings. Monopolies
started to develop due to large investment banks. By the end of the second
millennium many internet companies dropped and massive investments in internet
stocks were lost. Once again financial regulators allowed the excessive betting
which was accompanied by crisis. Investment banks promoted Internet companies
which they knew would fail so in March 2000, the Internet Stock Bubble burst. About
5 trillion dollars occurred in investor losses. Derivatives became popular in
1990s which caused the instability to grow. In the 2000s, the industry was
dominated by five investment banks, three rating agencies, three securitized
insurance companies and two financial conglomerates. Collateralized debt
obligations were sold to investors. Those obligations accrued because Investment
banks connected mortgages with other loans and debts. Predatory lending
occurred due to subprime loans being led. Many home owners were granted with a
loan they wouldn’t be able to repay during a lifetime.