Inside Job - étude en anglais

Inside Job

September, the 15th 2008, Lehman Brothers has been forced to declare itself as bankrupt, Merrill Lynch has been forced to sell itself and the announcement of the collapse of the insurance company AIG mark the beginning of the worst and widest crises in the history.

A global recession will cost tens of trillions of dollars, 30 millions of jobs and doubles the US national debt.

This crisis isn’t an accident; it was caused by an out of control industry:

Since 1980, crises are always worse than the one before while the industry has made more and more money.

After the Great Depression, the USA regulates the financial industry and start a period of 40 years of growth:

- Banks are mostly local businesses and are prohibited to speculate with the depositor’s savings.

- Investment banks are small private partnership, the partners were the one bringing the money up and were watching it very carefully.

During the 80th, investment banks go public and the president Reagan name Donald Reganas Treasury Secretary. They, with lobbyists and economists, start a 30 years period of financial deregulation.

In 1982, the deregulation of the savings and loans companiesallows them to make risky investments with their depositor’s money. During the following decade, hundreds of companies will bankrupt causing a crisis of a cost of 124 billion dollars and people’s savings.

Thousands of executives are judged and condemned. One of them, Charles Keating, before his arrestment had employed Alan Greenspan who declared Keating’s investments secured to the regulators of the SEC. Soon after, Greenspan is named by Reagan as chairman of the FED. Clinton and Bush will do the same.

Under Clinton mandate, and with the collaboration of treasury secretaries Rubbin and Summers, he pursues the deregulation politic.

Wall Street takes over the political world thanks to the great influence of the financial lobbies.

At the late 90’s, the financial companies start a vast campaign of mergers and acquisition becoming « too big to fail » and the Clinton’s administration will help them: in 98, Citicorp and Travelers merge to form Citigroup, the largest financial services company in the world.

This merge violate the Glass SteagallAct preventing banks with consumers deposit to engaging into risky investments. However, they get a one year exemption, just the time needed to promulgate a new law: the Congress vote the Gramm-Leach-Bliley Act nicknamed the Citigroup relief act allowing other merges.

Thereafter, Rubbin became Vice-President of the group.

The deregulation opened up the market, making the sinking of one as the sinking of the all.

Another crisis in the late 90’s happened after the dot-com bubble in which banks have invested in companies they knew they will fail. And the SEC had done nothing.

Deregulation and advances in technology make the accounts too difficult

...