Filmmaker Charles Ferguson, along with Audrey Marrs, won the Best Documentary Academy Award this week for “Inside Job,” a film about the 2008 financial crisis. Speakeasy caught up with Ferguson to discuss his plans to publish a book examining the market meltdown, his Oscar win, and the acceptance speech he gave in which he suggested from the stage that more financial executives should be in prison.
Wall Street Journal: In your acceptance speech last night you said, “Forgive me, I must start by pointing out that three years after our horrific financial crisis caused by financial fraud, not a single financial executive has gone to jail, and that’s wrong.”
Charles Ferguson: Well in fact, not only has nobody gone to jail but there haven’t even been any criminal prosecutions. Literally zero under the Obama administration. There have been, to my knowledge, three criminal prosecutions related to the financial crisis. Two were two mid-level Bear Stearns hedge fund managers who were prosecuted for fraud and acquitted. And then one also not very important financial person committed some fraud related to the TARP program and he just plead guilty. But there has been nothing, literally nothing, related to the core activities that caused the crisis…. We know that multiple investment banks sold securities that they themselves or other clients were betting against or were in some cases constructed for them to be able to bet against them. As a practical matter, the idea that all those things and many more, the idea that all those things could have gone on without a single person being criminally liable, that strikes me as implausible to say the least.
If it were all in your hands, what actions would you like to see taken or who would you call to the stand?
It is not proper for me to say this individual or that individual but from what we know, I think that a very substantial fraction of the top management of most of the major financial institutions and the rating agencies involved in the bubble and the crisis. My sense would be that there should be dozens or even perhaps hundreds of senior financial executives in prison now. It certainly shouldn’t be zero, that’s for sure.
Why did you use your acceptance speech time at the Oscars to say what you did?
Well because, of course, everything related to the crisis and the nature of reform is very complicated and there wasn’t time to say something very complicated. I wanted to make a very clear point about something that everybody could immediately understand. And that is also very important. I think that this is an extremely important issue.
Do you plan to follow up on the issues addressed in “Inside Job?”
I’m writing a book with another person who’s an expert on the crisis, in fact Charles Morris, he and I are writing a book together which will be published by Random House next year.
About?
About the crisis and the bubble and the crisis and our view of the problems in American finance and the financial industry and also in American politics. It is going to cover the same general politics as are covered in the film but it’s going to be a somewhat broader look at the political picture. It will also address this issue of criminal liability. It will have a fair amount of detail about that.
When the crisis going on, what laws do you think were broken?
Laws against fraud. If you are dealing with financial products and contracts you have an obligation to tell the truth. And there’s a lot of evidence that there was fraud of various kinds. There was accounting fraud and also some conspiracy laws. People engaged in conspiracy to commit various kinds of financial fraud to conceal size of their losses the defects of the securities they were selling. I think that there was a great deal of fraud in the financial system during the bubble.
Do you feel that the Obama administration is handling the backlash from the crisis in such a way that the actions that led to the economic downturn will be eliminated?
I have to say I don’t have much confidence about that because, first of all if you look at the way that foreclosures have been handled it seems that there has been some very unethical and possibly illegal activity there: and then also the record of the administration in criminal investigation and prosecution. We’re two years into the Obama administration and they haven’t done anything about this. So, I’m quite disturbed.
Wall Street Journal: In your acceptance speech last night you said, “Forgive me, I must start by pointing out that three years after our horrific financial crisis caused by financial fraud, not a single financial executive has gone to jail, and that’s wrong.”
Charles Ferguson: Well in fact, not only has nobody gone to jail but there haven’t even been any criminal prosecutions. Literally zero under the Obama administration. There have been, to my knowledge, three criminal prosecutions related to the financial crisis. Two were two mid-level Bear Stearns hedge fund managers who were prosecuted for fraud and acquitted. And then one also not very important financial person committed some fraud related to the TARP program and he just plead guilty. But there has been nothing, literally nothing, related to the core activities that caused the crisis…. We know that multiple investment banks sold securities that they themselves or other clients were betting against or were in some cases constructed for them to be able to bet against them. As a practical matter, the idea that all those things and many more, the idea that all those things could have gone on without a single person being criminally liable, that strikes me as implausible to say the least.
If it were all in your hands, what actions would you like to see taken or who would you call to the stand?
It is not proper for me to say this individual or that individual but from what we know, I think that a very substantial fraction of the top management of most of the major financial institutions and the rating agencies involved in the bubble and the crisis. My sense would be that there should be dozens or even perhaps hundreds of senior financial executives in prison now. It certainly shouldn’t be zero, that’s for sure.
Why did you use your acceptance speech time at the Oscars to say what you did?
Well because, of course, everything related to the crisis and the nature of reform is very complicated and there wasn’t time to say something very complicated. I wanted to make a very clear point about something that everybody could immediately understand. And that is also very important. I think that this is an extremely important issue.
Do you plan to follow up on the issues addressed in “Inside Job?”
I’m writing a book with another person who’s an expert on the crisis, in fact Charles Morris, he and I are writing a book together which will be published by Random House next year.
About?
About the crisis and the bubble and the crisis and our view of the problems in American finance and the financial industry and also in American politics. It is going to cover the same general politics as are covered in the film but it’s going to be a somewhat broader look at the political picture. It will also address this issue of criminal liability. It will have a fair amount of detail about that.
When the crisis going on, what laws do you think were broken?
Laws against fraud. If you are dealing with financial products and contracts you have an obligation to tell the truth. And there’s a lot of evidence that there was fraud of various kinds. There was accounting fraud and also some conspiracy laws. People engaged in conspiracy to commit various kinds of financial fraud to conceal size of their losses the defects of the securities they were selling. I think that there was a great deal of fraud in the financial system during the bubble.
Do you feel that the Obama administration is handling the backlash from the crisis in such a way that the actions that led to the economic downturn will be eliminated?
I have to say I don’t have much confidence about that because, first of all if you look at the way that foreclosures have been handled it seems that there has been some very unethical and possibly illegal activity there: and then also the record of the administration in criminal investigation and prosecution. We’re two years into the Obama administration and they haven’t done anything about this. So, I’m quite disturbed.