Inside Job (12A)

The Independent review: Dirty rotten scoundrels

The title makes it sound like a heist movie, and in one sense that's what Inside Job is. It's actually a documentary about the financial crisis of 2008, explaining how a small bunch of Wall Street operators robbed their own companies and clients blind, with the difference that, instead of being prosecuted by the government, they were abetted by it. They didn't wear masks and carry guns, because they didn't have to: some of them now occupy senior positions in the US administration and academia. Who says crime doesn't pay?

This is the shameful history addressed by the film-maker Charles Ferguson, already acclaimed for No End in Sight, his documentary on the Iraq war. Faced with a primer on the intricacies of financial misrule, I would ordinarily have ducked it and watched The Killing on BBC4 instead. But Inside Job lays out with perfect clarity and a proper sense of occasion why the global economy has reached the state it's in, ie. a mess.

I have seen it described as a "classroom" documentary, which, in this case, is precisely what many of us require. By the end of it you won't be drumming your fingers and waiting for the bell; you'll be outraged and possibly horrified at what you've just learnt.

Narrated by Matt Damon, the film traces the origins of the crisis to the deregulation of financial markets that began under Ronald Reagan. Banks now preferred to reward high-risk profiteers instead of looking after their customers. This is not a simple expose of Republican self-interest, though; the commitment to deregulation continued during Clinton's term of office, and positively thrived under Bush. Alan Greenspan is seen in this context as the Dark Lord of fiscal laissez-faire, carrying the day on behalf of deregulation. We are led through thickets of money talk – "credit-default swaps", "subprime loans" – yet we are never allowed to lose sight of the basic facts. Predatory lending took off, liability went out the window, bad loans created a pandemic of foreclosures and job losses. The banks – notably Lehman Brothers – collapsed under debts that ran into billions. The ripple effect across the world was (and still is) catastrophic.

What this film argues is that the catastrophe might have been averted. Marshalling a succession of interviewees between Wall Street and Washington, Ferguson offers the spotlight to consultants and economists who saw the trouble looming. (Iceland's economic meltdown was the canary in the coal mine). One of them, Raghuram Rajan, as chief adviser of the International Monetary Fund, delivered a paper to the top dogs of Wall Street in 2005 warning of the crisis ahead – and found himself ignored. It's interesting to note that Rajan and others (Charles Morris, Robert Gnaizda) who correctly predicted chaos don't go in for crowing; there's nothing smug or overbearing in their testimony. Then listen to those Masters of the Universe and CEOs whose personal involvement in the crisis might have caused them at least a show of contrition, or humility, and the contrast is instructive. Far from acknowledging responsibility, they block and stall and say just about anything that might deflect blame from them.

When Federal Governor Frederic Mishkin explains how he baled out at the height of the storm in order to "revise a textbook", hoots of derisive laughter exploded from the stalls. Glenn Hubbard, the economic adviser who helped design Bush's 2003 tax cuts, is nettled by a perfectly valid question about conflict of interest and suddenly snaps: "You have one more question," he tells the interviewer with a sneer, "... give it your best shot."

One might at least credit Mr Hubbard for daring to present himself before the camera. His companions in this hall of shame – Greenspan, Lawrence Summers, Robert Rubin, Hank Paulson, Timothy Geithner, et al – refused to be interviewed at all. Ferguson for the most part keeps a lid on his indignation, but occasionally an exclamation of incredulity ("You're not serious!") escapes him. He's not tempted by the Michael Moore school of stunts and confrontations, and his film is the better for it. Only when he interviews "Wall Street madam" Kristin Davis, whose business furnished prostitutes to many investment bankers, do the scales feel overloaded. Well of course these moneymen billed hookers as a business expense, what did you expect? It is a squalid sidelight on a corrupt culture, but I think Ferguson might have better served his argument by concentrating on how they defrauded people, not what they spent their money on. I much preferred the scenes of courtroom deposition, where a Goldman Sachs CEO is questioned about selling clients a financial package privately regarded by his own people as "a shitty deal". You can almost hear that CEO squirm in his chair.

Inside Job adds up to cinema's most remarkable indictment of financial chicanery since Enron: the Smartest Guys in the Room in 2005. The difference is that the rogue traders of Enron courted nemesis and provided the story with a happy ending: they got jail. This new film has no such comeuppance. Far from it: the men (they are mostly men) who propelled the financial system towards ruin not only kept their gigantic personal fortunes, they found themselves in cushy new jobs. Obama, having made stern promises to bring the banks to order, has filled his administration with the same old faces from Goldman Sachs and elsewhere. As someone ruefully remarks, "it's a Wall Street government". So people whose behaviour somehow did not amount to actually breaking the law are now entrusted with the honour of making the law. What a con. What a country.