Inside Job Essay

The throw started back in the 1980s with the deregulation of Savings and loans, this meant that the government no longer was over curbing the manner in which business was conducted. This in its self did not create the afford, but as time when along much deregulation in the banking sector took place. Banks could today begin to loosen their lending guidelines, this trend lead to what was exist as sub prime lending. Many banks such as Chase, Citi, Bank of America, Countrywide and many more started these companies to lend to the less then slandered banking customers. This way the banks could still make money, but not jeopardize their portfolio customers. direct banks could lend money to customers that had credit scores less then 700 and with resent bankruptcy and even foreclosures and their credit. The biggest mode browseness for the sub prime was money. Now there re every last(predicate)y was no limit on what interest set the banks could charge for their sub prime products. The banks could then bundle their sub prime loans and sell them to Wall roadway and receive margins on the loans, for example if the prime rate on Wall Street was 4.5% and your interest rate on your loans might be 9.5% Wall Street might pay the bank 3% on all their loans.Now this then is where the collapse is starting, Banks now are offering more and more products to lesser credit worthy customers at high rates and mortgage brokers and bankers are pushing these products because the banks are now offering incentives for these products and why because the banks are making money on them not because they are the best for the consumer.The succeeding(prenominal) chapter of the collapse is on Wall Street as shown in the movie AIG comes up with this great insurance idea of derivatives for the sub prime market. What these derivatives would do is protect the servicers and buyers of sub prime loans in case the loans leave alone fail and who helped AIG come up with this idea, Their next door ne ighbor and biggest buyer of sub prime loans Lehman Brothers.As we see in the movie everything comes to a head in 2008, Lehman Brothers closes, AIG is bailed out by the government and all sub prime lenders close.Yet no one is prosecuted and most all the upper management from the companies that contributed to the collapse are either still teaching business in upper scale colleges or maintain positions on government cabinets.In conclusion this movie shows how money and the promise of unlimited amounts, can work Wall Street and the banking sector to do whatever it takes ethically or unethically to achieve it. We see that companies such as AIG and Fannie Mae and Freddie Mac will lie and doctor their accounting, and even pay to receive abdominal aortic aneurysm rates even days before they went bankrupt so investors wouldnt know.Has Wall Street wise to(p) its lesson or do they even care?