The Inside Job - Review

He talks about how the Standard Oil company offered the same quality of oil for lower prices than he could do. Other situations like this was the Credit Mobilier scandal were railroad companies got paid a lot of money but built little railways with the money keeping the rest.

Exploring Enron as it goes from infancy to final explosion, is a valuable mechanism for understanding, how not to organize and manage a company properly. Lay and especially Skilling, were very powerful and persuasive orators. Their charisma radiated out to the employees who followed their leadership with blind obedience. This facilitated a work culture and environment that was toxic, and infectious to everyone involved. It limited any staff diversification internally and fostered a severely overt masculine culture that lead to its downfall eventually.

This shows a major breakdown in managerial controls that a low level employee was able to take steal money over the course of a couple of years without ever being suspected. This is a prime example of why internal controls are so vital and why even the government needs to be audited. Ruiz

Michael Lewis, The Big Short, film strategically provided three separate but parallel stories of the U.S mortgage housing of 2008. The movie demonstrated how Wall Street, in a desperate search for profits, lunched “bonds” products with riskier mortgages. As a result, lenders were no longer interested in if a borrower could pay them back. In disbelieved, I noticed deceitful tactics that lenders used, throughout the movie, to convince Americans to take out mortgages they could not afford. Chronologically, Americans’ saving levels dropped while countries ' savings tripled. Once the Recession was in full effect, the US government rescued Wall Street, passing an unimaginably large bill, the bill we are still paying off. To most Americans’ surprise, nearly all of the rescue money went into Wall Street executives’ pockets.

The movie was an overview of the life of a quirky doctor, Michael Burry, who analyzed the mortgage practices and exposed the fraud of subprime mortgages that allowed people with shaky credit to borrow money. The movie also highlighted two other investors in Burry’s theory, Mark Baum’s group and Charlie Geller, that invested millions to gamble against home loans and short the market by buying credit defaults. All of these people made billions of dollars by betting against the economy, but all three groups realized they were betting for a failing economy. Their win was the world's loss, leading into something similar to the Great Depression of 1929 when millions lost their jobs and were no longer able to keep up with their mortgage.

Where do you begin with covering one of the greatest economic crash of our time, and the worst recession since the Great Depression? Michael Lewis takes us to the very beginning, covering the story of how cynical mortgage brokers and CDO managers were playing fraudulent roulette. A rigged system that was doomed from the beginning but that very well needed every piece to be in place for 2008 to happen. Credit rating agencies S&P and Moody’s had to be completely oblivious in properly rating the CDO tranche system, mortgage lenders had to be eager to write down sub-prime loans, and . Yet, through all the dust came a story of the underdogs; Steve Eisman, Michael Burry, Greg Lippmann & his Chinese side kick Eugene Xu, and Cornhole Capital

The Insider tells the story of how Dr. Jeffrey Wigand is fired from Brown and Williamson Tobacco Company. Dr. Wigand, after being fired, eventually agreed to a 60 Minutes piece exposing the world of “Big Tobacco”. By doing this, he became one of the most famous whistleblowers in human history. Wigand revealed to Lowell Bergman, a 60 Minutes producer, that the Seven Dwarfs or the seven CEO’s of Big Tobacco companies lied testifying to Congress that they believed nicotine was not addictive. Dr. Wigand eventually gave deposition in a case against Big Tobacco companies and stated that tobacco companies manipulated nicotine content, suppressed efforts to develop safer cigarettes, and lied about the addictive properties of nicotine.

“Death, it’s a dirty job. But hey, somebody’s gotta do it” (“A Dirty Job”). A Dirty Job was written by Christopher Moore. This book would be classified by Fiction genre because it’s neither a true story nor has facts. The book starts off in San Francisco in the point of view of Charlie Asher, which makes it first person. The theme is perseverance because he persevered with his job/duty no matter what was thrown at him.

The problem to be investigated is the ethics and effects of subprime loans on the financial institutions, borrowers and stakeholders. The subprime market was created to provide borrowers with a FICO score below 570 access to home loans. Inopportunely these loans were a major financial risk as most of the borrowers did not have the long-term income to pay for the high interest rate loans. (Jennings, 2012)

Investors relished in these mortgage backed securities. They paid a higher rate of return than investors could get in other places, and appeared to be safe bets. Home prices increased; Leading lenders to believe the worst case scenario, homeowners would default on their mortgage, and they could sell the house for an additional amount of money. 1 At the same time, credit rating agencies continued to inform investors that mortgage backed-securities were safe investments. Investors were desperate to gain more securities. Promoting lenders to help create more of them. However, to create more, lenders needed more mortgages. This caused lenders to loosen their standards and provided loans to individuals with low income and poor credit. These are referred to as subprime mortgages.2 Eventually, some institutions begin using what is referred to as predatory ending practices to generate mortgages. They made loans without verifying income and offered absurd, adjustable rate mortgages with payments individuals could afford, at first, it became disorderly quickly. Subprime leading was a new practice at the time. These investments were becoming increasingly less safe. However, investors trusted rating, and continued to

From the CEOs, the Government, prostitutes, and even Ivy League professors, the movie blamed anyone who had even the slightest role in the financial meltdown. In a more non-fiction type setting, the documentary aimed to exposed the corruption on Wall Street and how the government got involved. The documentary seemed to put blame on the greedy 1% of America. According to the film, people in power stay in power and simply rotate their position in power to other like individuals. So top Wall Street executives rotate to leading government positions and thus continue the cycle of greed and destruction. They generalized everyone on Wall Street to be greedy crooks who use drugs and spend corporate

Lewis focuses the book from the perspectives of leaders from three investment firms that saw the future of the financial market and its inevitable collapse in the early 2000’s. Though given the opportunity, these men were not heroes. Instead of spreading the news and rebelling against Wall Street for infecting the market, they were more interested in making a profit. Michael Burry was focused on his company Scion Capital and buying credit default swaps to make both him and his investors’ money. Charlie Ledley and Jamie Mai focused on betting against Wall Street and ultimately in the end made fortunes.

When investors make large sums of money on investments that are not tied to the actual value of a tangible product a number of dangers can arise. During the financial crisis of 2008, investors were making money off of home owners who paid their mortgages. Because of leverage, the investors made more money than they should have because after multiple homes were foreclosed the home-owners that continued to pay their mortgage

During the housing/financial crisis of 2008, I was in the 10th grade. My parents did not have bank accounts or owned a home, and I did not watch the news, therefore I did not anything about the crisis. Prior to watching the film, I had no clue it occurred. All of the information in the film was new knowledge. A few terms that were new to me were subprime mortgage, collateralized debt obligation (CDO), adjustable rates and credit default swap.

The most evident conflict of interest evident by the CBA financial planning scandal is in relation to the member’s remuneration for professional services rendered. The very engagement between the client and professional equates to a conflict of interest with the client attempting to utilise the professional’s services