Response Paper


InsideJoband the financial crisis

Thefinancial crisis that faced the United States economy had hugeimpacts. Since the United States economy is the largest in the world,the crisis impacted on other economies around the world. Millions ofpeople lost their jobs. It is estimated that the crisis resulted intolosses amounting to over 20 trillion dollars. As a result of itsconsequences, the financial crisis in the late 2000s has beendiscussed in academia and popular media. Additionally, it hasattracted the attention of the film industry, probably due to theaudience interested in the topic. The widely applauded documentary,InsideJob,by Charles Ferguson is one of the major films that focused on thefinancial crisis. The film covers the events that are alleged to havecaused the financial crisis as well as the event during and after thecrisis. There are many aspects of the financial systems and economythat have been argued to have caused the financial crisis. Among themis the collapse of the housing and mortgage sector in the UnitedStates. However, according to the main theme of the InsideJob,the financial crisis was caused by unethical practices in thefinancial system in the United States. Despite the numerous supportsand phenomenon viewing, including wining an Oscar in 2011, InsideJobreceived numerous criticisms. The main rationale of the documentarywas that the financial crisis was caused by unethical practices inthe regulation of financial systems.

Accordingto the film Inside Job, in the years preceding the financialcrisis there were a series of unethical practices in the financialindustry precipitated by the deregulation of the industry. The filmportrayed that deregulation and the failure of the governmentinstitution to take action in the financial industry resulted into alarge and interdependent investment in the sector. This can beexplained using utilitarianism ethics whereethical decisions are determined by the cost or benefits of theaction. If the overall benefits of an action overweight the costs,the action is considered to be ethical. The costs of the deregulationin the financial sector overweigh the benefits and therefore, it wasunethical (Biktimirov &amp Cyr, 2013).

Thedevelopment of the housing sector and the interdependence with majorfinancial institutions such as banks was not regulated. Deregulationis associated with questionable actions by the industry players asthey take advantage of the inadequate regulation. Despite the factthat deregulation resulted into financial problems in the 1980s, theregulator in the industry was unwilling to take action. Due to thesensitivity of the financial systems in the economy, this unethicalact threatened the United States economy with collapse. For example,the east flow of credit and mortgage leading as a result ofderegulation mortgage and investment banking institutions were wilingto pay huge bonuses and borrow heavily. Due to lack of adequateregulations, some financial institutions did not have the requiredreserves. The film indicates that despite lobbies from interestgroups as well as warning from FBI on the effects of deregulation ofthe financial industry, there was no significant action from theregulator.

TheInsideJobalso shows that the Federal Reserve Board acted unethically byrefusing to act on the predatory lending and mortgage fraud despiteevidence being presented by other government institutions. TheFederal Reserve Board, as a regulator in the financial industry hadthe responsibility of observing the trends in the financial sector,analyze the evidence presented to them and take actions.Additionally, the board had the moral responsibility of proposing newlaws that will seal the loopholes in the industry regulation. Thelack of effective response on part of the regulating authority isportrayed in the film as one of the unethical behaviors that ledfinancial institutions acting ethically.


BiktimirovE. N. &amp Cyr D. (2013). “Using Inside Job to teach businessethics,” Journal of Business Ethics 117 (1), 209-219.