Inside Job Page #23

01:
58:31.21

NARRATOR:
One of the six Federal Reserve Board governors serving under Bernanke

was Frederic Mishkin, who was appointed by President Bush in 2006.

{FREDERIC MISHKIN

GOVERNOR, FEDERAL RESERVE (2006-2008)}

CHARLES FERGUSON: Did you participate in the semiannual meetings that, uh,

Robert Gnaizda and, and, uh, Greenlining had with the Federal Reserve Board?

FREDERIC MISHKIN: Yes I did. I was actually on the committee that, uh, that was

involved, involved with that; the Consumer Community Affairs Committee.

01:
58:53.18

CHARLES FERGUSON: He warned, in an extremely explicit manner, about what was

going on; and he came to the Federal Reserve Board with loan documentation of the

kind of loans that were frequently being made. And he was listened to politely, and

nothing was done.

FREDERIC MISHKIN: Yeah. So, uh, again, I, I don't know the details, in terms of, of,

uh, of, um – uh, in fact, I, I just don't – I, I – eh, eh, whatever information he provide, I'm

not sure exactly, I, eh, uh – it's, it's actually, to be honest with you, I can't remember the,

the, this kind of discussion. But certainly, uh, there, there were issues that were, uh, uh,

coming up. But then the question is, how pervasive are they?

CHARLES FERGUSON: Why didn't you try looking?

01:
59:32.16

FREDERIC MISHKIN: I think that people did. We had people looking at, a whole group

of people looking at this, for whatever reason –

Inside Job transcript – Sony Pictures – September 2010

45

CHARLES FERGUSON: Excuse me, you can't be serious. If you would have looked,

you would have found things.

FREDERIC MISHKIN: Uh, you know, that's very, very easy to always say that you can

always find it.

01:
59:44.15

NARRATOR:
As early as 2004, the FBI was already warning about an epidemic of

mortgage fraud. They reported inflated appraisals, doctored loan documentation, and

other fraudulent activity.

In 2005, the IMF's chief economist, Raghuram Rajan, warned that dangerous incentives

could lead to a crisis.

02:
00:06.19 Then came Nouriel Roubini's warnings in 2006; Allan Sloan's articles in

Fortune magazine and the Washington Post in 2007; and repeated warnings from the

IMF.

02:
00:18.02

{DOMINIQUE STRAUSS-KAHN

MANAGING DIRECTOR

INTERNATIONAL MONETARY FUND (IMF)}

DOMINIQUE STRAUSS-KAHN: I said it, and on behalf of the institution: ah, the crisis

which is in front of us is a huge crisis –

CHARLES FERGUSON: Who did you talk to?

DOMINIQUE STRAUSS-KAHN: The government, Treasury, s-, Fed, everybody.

02:
00:27.21

NARRATOR:
In May of 2007, hedge fund manager Bill Ackman circulated a

presentation called "Who's Holding the Bag?", which described how the bubble would

unravel.

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