Inside Job Page #5

01:
14:45.00 In 1982, the Reagan administration deregulated savings and loan

companies, allowing them to make risky investments with their depositors' money. By

the end of the decade, hundreds of savings and loan companies had failed. This crisis

cost taxpayers 124 billion dollars, and cost many people their life savings.

TOM BROKAW:
It may be the biggest bank heist in our history.

NARRATOR:
Thousands of savings and loan executives went to jail for looting their

companies. One of the most extreme cases was Charles Keating.

01:
15:17.28

MAN:
Mr. Keating, you got a word?

NARRATOR:
In 1985, when federal regulators began investigating him, Keating hired

an economist named Alan Greenspan. In this letter to regulators, Greenspan praised

Keating's sound business plans and expertise; and said he saw no risk in allowing

Keating to invest his customers' money. Keating reportedly paid Greenspan 40,000

dollars.

01:
15:45.01 Charles Keating went to prison shortly afterwards. As for Alan Greenspan,

President Reagan appointed him chairman of America's central bank, the Federal

Reserve. Greenspan was reappointed by presidents Clinton and George W. Bush.

01:
16:01.00 During the Clinton administration, deregulation continued under Greenspan

and Treasury secretaries Robert Rubin — the former CEO of the investment bank

Goldman Sachs — and Larry Summers, a Harvard economics professor.

01:
16:15.26

NOURIEL ROUBINI:
The financial sector, Wall Street being powerful; having lobbies,

having lots of money; step by step, uh, captured the political system; you know, both on

the Democratic and the Republican side.

01:
16:28.00

NARRATOR:
By the late 1990s, the financial sector had consolidated into a few gigantic

firms, each of them so large that their failure could threaten the whole system; and the

Clinton administration helped them grow even larger.

Inside Job transcript – Sony Pictures – September 2010

15

In 1998, Citicorp and Travelers merged, to form Citigroup, the largest financial services

company in the world. The merger violated the Glass-Steagall Act, a law passed after

the Great Depression, which prevented banks with consumer deposits from engaging in

risky investment banking activities.

01:
17:02.00

{ROBERT GNAIZDA

FORMER DIRECTOR:

GREENLINING INSTITUTE}

ROBERT GNAIZDA:
It was illegal to acquire Travelers. Greenspan said nothing. The

Federal Reserve gave 'em an exemption for a year; and then they got the law passed.

NARRATOR:
In 1999, at the urging of Summers and Rubin, Congress passed the

Gramm-Leach-Bliley Act, known to some as the Citigroup Relief Act. It overturned

Glass-Steagall, and cleared the way for future mergers.

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