Welcome to Scribd, the world's digital library. Read, publish, and share books and documents. See more
Download
Standard view
Full view
of .
Save to My Library
Look up keyword
Like this
1Activity
0 of .
Results for:
No results containing your search query
P. 1
InsideJob_StudyGuide

InsideJob_StudyGuide

Ratings: (0)|Views: 24 |Likes:
Published by Nikki D White

More info:

Categories:Business/Law
Published by: Nikki D White on Oct 07, 2011
Copyright:Attribution Non-commercial

Availability:

Read on Scribd mobile: iPhone, iPad and Android.
download as PDF, TXT or read online from Scribd
See more
See less

10/07/2011

pdf

text

original

 
THE FILM THAT COST OVER
$20,000,000,000,000
TO MAKE
CANNES
FILM FESTIVAL
TORONTO
FILM FESTIVAL
TELLURIDE
FILM FESTIVAL
NEW YORK 
FILM FESTIVAL
CANNES
FILM FESTIVAL
TORONTO
FILM FESTIVAL
TELLURIDE
FILM FESTIVAL
NEW YORK 
FILM FESTIVAL
THEGLOB ALECONOMICCRISIS OF 2008
COST TENS OF MILLIONS OF PEOPLE 
THEIR S A INGS, THEIRJOBS, 
 A ND THEIRHOMES.
THISIS HO WIT H A PPENED.
INSIDE JOB
 A FILM BY CHARLES FERGUSON
DEVELOPED BY PROFESSOR FRANK PARTNOY, THE GEORGE E. BARRETTPROFESSOR OF LAW AND FINANCE AT THE UNIVERSITY OF SAN DIEGO SCHOOL OF LAW
THE OFFICIAL TEACHER’S GUIDE
 
Inside Job, the critically acclaimed movieby Academy Award nominated filmmaker,Charles Ferguson, is the definitive filmabout the economic crisis of 2008 and therole of Wall Street in modern society.
It is a substantive and entertaining film thatis ideal for educational purposes. I have shownit to my class, and I encourage you to showit to yours. The film is sweeping andnon-partisan in its critique, and coversboth the historical roots of the crisis andthe central flaws of global financial regu-lation. It includes comprehensive coverageof the major financial players at the center of the recent boom and bust. The film drawsheavily on interviews with a “Who’s Who”of financial markets, including major financialinsiders, politicians, journalists, and academics.(I have a very small part as well). Theseinterviews, and the film’s engaging andprovocative narrative by Matt Damon, willintroduce your students to key financial issues,economic history, and current debates andnews about the markets. Inside Job is colorfuland comprehensive, and is guaranteed to generatelively discussion among your students. As Time magazineput it, “If you’re not enraged by the end of this movie,you weren’t paying attention.” The people at Sony Pictures Classics asked me to write this teacher’s guideto help provide some content and lesson plans for teachers interested in showing Inside Job as part of their classes. I have included four lesson plans to be used inconjunction with the film. These lessons will help your students to connect the film to importantfinancial issues that touch their lives. They are designed to assess several importantquestions that your students inevitably willconfront in the future. The material isdesigned to be flexible. The topics aremodular, and the lesson plans can buildon each other, or be used alone. They canbe used with the entire film, or just selections. You should feel free to print and duplicatethese materials for your students andcolleagues. They are available for free onthis website: www.sonyclassics.com/insidejob.Each lesson is designed for about 50 minutesof class time, though you easily could devotemore or less time. I hope you and your studentsenjoy watching Inside Job and that you find thematerials in this guide to be a provocative and use-ful way to engage your students in a conversation aboutthe past, present, and future of our economy.Professor Frank Partnoy is the George E. Barrett Professor of Law and Finance and the founding director of the Center for Corporate and Securities Law at the University of SanDiego. He is one of the world’s leading experts on thecomplexities of modern finance and financial market reg-ulation. He worked as a derivatives structurer at MorganStanley and CS First Boston during the mid-1990s and wrote F.I.A.S.C.O.: Blood in the Water on Wall Street, abest-selling book about his experiences there.Since 1997, he has been a law professor at the Univer-sity of San Diego, and an expert writing and speakingabout markets to Congress, regulators, academics, and in- vestors. He has written numerous opinion pieces for TheNew York Times and the Financial Times, and more thantwo dozen scholarly articles published in academic journalsincluding The University of Pennsylvania Law Review,The University of Chicago Law Review, and The Journalof Finance. His recent books include Infectious Greed:How Deceit and Risk Corrupted the Financial Markets, aleading corporate law casebook, and The Match King: Ivar Kreuger, The Financial Genius Behind a Century of WallStreet Scandals, about the 1920s markets and Ivar Kreuger, who many consider the father of modern financialschemes. Professor Partnoy also has been a consultant tomany major corporations, banks, pension funds, andhedge funds regarding various aspects of financial marketsand regulation.
 You can find out more about Professor Partnoy at his web-site, www.frankpartnoy.com, where there are descriptionsof his books and links to some of his recent articles andmedia appearances (including his interviews with Jon Stew-art on The Daily Show and Terry Gross on NPR’s Fresh Air).
Note to Teachers About Frank Partnoy 
1
 
Tell your students that althoughthe basic function of financialmarkets is straightforward – to matchpeople who have money with people who need money – the way financeand Wall Street actually operate canget very complicated. Learningabout the financial crisis will be abit like learning a foreign language, so you shouldtalk about a few terms that are common in the markets,and in Inside Job.Some of these terms are defined on the lesson plan web-site at http://www.sonyclassics.com/insidejob/site/#/the-jargon. You should givethe students a copy of this list of terms, so they can take notes abouttheir meaning and howthey are used while watching the movie. Atfirst, the words, andespecially the acronyms,might look like alphabetsoup. But assure your students that soon they  will be saying “CDO”and “CDS” as effortlessly as they say “ABC.” You might start by telling students you are going toexplain some of the most important terms in the movie by telling a brief story about how subprime mortgages weretransformed into complex bets that nearly brought downthe financial system. Although the film does a superb jobof explaining this transformation, it might be easier for students to understand the details if they have a bit of back-ground. The easiest place to begin is with the transactionat the core of the crisis, something simple that most stu-dents have heard of: a home mortgage loan. Ask your students if they know what a home mortgageloan is. Do they know anyone who has borrowed money to buy a house? Who lent them that money? Did the bor-rower have to make a downpayment? Why? If a borrower has a bad credit history, as about one in four people do,then their loans are known as subprime. Ask them why abank would make a subprime loan? (Answer: the interestrate the bank receives is higher, to compensate for thehigher chance that a borrower will default.)Historically, banks that loaned money to home buyerskept those loans, and bore the risk of default. Thus, bankshad an incentive to make sure borrowers repaid them. Thisis one reason why banks required a downpayment. It alsois why they charged subprime borrowers higher rates.Over time, banks began bundling mortgage loans together into pools known as residential mortgage backed securities(RMBS). Large institutional investors, such as pensionfunds, bought these RMBS. Because the RMBS included adiverse pool of mortgage loans, they were deemed to besafe investments. The credit rating agencies gave theseRMBS their highest ratings of “AAA.Now, investors – notthe lending banks – bore the risk of default.Next, banks began bundling these RMBS together in asecond kind of pool known as a collateralized debt obliga-tions (CDO). The banksand rating agenciesused complex computer models to determine what portion of a CDOcould be labeled AAA.The rating agencies thengave AAA ratings tolarge portions of CDOs,even though the mort-gage loans backing theCDOs were subprime.Subprime-backed CDOs were popular, because they had high credit ratings andpaid high returns.Finally, as the number of CDOs grew, it became harder to find enough new subprime loans to back new CDOs.The credit default swap (CDS) was a tool to enable banksand investors to bet on subprime RMBS and CDOs, withoutactually owning anything. Instead, CDSs were side bets on whether home borrowers would default. CDSs are one of a type of financial instrument known as derivatives,because their value is “derived” from the value of the underlying asset (in this case, home mortgage loans).Financial institutions used CDSs to place trillions of dollars of bets.For some students, this story willseem difficult to understand – atfirst. One of the remarkably  valuable aspects of Inside Job is howclearly it explains and illuminates thisdaisy chain of risk. Still, a brief discussion of vocabulary beforethe movie will help your studentsunderstand some of the details.
Before Viewing the Film
22

You're Reading a Free Preview

Download
/*********** DO NOT ALTER ANYTHING BELOW THIS LINE ! ************/ var s_code=s.t();if(s_code)document.write(s_code)//-->