The possibility of the financial sector to influence the media for its own personal gain is greatly debated. Enforceable evidence is difficult to find but sound reasoning allows
for certain assumptions to be made. The documentary “Inside Job” directed by Charles Ferguson investigates the causes of the 2008 financial crash and his discoveries have
displayed the over-arching reach of the financial sector by uncovering all the previously undisclosed fields in which it has power. These fields include rating agencies, the U.S
government and Ivey League universities. Each of these sectors can in turn use their power in the media to influence the public.
The documentary explains the workings of collateralized debt obligations or CDO’s. Lenders were selling the rights of their loans and mortgages to investment banks who
compiled and grouped these loans together in complex derivatives known as collateralized debt obligations. These investment banks then sold these CDO’s to investors. The
issue is that lenders now gave no importance to whether the loan’s they issued had to be paid off or not since they were selling them off to these big investment banks. This
made loans accessible to people who previously would never have be approved for loans before. Continuing down the chain, the investment banks now paid off rating agencies
to give safe ratings to this compiled debt even though it could not be paid off. Where does the influence over the media come in? It is present throughout the entire chain.
Lenders were advertising a cheap loan knowing very well that these people would default on them. This treated consumers with a general lack of respect they were never meant
to pay back the loan from the beginning. Moreover, rating agencies were purposefully misleading their customers with the false ratings they were sending out which breaks the
most important point in advertising’s five point test: truthfulness. Consequently, they are purposefully misleading consumers demonstrating how they influence the media in
The U.S government has unparalleled influence over the population regardless of whether it reaches traditional media outlets or not. The government’s act of supporting
legislation provides confidence to the public in these banking institutions. In other words, when lobbyists managed to increase the amount of leverage available to the
investment banks through deregulation, the government portrayed confidence in these banks. Henceforth, the greater the trust the government held for these banks, the public’s
perception of trust in these banks also increased. The issue is not that of government placing trust in these investment banks, the problem arises in who was influencing the
government and pushing for deregulation. In 2006, Henry Paulson, the former CEO of Goldman Sachs was appointed to be the secretary of the treasury. Of the CDO’s sold by
Goldman Sachs in the last couple months of Paulson’s time as CEO, a third of them defaulted. Investment banks such as Goldman Sachs took this a step further. Not only were
they continuously selling these sub-prime mortgages at ratings equivalent to government securities, they were then betting against them for when these loans would fail. These
actions demonstrate that the person in charge of economic counselling and policy making for the government’s financial interests, that is the secretary of the treasury, had an
adverse interest to his clients. His teleological form of ethics was purely Machiavellian in nature and it is this type of ethical attitude that is advising the president of the United
States. During the beginning of the financial crash, Paulson insisted that the economy was still growing despite numerous signs to the contrary. He pushed against regulation
and by doing so; indirectly mislead the public through his power at the White House. In other words, the financial sector once again abused their power to influence the media
according to its own agenda.
The last sector in which the financial sector influences the media in unethical ways is through their connections in highly ranked universities. Academia has played a major
role in support of deregulation since the 1980’s. Moreover, academic economists have helped shape current economic policy. Business school professors have done very well
financially by consulting part-time with very powerful corporations and argued for deregulation on behalf of these companies to political parties. Larry Summers is the treasury
secretary and played a critical role in the deregulation of derivatives, he became the president of Harvard in 2001. He made millions of dollars from speaking fees all sponsored
by major investment banks such as Goldman Sachs and Morgan Stanley. In addition to this, Martin Feldstein, a Harvard economics professor, was the chief economic advisor
during the Regan Administration and was a major proponent to deregulation. He was on the board of AIG, a major insurance firm who played a pivotal role in derivatives and
helped investment banks bet against the CDO’s. The issue arises with the notion of conflict of interest. Seeing as how these two major officials in a prestigious university are
receiving huge compensations from the financial sector, they will most likely preach for the benefit of these firms. By doing so, students and members of the public who attend
these speaking engagements will abide to what they are encouraging in the speeches, without the knowledge of where their true intentions lay. Harvard is not the only university
to have similar problems with conflict of interest. Columbia University and Brown University all have similar problems. Glenn Hubbard is the dean at Columbia University and has
several consulting clients all which he does not disclose and Ruth Simmons, the president of Brown University, sits on the board of Goldman Sachs. A conflict of interest is
present in all cases in that each authority figure uses his/her own power to influence people in an unethical way based on compensation from investment banks.
In conclusion, the financial sector uses its power to influence the media in an unethical way based on self-interest. Investment banks have used their power over rating
agencies to deceive the public in order to sell more CDO’s. Furthermore, investment banks used contacts in high ranking government positons to promote deregulation so that
they can continue on with activities that have an adverse interest to their customers. Lastly, investment banks have compensated academic authorities in top universities to
promote their viewpoints on the masses and in government.
All Information was taken from the documentary "Inside Job" http://www.imdb.com/title/tt1645089/