Inside Job Transcript - Final Version - 9.30.10 - Sony Pictures Classics

Inside Job transcript – Sony Pictures – September 2010 37
NARRATOR: You might think it would be hard for Paulson to adjust to a meager
government salary. But taking the job as Treasury secretary was the best financial
decision of his life.
Paulson had to sell his 485 million dollars of Goldman stock when he went to work for
the government. But because of a law passed by the first President Bush, he didn't have
to pay any taxes on it. It saved him 50 million dollars.
01:49:30.24
{IN 2007, ALAN SLOAN PUBLISHED AN ARTICLE ABOUT
THE CDOs ISSUED DURING PAULSON'S LAST MONTHS AS CEO.}
ALLAN SLOAN: The article came out in October of 2007. Already, a third of the
mortgages defaulted. Now, uh, most of them are goin'.
01:49:49.16
NARRATOR: One group that had purchased these now-worthless securities was the
Public Employees Retirement System of Mississippi, which provides monthly benefits to
over 80,000 retirees. They lost millions of dollars, and are now suing Goldman Sachs.
01:50:19.27
{AVERAGE ANNUAL RETIREMENT BENEFITS
FOR A MISSISSIPPI PUBLIC EMPLOYEE: $18,750
AVERAGE ANNUAL COMPENSATION OF A
GOLDMAN SACHS EMPLOYEE: $600,000
HANK PAULSON'S COMPENSATION IN 2005: $31,000,000}
NARRATOR: By late 2006, Goldman had taken things a step further. It didn't just sell
toxic CDOs; it started actively betting against them at the same time it was telling
customers that they were high-quality investments.
01:50:35.02 By purchasing credit default swaps from AIG, Goldman could bet against
CDOs it didn't own, and get paid when the CDOs failed.
01:50:45.26
ALLAN SLOAN: I asked them if anybody called the customers, and said, you know, we
don't really like this kind of mortgage anymore, and we thought you ought to know, you