As many of you may know, HBO made a movie out of Andrew Ross Sorkin's book, "Too Big to Fail." In the book, which we'll be reading soon, Sorkin goes behind the scenes and shows you the human side of the people who were involved in defusing the financial crisis that took place in the fall of 2008.
Now, the book is over 500 pages long. And the movie runs about two hours long. Obviously, something has to be distilled out of the movie, and it's got to be rewritten so that it appeals to an audience that's not interested in finance. The American public is so poorly informed about financial matters that it's ridiculous. Ask the average American about the TARP and they'll probably tell you that the government lost all $700 billion, instead of profiting from it. And they will probably tell you that Fannie and Freddie need to be shut down, not understanding that if this happens, the entire housing market will pretty much freeze. They also are likely to believe that if AIG went down, they'd be fine.
But the movie, which is loaded with well known actors ranging from William Hurt as Hank Paulson to Ed Asner as Warren Buffett to Paul Giamatti as Ben Bernanke to James Woods as Dick Fuld, does a good job of telling what went on.
Many say the movie pulls its punches. We disagree. You've got Dick Fuld insisting that his firm can survive and fighting against filing for bankruptcy to the end, even though everyone in the industry knew they were doomed. You've got Bernanke, Paulson, and Tim Geithner cobbling together a deal where Barclays would buy most of Lehman, only to forget to make sure that British regulators would approve the deal. When the British regulators said they wouldn't approve it, that sealed Lehman's fate. And this was after a weekend where competitors of Lehman, such as Goldman Sachs, Morgan Stanley, and Merrill Lynch agreed to put up a billion dollars each to buy the toxic assets on Lehman's books.
In the end, what the movie does is humanize the main players who fought to keep the system from falling apart. We get to see just how close it came to happening, and we got to see how Bernanke, for all his faults, was able to act as the college professor he once was and explain to both legislators and CEOs alike why they needed to agree to unprecedented actions. We see how close John McCain came to scuttling the entire TARP with his ill fated decision to suspend his campaign and fly to Washington to focus on the problem.
The movie has a few great moments. In one of those moments, Geithner is jogging through New York and he realizes that nobody has a clue that the financial system is on the brink. He calls Paulson, and when he suggests that they merge Morgan Stanley, Merrill Lynch, and Goldman Sachs with banks so that the investment companies won't have capital problems, Paulson tells him he'll make them even bigger. Geithner replies by saying that it will stabilize the system, but the downside is that they'll be really fucking big.
Another telling moment -- and one that everyone who doesn't understand what almost happened in the fall of 2008 was all about -- comes when one of the few women in the film asks what she should tell the press. Cynthia Nixon, famous for her role in Sex and the City, plays Paulson's press contact. She's asking how she explains what's going on to the press. In one of the best moments in the film, Paulson and his assistants explain it to her.
Basically, they say, what happened is that credit standards to get a home loan got loosened. This happened, they say, because Wall Street made money aggregating loans and selling them off. And when the banks ran out of people to lend to who could actually pay off the loans, they started making loans to those who couldn't. The people taking out these loans were unsophisticated, and figured if their loan officer and realtor were making the loans, then they could afford them. Everything worked as long as housing prices went up. When the bubble burst, then the loans went bad, and things fell apart.
In a babe in the woods moment, she asks why nobody regulated this and kept things from getting out of control. The response, coming from Paulson, was because people were making a lot of money and nobody wanted to stop it.
If the rest of the movie was horrible, which it was not, that short segment would make it worth watching. It explains why the system went down in simple, easy to understand terms. There's no talk of CDOs, credit default swaps, or other financial jargon.
Too Big to Fail is an entertaining movie, but it provides you with a lot of insight into what the people who were involved in the financial crisis were thinking. It's well worth the two hours even for those who are not interested in the financial sector. If you are, watching how the major players interacted and what they said to each other is a compelling reason to watch it.
It also should serve as a reminder as to why regulation is required. It's less than three years after the taxpayers had to pour nearly a trillion dollars into private companies to keep them from failing. That is something to remember when people tell you that the private sector will police itself.
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Now, the book is over 500 pages long. And the movie runs about two hours long. Obviously, something has to be distilled out of the movie, and it's got to be rewritten so that it appeals to an audience that's not interested in finance. The American public is so poorly informed about financial matters that it's ridiculous. Ask the average American about the TARP and they'll probably tell you that the government lost all $700 billion, instead of profiting from it. And they will probably tell you that Fannie and Freddie need to be shut down, not understanding that if this happens, the entire housing market will pretty much freeze. They also are likely to believe that if AIG went down, they'd be fine.
But the movie, which is loaded with well known actors ranging from William Hurt as Hank Paulson to Ed Asner as Warren Buffett to Paul Giamatti as Ben Bernanke to James Woods as Dick Fuld, does a good job of telling what went on.
Many say the movie pulls its punches. We disagree. You've got Dick Fuld insisting that his firm can survive and fighting against filing for bankruptcy to the end, even though everyone in the industry knew they were doomed. You've got Bernanke, Paulson, and Tim Geithner cobbling together a deal where Barclays would buy most of Lehman, only to forget to make sure that British regulators would approve the deal. When the British regulators said they wouldn't approve it, that sealed Lehman's fate. And this was after a weekend where competitors of Lehman, such as Goldman Sachs, Morgan Stanley, and Merrill Lynch agreed to put up a billion dollars each to buy the toxic assets on Lehman's books.
In the end, what the movie does is humanize the main players who fought to keep the system from falling apart. We get to see just how close it came to happening, and we got to see how Bernanke, for all his faults, was able to act as the college professor he once was and explain to both legislators and CEOs alike why they needed to agree to unprecedented actions. We see how close John McCain came to scuttling the entire TARP with his ill fated decision to suspend his campaign and fly to Washington to focus on the problem.
The movie has a few great moments. In one of those moments, Geithner is jogging through New York and he realizes that nobody has a clue that the financial system is on the brink. He calls Paulson, and when he suggests that they merge Morgan Stanley, Merrill Lynch, and Goldman Sachs with banks so that the investment companies won't have capital problems, Paulson tells him he'll make them even bigger. Geithner replies by saying that it will stabilize the system, but the downside is that they'll be really fucking big.
Another telling moment -- and one that everyone who doesn't understand what almost happened in the fall of 2008 was all about -- comes when one of the few women in the film asks what she should tell the press. Cynthia Nixon, famous for her role in Sex and the City, plays Paulson's press contact. She's asking how she explains what's going on to the press. In one of the best moments in the film, Paulson and his assistants explain it to her.
Basically, they say, what happened is that credit standards to get a home loan got loosened. This happened, they say, because Wall Street made money aggregating loans and selling them off. And when the banks ran out of people to lend to who could actually pay off the loans, they started making loans to those who couldn't. The people taking out these loans were unsophisticated, and figured if their loan officer and realtor were making the loans, then they could afford them. Everything worked as long as housing prices went up. When the bubble burst, then the loans went bad, and things fell apart.
In a babe in the woods moment, she asks why nobody regulated this and kept things from getting out of control. The response, coming from Paulson, was because people were making a lot of money and nobody wanted to stop it.
If the rest of the movie was horrible, which it was not, that short segment would make it worth watching. It explains why the system went down in simple, easy to understand terms. There's no talk of CDOs, credit default swaps, or other financial jargon.
Too Big to Fail is an entertaining movie, but it provides you with a lot of insight into what the people who were involved in the financial crisis were thinking. It's well worth the two hours even for those who are not interested in the financial sector. If you are, watching how the major players interacted and what they said to each other is a compelling reason to watch it.
It also should serve as a reminder as to why regulation is required. It's less than three years after the taxpayers had to pour nearly a trillion dollars into private companies to keep them from failing. That is something to remember when people tell you that the private sector will police itself.
For more articles like this, please visit Buy and Hold Plus.
Related articles
- 'Too Big to Fail' review: Financial thriller (sfgate.com)
- The Bernanke-Paulson Exchange That Never Happened (blogs.wsj.com)
- Too Big to Fail? Geithner Says No (thedailybeast.com)
- Too Big to Fail humanizes Wall Street (arts.nationalpost.com)
- Too Big To Fail Review: Too Light on Blame? (curiouscapitalist.blogs.time.com)
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