One of my favorite sort of review is one in which an expert, rather than a TV or film critic, reviews a TV show or film on his area of expertise. Years ago, one of my most enjoyable writing experiences was watching a show on The History Channel alongside the eminent Jesuit historian John W. O'Malley, and hear him comment from time to time, "Well, that never happened," or words to that effect. (The article, as they say, wrote itself.) So when I received news of HBO's new drama on the economic meltdown of 2008, based on Andrew Ross Sorkin's book Too Big to Fail, I knew we needed an expert reviewer. (The film, of the same name, airs Sunday evening.) So here you go: Charles Wilber is emeritus professor of economics and a fellow at the Kroc Institute for International Peace Studies at the University of Notre Dame in South Bend, Ind., and frequent contributor to America. He's one of the clearest of all economic writers (saith I as a former Econ major). In this online Culture piece, just posted, he gives high marks to the drama, which is based on one of the most dramatic periods in recent history.
I am an economist, not a film critic, so I will not say much about HBO’s “Too Big to Fail” as an example of film making. My reviewing process: I watched the film with my wife and we then discussed it.
The film is a cross between a mystery drama and a documentary. HBO went all out and cast big-name stars: William Hurt stars as Treasury Secretary Paulson, Ed Asner as Warren Buffet, Billy Crudup as New York Federal Reserve President Timothy Geithner, Paul Giamatti as Chairman of the Federal Reserve Ben Bernanke, Kathy Baker as Paulson's wife, Wendy, and one of my favorite actors, James Woods, as Richard Fuld, chairman and CEO of Lehman Brothers, whose filing for bankruptcy in September 2008 set off shockwaves of fear that the entire financial system was about to implode.
To emphasize the film as a drama the producers focus on Secretary Paulson and his personal interaction with the other characters—Bernanke, Geithner, assorted bank presidents and other financial movers and shakers. The film's perspective is that the financial sector caused the crisis and then was called upon to fix it. They did, but at a high cost. The collapse into a full-scale depression was avoided, but the banks got even bigger through forced mergers; later, the banks sat on the capital infused by the government, and executive bonuses returned to their pre-crisis level.
As a viewer I enjoyed the film, and the dramatization brought the crisis to life. My wife and I both think that unless you already know quite a bit about financial operations you will get lost in the complicated events and obscure terms and perhaps not understand what caused the crisis and how the various players went about containing it. At one point in the film, a public statement needs to be made and after one aid spouts out a jargon-filled explanation of the looming crisis another yells "It’s got to be in English."
I am not sure whether the filmmakers have got all the details correct. I am not an expert on the inner workings of the financial system or of what went on in the Secretary of the Treasury's office at that time. However, it "feels" right. In other words, yes, this is how it could have played out.
Let me share some reflections and reactions on watching the film twice.
They dealt with it in a way that many disapprove but by the end of November the crisis was over and by the following February the market knew it was over and things started to move in a more normal fashion. But meanwhile millions had lost their jobs and continued to lose their jobs. The housing crisis precipitated the panic but if the Wall Street Banks were not so heavily leveraged and into mortgage bonds there would not have been a panic. There still would have been a housing crisis as housing prices rose almost 150% in 10 years starting in 1997 when normal appreciation should have been about 20%. There still would have been a housing crisis when prices plummeted and there still would have been millions under water and millions of foreclosures even if Wall Street did not fall apart.
These movies that try to tie the two together as one thing miss most of the problem. Wall Street could have survived easily if they were not so greedy and leveraged and there still would have been a housing caused financial melt down. By 2007 there were 27 million sub prime and alt A mortgages in the system, most processed by Fannie Mae and Freddie Mac but a lot processed by Wall Street and this gets glossed over in these sensational movies and books about Wall Streed greed.
One of the architects of the housing crisis is being groomed by the Democrats for president in 2016. That is Andrew Cuomo. The black governor of New York was thrown under the bus to make room for him and forced to withdraw from the race for governor to pave the way for him.
Another is Jesuit trained Angelo Mozilo who walked away with probably near a half billion dollars from his role in financing the phony mortgages. He bribed too many congressman to be indicted And of course Wall Street was a major contributor to the political parties but mainly the Democrats so there will not be any close scrutiny there. The largest recipient of Fannie Mae and Freddie Mac political contributions was Barack Obama so you know they will not get a close look. Hillary Clinton was the second biggest recipient of their money.
Wilbur's four "reflections and reactions" are the end completely misrepresents what the 2008 fiancail crisis was about. It was not a moral drama of reckless risk taking and indifference to the economic impacts of the finacial crisis. The financial crisis was an unanticipated economic evetn that took everyone inside and outside government by surprise. No immoral action or ioinaction caused the 2008 fincial crisis. And it was in no one's interest to do anything but contain and correct the hugh liquidty poblem the whole banking and fiancial system was facing.
The root casue of the financial crisis was the collapse of prices in the the housing market. The Federal Reservce and almost all economist did not as a technical matter (and nothing to do with morality) recognize taht a housing price bubble was developing . Housing prices were high and went higher still due to the abundance of money made available for housing mortgages. This drove up the Hosuing prices antionwide to a point no one could afford to buy a house. People stopped buying houses and the hosusing prices collapsed. The hosuing price bubble burst. People could no logner sell their homes and prices continued to fall right up to the present People defaulted in mass as home values fell to much less than what they owed to the bank on their mortgage. This mass default of mortgae payments and foreclosuers impacted the United States banking and fiancicial system in the loss of trillions of dollars. Thsi hugh loss of mortage payments threatened to collapse the entire financial system.
Most Europen nations at the same time and for the exact same reason also had fianncial crisis and their housing prices also continue to decline today. This is atechnical economic event not a moral conspiracy.
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