ProPublica

Journalism in the Public Interest

Cancel

In HBO’s ‘Too Big to Fail,’ the Heroes Are Really Zeroes

Watch carefully, and you’ll see how the three men who saved the world—Federal Reserve Chairman Ben Bernanke, NY Fed’s Timothy Geithner, and Treasury Secretary Henry Paulson—get it wrong again and again and again.

.

Actor William Hurt playing Henry Paulson in HBO's 'Too Big to Fail' (Photo courtesy of HBO)

HBO's "Too Big To Fail"—I just caught up with it last night; thank you, HBO On Demand—is extraordinarily revealing about the financial crisis. Only its revelations are almost entirely inadvertent.

The movie is set up in the Hollywood conventional way: A gang of misfits, each with a special expertise, is brought together for an impossible mission. There's Treasury Secretary Henry Paulson, steely eyed at the moment of truth. There's New York Federal Reserve head Timothy Geithner, the athlete (he doesn't just jog, but also plays what appears to be squash). And then there's Federal Reserve chairman Ben Bernanke, the professor with a heart of gold and secret knowledge of the Great Depression.

Ostensibly it's a story of their success against all odds. Michael Kinsley, reviewing the movie in the New York Times, labeled Hank Paulson the "hero" of the account.

Except that the movie actually depicts something entirely different: failure upon failure. "Too Big To Fail" The Movie isn't the story of how the Three Musketeers saved the global economy. It's a story of how the three didn't see the financial crisis coming; hadn't prepared for it; made mistake after mistake as it was cresting; and then, in their moment of triumph, made their most colossal blunder of all.

That, it turns out (whether or not "Too Big To Fail" knows it), is the true story of the financial crisis.

How much did Curtis Hanson and the writers mean for that to be the story? Throughout, the characters drop hints about their missteps, but the plot unfolds like a financial "Die Hard," with our intrepid heroes battling fiendishly powerful forces toward a happy ending. (Full disclosure in this era of transparency: I write a regular column for DealBook, the New York Times section edited by Andrew Ross Sorkin, the reporter upon whose book the movie was based.)

Early on, Paulson complains to his staff that they have been behind on everything as the crisis began to emerge. And that's true! The crisis actually started in the late summer of 2007. Paulson's first effort, late that year, was to get a bunch of banks to assemble a giant off-balance-sheet concoction that would save each individual bank's off-balance-sheet monstrosity. It was a complete flop.

In the movie, as bankers and government officials frantically try to save Lehman, Chris Flowers, the private equity investor and banking impresario, is depicted as informing Paulson and Geithner that AIG is teetering on the edge. In their fumbled response, he immediately grasps the truth. "They're not on top of it," he tells a confederate.

And they weren't. In real life, AIG had been struggling since the middle of 2007. Paulson and Geithner of course had some inkling of the problems at the world's largest insurer. But they didn't prepare for it.

In the movie, the chief executive of General Electric, Jeff Immelt, places a terrified call to Paulson saying that GE can't borrow. GE is standing in for every Real American manufacturing company. We are reminded it makes light bulbs and washing machines. Paulson is shocked that such a stalwart could be having trouble borrowing.

The reality, of course, is that GE was more a finance company than a manufacturer and was teetering because it financed those operations with billions of short-term borrowing. It is also true that Paulson, Bernanke and Geithner had no inkling of GE's troubles until the very last moment and therefore had no plan to deal with it.

Plans are, in the movie, almost nonexistent. The team of heroes races from crisis to crisis, as Bond goes from chase scene to babe, eventually stumbling on the evil SPECTRE plot to take over the world. Intentionally or not, the movie is echoing real life.

Despite warning signs, Paulson, Geithner and Bernanke had no evident plans throughout the last half of 2007 and the first eight months of 2008. Not for how to resolve Lehman after Bear Stearns' collapse, not for AIG, not for recapitalizing the banking system.

Indeed, they asked Congress for $700 billion to implement the Troubled Asset Relief Plan to buy toxic assets from the banks, and then, without any further discussion, abandoned that idea and injected capital into the banks. Many economists and financial experts had been urging them to do just that, but when they finally hit on that as a solution, it was so poorly thought out that they gave the money to the banks on overly generous terms.

This moment is depicted at the end of the movie, and because it is both a triumph in the conventional narrative sense, but also a major mistake by our heroes, it is the  point at which the movie is most cognitively dissonant. Paulson, Bernanke and Geithner have finally come to their solution: Put capital in the banks. They gather outside the boardroom where they are going to confront the CEOs.

For purposes of dramatic tension, we have to see their nervousness that the deal won't go through. The Treasury secretary and the two most powerful central bankers in the country are about rescue these CEOs and their institutions from their own recklessness, yet they cower in fear of rejection.

Of course, this rings true because the government drove awful bargains. In the aftermath of the greatest credit bubble in history, it protected creditors at almost every turn. The government gave the banks money but didn't get voting rights and didn't prevent the banks from using the money to pay dividends or bonuses. They wrote what was essentially a blank check. In real life, Warren Buffett got much better terms when he invested in Goldman Sachs.

What is the audience to make of these scenes? Paulson, our supposed hero, insists that if the government puts any restrictions on the money, "They won't take it!"

It's left to the hapless PR woman, played by Cynthia Nixon (who has, moments earlier, had the crisis explained to her in words of one syllable for the sake of her, and the audience's, simple minds), to wonder why, if the government is saving these institutions, it couldn't impose any limits on how the money be used.

The banks do take the money, of course. They have no choice by the conventions of Hollywood. Nor did they in real life, something that the Three Musketeers never fully appreciated.

After the scene, the Big Three gather in a room, relieved, and Bernanke asks, "They will lend the money out, won't they?" The director, Curtis Hanson, focuses in on Paulson, who gazes out the window, as if contemplating the question for the first time. He insists they will. But an unmistakable moment of doubt passes across his face.

Fade to the postscript. There we learn that, whoops, the banks didn't lend it out after all. Instead, they got bigger, banker bonuses recovered, and Wall Street is getting bottle service at velvet-roped clubs all over again. The world was saved from ruin, but the banks quickly went back to business as usual and even felt self-righteous about it.

Yep.  I saw what you saw, pal.  A pretty good movie, love William Hurt - but a tragic tale of supposedly smart guys failing on a grand scale to apprehend, once again, reality.  On what planet could they have expected the banks to behave responsibly when they had already demonstrated to a breathtaking degree, that it was simply not in their nature to do so.  A tiger after all, is always a tiger.

I thought the casting was pretty decent.  I loved Paul Giamatti as Bernanke.

acmodspecialists

May 25, 2011, 10:32 a.m.

The whole tale is told at the end of the movie with titles that states that the banks instead of helping America, they turned around and proceed with not lending any money and instead proceed with over 5 million foreclosures, that is how they pay back the taxpayer for saving their asses!

The banks must first save themselves to be able to save anyone else. They were reluctant to lend money using the same lending criteria that got them into trouble in the first place. To put the country’s credit on solid ground for the first time in a decade means that we had to go from 80+% of the people being qualified for loans to maybe only 60% of the people being qualified. The whole economy has to adjust to the new lending criteria and that takes more time than most people would like to believe.

And what about all the ‘zeroes’ —you know the journalists that still to this day do not understand the difference between SPENDING and cash infusions as investments.

The government has been paid back 75%+ of the $350 billion it lent and has value that will get back at least another 15%.  So if saving the banks ended up costing $25-$50 billion,  this was quite a good thing.

Having AIG default would have been an unmitigated disaster.  Paulson wasn’t responsible for this crisis nor could he have stopped it even if he knew.

Monday morning quarterbacking article by another zero.

i almost don’t know where to begin, but one thing i know with certainty; amongst all of the tomes so far on the meltdown, tbtf is the least insightful.

in fact, gillespie & zweig’s “money for nothing,” which isn’t even directly about the meltdown, is MUCH more penetrating into how the econ meltdown occurred.

sorkin is *way* overrated - he’s not an analyst but a chronicler, a meltdown paparazzo were tmz to decide coverage warrants. prins, whitney, taibbi, dean baker, peter schiff… the list goes on in terms of superior meltdown writing. and if you want journalists look no further than sorkin’s own nyt brethren, gretchen morgenson, who’s far more penetrating.

behindthecurtin

May 25, 2011, 12:27 p.m.

Is the banking crisis over? Are the chairs back in place so that the music can start?

Michele Zimmerman

May 25, 2011, 3:20 p.m.

I thought last night when I watched it too “Were they in a different universe?” I am glad my hold on reality is still as cold-hearted and truthy as yours. The HBO movie was a laugh, and they “did NOT GET IT!”
Thank you for some welcome reality.
Keep speaking Truth To Power, it’s rare.

The movie that gets it right is: “Inside Job”

Now that’s an awesome movie!

We need to take Washington back from Wall Street. This can be done by 1) recess appointment of Elizabeth Warren, 2) allow Sheila Bair to pick her successor, 3) give Paul Volcker final approval of Dodd/Frank rules & regulations & 4) appoint Brooksley Born as head of FTC & allow her to regulate derivatives.

How about that Christopher Cox (SEC Chairman)? Another in a long line of incompetent Bush appointments, which is part of their self-fulfilling prophecy concerning the incompetence of the federal government.

andrew whorkin, wall street’s golden boy. for real analysts who are telling the truth about the meltdown, see: http://econmelt.com/?page_id=185

What is so significant to this bystander is the sports metaphors that have come to define our reality. For a primer on how we got here, I redirect all interested parties to a book - no, really!
Taking the Risk out of Democracy, it was a text in Modern Communications more than a generation ago. Little college press in Illinois, but an exhaustively researched and compelling dissection of how modern US corporations invented PR and Human Relations, and bent the truth to their needs.

I saw the same movie you saw and I thought it was brutally honest. The Three Musketeers weren’t heroes or zeroes, just three guys flying by the seat of their pants without a playbook. No they didn’t see the crisis coming and no, they didn’t have a plan set up to deal with it. The movie makes that perfectly clear. But they did end up saving the economy even if it meant that the banks that survived made even more money. That’s what greed is all about, isn’t it?

Actually, I thought HBO did a pretty good job showing that they messed up and certainly it was not presented as some melodrama where these guys were superheroes.  That said, think you got to give some credit where credit is due.  We were on the brink.  We did not go over largely because of what was done by very imperfects.  That part was real.  Agreed that these guys were firemen who helped set the fire—but there were plenty of those folks right down to John Q. Public and the financial press corps that treated WS CEOs like rock stars.  At least these guys put out their fire. I hope.

I disagree Bob. We should have:

1. Taken the banks into receivership/bankrupted them;
2. Converted debt into equity;
3. Got on with life.

This is a LAW; the Prompt Corrective Action federal law mandates this. Further, it is the outgrowth of that past crisis, the S&L disaster.

This just shows we haven’t learned a thing from history, and that Churchill had America pegged: “America always makes the right decision, after it’s exhausted every other possibility.”

The author defeats his own point while he tries to make it. The movie did not present the three main characters as heroes at all. In fact, the movie provided eerie detail for the dismantling of intellectual certainly for these three characters born out of a lifetime of success. The unspoken context of Paulson, Bernanke, and Geithner’s decision-making process was the deeply held assumption of prudent actors in a self regulating free market economy. As reality proved the hollowness of their assumptions, these main characters did what thoughtful, intelligent people do…they learned (all too grudgingly for my taste). They restored confidence to the market with audacious, government intervention. And they had the horror of observing the potential damage unchecked intellectual certainty can have at a time of crisis (see John McCain weaken consensus & Congressional Republicans scuttle the first vote). First they had to abandon their assumptions (self regulating, prudent actors), then betray their convictions (by supporting interventionist government), and finally accept salvation delivered by their political enemies (Nancy Pelosi, et.al.). I can almost hear Greenspan in the background whispering “how could we have been so wrong?”

Re:  “It’s a story of how the three didn’t see the financial crisis coming; hadn’t prepared for it…”

I think the American people underestimate the malicious nature - and goals - of the few who are the true American right.

I think they did see it coming (witness Goldman Sachs’ bets against the mortgage-backed products they were selling; recall that Paulson is a GS alumni) but they overestimated the amount of time they had.

After the WMD lies and the blatant manipulation of America into Iraq and the mismanagement and so failure of the “Get in, get OBL, and get out.” Afghanistan adventure, the right knew they wouldn’t retain the White House.

But their (yes, their; see archives.hud.gov/remarks/martinez/speeches/presremarks.cfm and consider carefully both the date of that speech and the implications of the line where Bush brags of laying the Presidential arm upon Fannie Mae with the consequence that $440 billion - over half of TARP - was “created” out of thin air) mortgage-backed securities scam collapsed prematurely.

By one Presidential election.

Maybe they weren’t ignorant, but did what the big wigs wanted them to do.  Many bankers (and others) have gotten much more wealthy over the past few years.

I watched it and could appreciate the acting, but was infuriated by what was left out. Go watch “Inside Job” and you’ll see the real story (and be left fuming at their idiocies).

Or maybe banks should go back to what banks used to be; A repository/despository for people to keep there hard earned money in a safe account-a la FDIC. When did banks start doing other things?  I suppose it was during the 80’s when business got whatever they wanted during the Reagan Administration.

A friend of mine was buying a pre-fab house and needed just a few thousand more, which he had in a retirement account with Lehman Brothers.  He had a little over $3K.  He pulled the money out, and a couple of days later, boom, Lehman closes shop.  Had he waited two days, he money would have been worth about $50!

Giethner is not the answer and I hope during his second term, Obama will realize that.  We need a progressive Secretary of the Treasury that will look to the future, not just one that handles damage control.

Peggy Deras

May 25, 2011, 5 p.m.

I didn’t see the HBO film, but instead watched the whole thing in real time.

I’m a kitchen designer in the San Francisco Bay Area and saw my work fall through the floor in mid 2007. Clients told me that their home equity lines of credit were being rescinded by their banks. A ten year boom in remodeling came to a crashing end as a result. My clients’ piggy banks were broken.

In August of 2007 I pulled all of my IRA and Keogh retirement investments out of mutual funds and into money market accounts. My retirement funds stayed there, safe and secure, while the meltdown happened and into 2009 when I reinvested in mutual funds. I didn’t lose a penny and actually have nearly doubled my investments since getting back into the market.

If I, a kitchen designer, certainly NOT an investment expert, could see the crash coming; why could not these vaunted experts in money management for the US government see it? Seems fishy to me.

I also give credit to Kathleen Pender financial columnist at the SF Chronicle for helping me to understand what was happening and act before all was lost. Thanks Kathleen!

I’m with Brian Book “We need to take Washington back from Wall Street. This can be done by 1) recess appointment of Elizabeth Warren, 2) allow Sheila Bair to pick her successor, 3) give Paul Volcker final approval of Dodd/Frank rules & regulations & 4) appoint Brooksley Born as head of FTC & allow her to regulate derivatives”.

Who could have seen AIG imploding?  Their CDS unit operated from London out of sight of US regulators!  Dick Fuld, obstinate and ignorant, could not see Lehman failing even though he moved debt off b/s to brighten his earnings and had sat at the helm for years.

This was a MUCH more realistic view than ‘Inside Job’ which flailed around trying to prove some vast conspiracy of fraud.  This was willful ignorance in the financial community.  A credit crash is rare - the last was 1930ish and is the most severe of all financial calamities.  And speaking of GE, it turns out the Fed had to set up a CP loan program so McDonalds and others could make PAYROLL - that is how tight credit was!

While all the main participants were blind in 2006-07 Bernanke must be commended for his skill in avoiding the GD II - which will be in textbooks in 20-30 years.

George B. Hug

May 25, 2011, 5:12 p.m.

As time passes the truth becomes further obscured by the disingenuous interpretation of the failed losers. If nothing else, the movie reveals how Sorkin’s ‘Mission Impossible’ team saved the Banksters from their own colossal greed & unchecked hubris, allowing the monster to grow even more powerful & ominous.

Unfortunately the banksters were not only saved, but also ‘reanimated’ and now these ‘vampire squids’ are back again to suck the last drops of blood from those of us who were not thrown under the bus the first time.

HBO’s depiction of “...the story of how the Three Musketeers saved the global economy” is not one of patriotic heroes preventing an economic catastrophe, but a calculated & cynical obfuscation of the fact that all involved were part of a well oiled & functioning criminal enterprise.

James F Traynor

May 25, 2011, 5:15 p.m.

I’m an ecologist (money bores me), but years ago, out of self preservation, I took a look, got scared and decided to do something about our retirement (my wife, an RN, is also bored about money).

What I have learned is truly astounding. I began getting nervous in the ‘80s and still am. The Republicans scared me, the Democrats dismayed me, the ignorance of the general public terrified me.

Greenspan? Oh, my God! The man should be classified a natural disaster. He said the market in derivatives was isolated from the general economy. And I, the nerd idiot, accepted this. Derivatives? Too complicated they said. O.k., I didn’t have any, so I didn’t worry about it.

Well, derivatives did affect the economy, they are not complicated and we all got screwed. Sheila Blair tried to warn them, Brookesly Born tried to warn them. We’re still screwed and we’re being screwed and we will continue to be screwed until we put an end to laisse fair capitalism.

I saw this movie last night in my hotel room in Chicago. I’m a cable cutter so I was looking forward too this, What a Joke! Paulsen, Geitner, and Bernekee are made out to be super heros saving the day; and GE was was played as the Red Headed Stepchild. Anyone who believes we live in a Replblic is a fool! We got a peek behind the curtin during this last depression. The Government had a chance to change the banking system but was bought off by the finincial lobby. The big banks are running the country now. I’m sharpining my pitch fork.

As predicted, here come the Conspiracy Theorists.

Lehman, Bear, Merrill, AIG, Wachovia, and others all BANKRUPTED THEMSELVES as a get-rich scheme — a “criminal enterprise”!

Citicorp and Bank of America brought their equity prices down 97% as a get-rich scheme!  They wanted all these non-performing loans!

Hilarious.

I have a difficult time reconciling the demand that I discount the possibility of a conspiracy with the presence of a plethora of Goldman Sachs’ alumni within the White House and all government financial oversight even as Goldman Sachs itself was betting that the mortgage-backed securities would fail.

What, you leave GS and never speak to the firm or any of its partners again?

Yeah, right.

By the way:  Using the failure of Wall Street firms as “proof” that no conspiracy existed is employing the same fallacy that the Supreme Court used to assault democracy in America:  Anthropomorphizing corporations as people.

You don’t look at the success or failure of the firms; you look at how much money the individuals who were directing the firms walked away with

Ain’t no skin coming off of your nose if you properly shield it with a couple hundred million dollars of the public’s - and the taxpayers’ - money that you take care to drain off over the course of the scam.  It is the latter group - the American people - who got skinned.

Somebody give me a list of flat-broke former Wall Street executives and maybe I’ll reconsider.

Havent seen the movie…..
no doubt it shows the players
but how can one show the dealers.

The big deal is to educate the American people on how credit is created, then and only then can Americans make informed decisions about where they should direct the credit created.

This most powerful force on earth , if directed, is its only hope off dealing with the calamities our planet faces.

Americans have the potential to be at the forefront of this opportunity , to retain its leaders ship as an economic power and possibly as a moral force to boot. ( realy streching it here), no matter you will get rich!

The perfect storm of fresh laundered cash into the banking system from high energy and commodity prices and huge soverign wealth funds such as China allowed for the huge ability for the banks to create the trillions that they did and squander on private debt in America, that was ultimately picked up by the single entity called the state, backed by the taxpayer. lol or cry my f’eyes out

Our only hope for the world is the BRICS countries that are more responsible and have a better grasp of what is needed .

I doubt that there will ever be a movie that could really educate the people on this real power/force to create credit and that they own it but long ago handed it over to private enterprise.
The irony is that the argument to hand this force over to private enterprise was that governments could not be trusted with it.

We all know to well the fallacy of that argument now when it is so clear that apart from a consolidation of banks (objective met) , consilidation of debt with the State ( objective met) and might pay off to the workers in bonuses and a big bone (bribe) to the military industrial complex to placate the only ever real potential threat to the central bankers.

Ultimately, the BRICS will back their currencies with gold and America may act more responsibly in future.

I’ve just finished reading all of the letters to this point, and in the midst of what I consider the largest catastrophe in history, I am damn proud to be an American when I see the level of thought here—even if I disagree.

In 2007 I had my own company, but noticed that potential customers I had ready to go all of a sudden pulled back. 2008 put a lid on everything. I haven’t worked in over 2 years now…

As time went on I got curious; how could, in Q1 of ‘09, mere months after the apocalyptic fall of ‘08, the banks be posting record profits??? After sending out 30-50 resume’s a day with deafening silence, I began to go stir crazy and decided I needed to plug in - SOMEHOW. As a former history major, I didn’t have econ or financial skills, but I knew how to research, analyze and write. So I dove in…

The story that unfurled is so staggering and beyond anything Machiavelli could have conceived, in 2006 if you’d have put it into a script and shopped it to Hollywood they would have looked at you like you were from Pluto.

Within about a year I had too much data, and growing on a daily basis. Together with a college friend, we realized everyday people were blind-sided because they simply didn’t have the tools, the info, to understand. So we organized it here: http://econmelt.com/index.html

Just click anywhere toward the bottom.

I loved Peggy Deras’ letter that so exemplifies the story of the meltdown from “everyday street” and while I understand her agreeing with Brian, I disagree. Bringing in new people in old systems is not the answer because the system itself is so broken, it must be analysed.

For starters, take the SEC. Bernie Madoff, while not directly related to the meltdown, is instructional. Harry Markopolous, an econ forensics investigator, notified the SEC about Madoff for over NINE YEARS prior to fall of ‘08.

And if they didn’t cut off Madoff at the knees—for whatever reasons—going after behemoths like Lehman and Goldman was obviously taboo.

The system is rife with conflicts of interest, fraud and, taking a page from Watergate’s “Deep Throat” Mark Felt, follow the money.

Therein lies the fundamental cause of our systemic failure; payola. Because when powerful people such as former Senate Banking Committee Chair Chris Dodd and his counterpart in the House Barney Frank have conflict of interest relationships with Countrywide, that, in poker terms, is a tell. That nothing has been done to root out the infiltration of payola into the system is also a tell.

I wish I could say that Liz Warren, Brooksley Born, Harry Markopolos, Iris Mack… were the answer. Sadly, if I had to bet, I’d say they aren’t.

An important part of any recovery that’s desperately needed is for everyday Americans—like us here—to wake up and get serious about our country that was built on the backs of our grandparents (I’m 3rd generation). Part of that is educating ourselves and then ORGANIZING into something beyond individuals just complaining and then voting in and endless cycle. Something with TEETH.

I think a god place to begin is money. But that’s a whle other essay, and I’ve obviously ranted way too long, and apologize.

I thought it was nothing more than an attempt to make these Bastards, look human and caring.
I will stay with Matt Taibbi’s account of the events, as he writes about them in Griftopia.

acmodspecialists

May 25, 2011, 8:29 p.m.

What was not in the movie:
Why do the Banksters (gangsters) have to produce questionable documents to proceed with a foreclosure? and Why can’t the banks simply use the documents on file in the County Clerk’s Office to foreclose?? mmmm…..anybody?
I alleged rampant, widespread bank fraud plus more fraud on top of fraud, is the reason, and I answered the questions regarding Property values, court budgets, pension funds, robo-signing, tax base, foreclosures, bank fraud and much more…are all seamlessly linked together. by suggesting that the banks INTENTIONALLY DESTROYED original NOTES and MORTGAGES. On purpose.
I also like to pint that they intentionally avoided filing subsequent assignments of mortgages, thereby EVATHING BILLIONS in filing fees. And there was another question: Why would the banks intentionally do that?
Here is what was going on during the housing bubble and its not in the movie. 1- Mortgages were intentionally being given to anyone, so long as you were breathing, and in some cases even if you weren’t breathing yes, dead people ! (They did mention it in the movie but a very slightly)
So if you know someone who exploited this open spigot of cash, remember they could not have done it without the banks being COMPLETELY willing to provide the poorly underwritten loan.
The bank would then package up these mortgages in large groups and sell what are known as Mortgage Backed Securities (MBS) (the did mention that in the movie) to pension funds, municipal governments, and your grandmother, hey your garndfather too.
Therefore the banks were IMMEDIATELY made whole on the million dollar loan they had just given to the guy working the drive through. The banks were then supposed to PLACE the original note and mortgage in a trust,BUT THEY DID NOT. (not in the movie)
The banks simply provided a spreadsheet of numbers to the investors representing the mortgages, and then destroyed the originals, or conveniently “lost” them. (not in the movie)
Why? Why would the banks do that??
Because if they had actually provided to your grandmother the mortgages she had been sold as well underwritten prime mortgages, she would see that they were a large pile of smelly dog excrement and know that she had been defrauded, Get it? in other words they did that to ide the fraud, (not in the movie)
It gets worse, Sometimes they sold the same mortgage numerous times, placing it in numerous securities. They could, because they only provided a spreadsheet, and not the original docs.-NOTES (not in the movie)  You guys follow me?
This is what is ultimately affecting property values, market confidence and tax base. (not in the movie)
But gess what, IT GETS WORSE, More often than not, these securities were sold, resold, and traded as these MBS (Mortgage back Securities) spreadsheets were kicked around like beers cups at Fantasy Fest. Novels will be written as to the scale of the fraud, credit default swaps, (CDO’s) and methods with which those in the know were gaming the system. But lets tune in to this PONZI SCHEME. (not in the movie)

That was Hollywood version, for real version watch INSIDE JOB.

Nice primer for the masses…Now where’s the real movie for us adults

For all the good points made about the movie and the financial disaster in general. Does it matter? Even if we had all the Elizabeth Warren(s) and dare I say (soon to be former auditor general of Canada) Sheila Fraser on our side. Would anyone listen? My question is, do the people of Slave Lake, Alberta and Joplin, Missouri, need more tents?

Haven’t seen the movie/docudrama yet, but will catch up with it. Yes, these bankers act as if they are above the law and the their bank, a business entity is a country unto itself to whom they hold allegience. They are ripping off, we the people, whose money is the same money in these banks, and acting as if they are untouchable.

Monetary and criminal penalties must be bought against the banks and the top CEOs. If they, or any business, is “too big to fail”..then they damn sure is too big to exist and must be divested and broken down!! Anti trust laws were in existence for a reason…mainly the avert an economic collaspe such as what we had!!

WAKE UP PEOPLE—-THERE ARE NO LOANS—-THEY ARE STEALING HOUSES—-IT’S UNSECURED DEBT—-SPREAD THE WORD—-YES, THEY WILL FAIL—-


from   livinglies(dot)wordpress(dot)com:  (go there for the TRUTH!):

saveamericaone, on May 25, 2011 at 8:25 pm said:

They got rid of Elizabeth Warren who could make a difference. I pray she will resign and begin mass joinders so I can work for her!
The Attorney General in CA said she will be pursuing cases under False Claim Act –
This inquiring mind wants to know how she will help consumers from unlawful seizure of property denied due process by substantive omissions of material facts, fraud, intent to take property by deception, third party taking possession of property in larcenous manner.
Every consumer foreclosure in hands of a national bank under visitorial powers of OCC !!!
Attorney General with Jurisdiction over unlawful business acts if OCC allows them to proceed.
The False Claims Act (31 U.S.C. Sections 3729-33) allows a private individual or “whistleblower”, with knowledge of past or present fraud on the federal …
There is no one – absolutely no one – who is going to help so we have to take care of business ourselves.
Thank God for Living Lies Team Members

wallstreetisacasino

May 26, 2011, 9:17 a.m.

I am reluctant to like this movie.  I can’t bare the “simple explanation” of mortgage backed securities and default swaps so that the audience has even a clue as to what happened.  Further, and possibly most infuriating is the notion that we are to somehow gather empathy for the exact people who created the worst financial crisis we have ever seen. They are criminals, make no mistake and Paulson is quite possibly the worst.  You don’t head up Goldman and breath derivatives for a living and then wonder what went wrong.  It’s as if Paulson was the old school marm and the children had run amok.  Unreal!

This makes me wish I could afford cable TV to watch it, but alas I didn’t get a blank check and a bail out.

I refuse to watch this hokey dramatization of some of the most incompetent characters in our government’s history that is designed to elicit feelings of sympathy from the audience.  It is remarkable, judging form the comments posted here, and the release of this film only 2.5 years after financial catastrophe, how the consensus is becoming that we have magically averted catastrophe and avoided a Second Great Depression. 

This, of course, is against a backdrop of unemployment figures that have not improved for over 2 years (figures that are being constantly manipulated to put a rosy picture on our situation), stalled foreclosures and new housing starts, home prices that continue to sink, a European Debt Crisis that has been spurred by Wall Street, and stagnant and reduced wages for working Americans.  Homeless Shelters are at capacity, and Food Pantries can’t keep anything on the shelf.  One in 4 children in America now goes hungry.  Infrastructure is also crumbling in this country, states and cities are broke, and retirees have not seen their retirement investments recover.  Is this the picture of “recovery”?

How about everyone one take a minute to step back from the job that you should be thankful to have and look at the big picture: are we REALLY out of the woods?  did the actions of Bernanke, Geithner, and Paulson really “save” our economy?

The tragedy is that our national discourse has been hijacked and our outcomes truncated by a consistent, unremitting corporatist propaganda tsunami.

Since the inception of PR and ‘human resources’, Americans are the most ‘propagandized’ population in history, and our sagging national fortunes embody the cognitive dissonance that passes for our zeitgeist these days. Dark days indeed.

The questions resulting from viewing “Too Big to Fail”  demonstrate the mental corporate capture and six generations of successful disinformation campaigns that separate values from results. Wall Street is the ‘cash wrap’ for situational ethics, where ‘the best and the brightest’ check their souls at the door and get bottle service and selective blinders in return.

“Too Big to Fail” and some of the posts on this site are apologists - Yeah, sure there are stumbles, where millions are dispossessed, where pensions are hoovered into the gated communities of the rich and the fatuous, but this is just ‘table stakes’ at the casino of consumerism, where the gruesome results of unfettered clear cutting of our responsibilities to each other are ignored. When the dominant corporate paradigm is ascendant, as now, even the Justice Department is stymied - precisely because the entire housing financial industry was corrupt, immoral and engaged in a criminal enterprise of incalculable unstoppable immensity.

Barry Schmittou

May 26, 2011, 12:51 p.m.

There are many dangerous crimes the Obama administration will not prosecute !!

Quotes from numerous U.S. Judges’ prove Doctors’ paid by insurance companies’ are ignoring life threatening medical conditions in disability claims !

The Judges’ quotes you’ll see on the website linked below include :

U.S. District Judge Richard Enslen wrote “Metlife and its henchmen” regarding MetLife’s treatment of a disabled psychological patient who has attempted suicide multiple times.

* * A Psychologist wrote that MetLife’s treatment of a disabled cancer patient was “inhumane, dangerous, and reckless”

* U.S. District Judge Timothy J. Savage wrote that Metlife (and their paid consultant Dr. Greenhood) ignored MRI reports that evidenced Multiple Sclerosis and brain lesions of patient Jacquelyn Addis

* U.S. District Judge Robert Cleland wrote that Metlife and Dr. Greenhood ignored a foot that patient Joanne Vick broke in 5 Places after she developed diabetic kytoacedosis following childbirth.

* Multiple Judges’ wrote that cardiac conditions of several patients were ignored by Metlife

* The Obama aand Bush administrations have refused to take action even though they are very aware that patients can die during the years it takes to get their case heard by the Courts

Please be sure to view the Judges’ quotes and evidence seen at : http://www.5typesofdeadlyinsurancecompanycrimes.blogspot.com

To see a motion I just filed with the Court that references a ProPublica article and was sent to Obama’s top directors today please go to : http://www.identicalconcealment.blogspot.com

I also hope people will pray that our government will stop protecting dangerous corporate crimes !!

While I was watching the movie, I could not help but wonder why the House of Representatives is fighting Elizabeth Warren tooth and nail in her effort to bring responsibility to investment banking.  I still don’t know why congress is opposed to her, but it is easy to see why the banks are.

The House, nee Republicans oppose Warren because:
1.  She is a Democrat;
2.  She was appointed by a Democratic President;
3.  She knows where the dead bodies are located.

I saw that little exchange she had with McHenry.  He wouldn’t let her talk.

Given the enormous amount of money involved, it would really help us to limit our analysis to what we can verify. I will attempt a distilled version here. The narrative broadly accepted involves mortgage lenders making loans to people who can’t afford them. If we peel this onion back one layer we see the method used to qualify people for this soon to be toxic mortgage is the now infamous liar loan, or more accurately a stated income (even stated asset) loan. As the story goes, the originator bank is not worried about the credit quality of the borrower because they intend to sell the loan off to investors. By peeling the onion one more layer, we learn to mitigate the risk of separating origination from servicing, investors often require repurchase agreements which obligate originators to repurchase sold loans usually in cases where the sold mortgage defaults within a prescribed period of time. Anticipating these agreements, originators expanded the use of teaser rates that offered new borrowers very low payments for the first several months of the loan. To protect rate premiums (fees received for selling the loan), the originators then installed high rate adjustment language so the blended interest rate over the term of the loan would exceed the par rate. Borrowers were then told not to worry about these adjustable rate mortgages that offered low teaser rates and high rate adjustment language because they would be able to refinance the mortgage prior to the end of the teaser rate period. The refinance would pay off the loan then held by the investor. Everyone wins. Originator gets high fee from selling mortgage with above par blended interest; Investor gets a loan paid off by the refinance prior to the end of the teaser rate period; Homeowner gets to pay the teaser rate then refinance into the prevailing teaser rate in the market. So what happened? Wall Street bankers devised a scheme to blend mortgages of different credit risks into a bundle that miraculously maintained the best risk rating (AAA). Investors worldwide bought the “low risk” bundles that just happened to offer a slightly higher return than traditional AAA rated securities. Eventually (probably starting in 2006), these low risk bundles started defaulting at higher than expected levels. By spring 2007, investors began pulling back from buying non-conforming (jumbo) Mortgage-Backed Securities. By June 2007, the non-conforming (jumbo) market seized up because investors refused to buy more of these bundles. Homeowner’s trying to refinance before the teaser rate expired were locked into their original mortgages. Since the FED had increased the federal funds rate from 1% in 2004 to 5.25% in 2006, many jumbo mortgages were adjusted from teaser rates of 4%-5% up to 10% - 12%. These extraordinary adjustments created the first rash of “rate adjustment” foreclosures in US history. Important to note:  the collapse of the secondary market caused the 1st major wave of foreclosures by preventing refinancing prior to high rate adjustments; This event started home devaluation. Huge losses from foreclosures started tightening credit. Tightened credit forced business slowdown, which led to lay-offs. Lost jobs led to traditional foreclosures, which exacerbated loses to the financial services industry and further tightened credit. And the death march began…

I’d like to say another thing: While it is a certainty that banks and others defrauded the public in this debacle, such activity would not have been possible if individuals and institutions simply minded their financial affairs.

Too many of us have abdicated our roles in managing our own financial affairs to “advisers” and “investment counselors” and institutions like Lehman and Bear Stearns. Entire cities and counties, with the resources to manage their own savings and investments instead turned the whole kit and kaboodle over to institutions and never looked back at what those institutions were DOING with their money. Same goes for individuals.

Now, after so many have lost their proverbial shirts, we have finger pointing and threats of reprisals. Some may even get some justice. But it all could have been avoided if people and institutions had only done the logical, time-worn thing. “There’s a sucker born every minute” How old is that saying anyway? 1885. Isn’t it time that we learn? And how about “If it looks to good to be true…”

We wanted it all: More interest, better returns, a home like Mrs. Jones” down the street. All while we were busily working and playing and looking every other way but at our money and who was minding it.

Vladimir Lenin

May 27, 2011, 7:30 a.m.

Economists refer to different sectors of an economy by groups of economically related businesses. For example, the Manufacturing sector includes Food Manufacturing, Apparel Manufacturing, Wood Product Manufacturing, Petroleum and Coal Products Manufacturing,  and Computer and Electronic Product Manufacturing. The Finance, Insurance, and Real Estate or FIRE sector is composed of Commercial Banks, Savings & Loans, Credit Unions, Finance / Credit Companies, Securities & Investment, Venture Capital, Hedge Funds, Private Equity & Investment Firms, Insurance, Real Estate, Mortgage Bankers & Brokers Accountants.
The FIRE Economy is one of two economies that operate in the United States, the UK, and other countries that developed economic policies that give FIRE industries tax, regulatory, and monetary policy advantages over productive industries. The other economy is the Productive Economy that is comprised of businesses that produce value-added goods and services. The Productive Economy grows based on profits from sales of goods and services produced by adding intellectual property and other human value inputs. The FIRE Economy operates by extracting economic rents, such as interest on debt, from the rest of the economy.
What is the future of the FIRE Economy?

The FIRE Economy in the US grew from 1980 to 2006, and began to disintegrate with the collapse of the housing bubble in 2006 followed in in early 2007 by the crash in the market for securitized debt that financed the housing bubble in the US, followed by the US banking system in 2008. A collapsing FIRE Economy is accompanied by debt deflation, falling demand, debt defaults, business failures, and rising unemployment. The Great Depression in the US in the 1930s is a famous example of a debt deflation that followed the collapse of a FIRE Economy. That debt deflation ended with WWII although it moderated from 1934 to 1938 by the economic reflation policies of the FDR administration, including a on time 69% dollar devaluation and numerous fiscal stimulus programs.

If any questions call 1-800-GOD-HELP

The financial industry did more damage to our neighborhoods than a predator attack. MERS was crafted to evade taxes, fees and legal recourse for property owners. It worked better than Grover Norquist could ever have imagined, bankrupting the local, county and state services dependent upon those revenues to provide such interfering services as roads, fire services, police patrol, and schools.

Look around. After the most immense transfer of wealth, the banks are on track to own 5 million of our homes. The equity of many generations, wage earners who scrimped and saved to buy a little piece of the American Dream, and passed it to their families, or bestowed down payment gifts to their kids to help them get a leg up - vaporized into a black hole. Lying complicit brokers, appraisers, loan officers, and ratings agencies backed up their trucks in your neighborhoods and loaded up generations of equity invested in homes across the country, across the generations.

The promise of wealth, of easy money, no fee mortgages, was like a blinking neon roadside attraction . It was the “Great American Fast Economy Drive-In” The ethically impaired wrote and cooked books, a well appointed corporate press served the koolaid,  and a cadre of regulatory butchers in the back of house, hired by how vigorously they would “cut it up, sell it off or kill it”  served the American public a deadly menu consisting of “Pay no attention to how the sausage is being made” Since the Milkens and their ilk carved up the productive manufacturing sector to “unlock value”,  and ship our assets overseas to make bank, The Great American Drive-In menu became increasingly toxic, and harder to keep down.

Think about how our economic diet has changed in the past 40 years, and then try to act surprised about the outcomes. Until common sense returns to our society, and there are consequences to stupidity on steroids, we will continue to be served SOS - where resources are privatized, and risk is transferred.

As a “lifer” in both the film business and the stock market, I thought there were plenty of clues to the “zeroes not heroes,” including the fade-out line.  If Michael Kinsley missed the point, well, would it be the first time?  If there was any Hollywood formula in play, it was “the gang that couldn’t shoot straight pulls itself together after multiple missteps and saves the day.”  Emphasis on “day;” tomorrow has to take care of itself.  That’s what we have elections and a judicial system for.  And, in the movie business, sequels and remakes.

nick freeman—as so many others here—is on point.

this is where marx (karl, not harpo) ultimately really is wrong. religion isn’t the opiate of the masses, the ability to whip out a piece of plastic and ***instantly*** buy a flatscreen tv is.

language is important; thus, it’s remade from “estate taxes” into “death taxes.” “liberal” into “the dreaded ‘l’ word.” so now notice how it’s called a **credit** card, but not what it actually is: a DEBT card.

meanwhile, one of the largest landfills in la fills up an area the size of the rose bowl every couple of weeks. la county last i heard is now shipping some of its trash to san diego.

i know of americans who can’t even park their cars in their garages because they’re stuffed with junk. now consider the recent rise of an entire industry; public storage.

the tv show hoarders is held as spectacle and anomaly, but i think it’s also a grim peek into a culture careening off the rails.

This article is part of an ongoing investigation:
The Wall Street Money Machine

The Wall Street Money Machine

Enticed by profits and bonuses, Wall Street took advantage of complicated mortgage-based instruments to reap billions, only to exacerbate the eventual crash.

The Story So Far

As the housing market started to fade, bankers and hedge funds scrambled for ways to maintain the lavish bonuses and profits they had become so accustomed to, repackaging mortgages in complex securities called collateralized debt obligations. The booming CDO market masked how weak the housing market was, and exacerbated its collapse.

Get Updates

Stay on top of what we’re working on by subscribing to our email digest.

optional

Our Hottest Stories

  •  
  •  
  •  
  •  
  •  
  •  
  •  
  •  
  •  
  •