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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.

1. The focus is on Wall Street and the financial crisis created by its rash risk-taking. Little to nothing is said about the real victims of their manipulations—the millions who became unemployed as a result and the millions who have lost or are about to lose their homes to foreclosure. This is like a movie about slavery that focuses on debates between slave owners and abolitionists while omitting the cruelties slave-owners visited upon their slaves.

2. There is a chilling scene near the end of the movie. The Secretary of the Treasury calls a meeting with CEOs of the nine largest banks. The only other persons present are Geithner, Bernanke and Sheila Bair, the director of FDIC. These nine banks hold the fate of the United States economy in their hands. Their arms are twisted to save the day by accepting $125 billion in capital from the federal government infusions (via the government buying non-voting preferred stock from the banks), which they are to then lend to both personal and business customers, thus breaking the credit freeze that had resulted from the crisis. The banks resist until Bernanke says “If the financial system collapses, it will take every one of you down.”

After the banks have agreed, Michele Davis, Assistant Secretary of the Treasury for Public Affairs, tells Paulson that some restrictions should be placed on how the banks can spend the $125 billion. Paulson responds by saying that if we put restrictions on them they won’t take it, and then strides off. Davis mutters, shaking her head: “They almost bring down the entire economy and they won’t take it?”

What flashed through my mind was the popular image of a free-market economy driven and self-regulated by many small buyers and sellers. Here in this room sat these movers and shakers, not many, not thousands, but nine. The question we need to ask is: How did we get to a point where so few control so much, not only of the country’s wealth but of our very lives? The HBO Web site for the film says: “In 2008, the fate of the world’s economy was decided in a matter of weeks.”

3. Trust is key for markets to function well and that is doubly true of financial markets. But trust is easier to come by if there are clear rules and regulations about how actors may operate. At the beginning of “Too Big,” film clips are played from Presidents Reagan and Clinton speaking about the importance of deregulating the financial sector including dissolving the wall between commercial and investment banking. It is this very deregulation that paved the way for the risk taking activities that violated every canon of trust. Banks bought and sold securities on behalf of customers and for themselves, setting up conflicts of interest; rating agencies gave high ratings to derivative bonds without knowing or caring that they were filled with junk mortgages; and on and on.

4. The film ends shortly after the meeting with the nine banks. Bernanke and Paulson are in a room together and Bernanke asks, referring to the $125 capital infusion: “They will lend it out won’t they?” Paulson quickly replies: “Of course they will!” He then slowly turns and looks out the window and more quietly says again: “Of course they will.” The film ends with a series of statements appearing on the screen:

Following the passage of TARP, banks made fewer loans and markets continued to tumble.

Unemployment rose to over 10 percent and millions of families lost their homes to foreclosure.

In 2009 panicked markets stabilized and the slide into a global depression was averted.

The biggest banks repaid their TARP money.

In 2010, compensation on Wall Street rose to a record $135 billion.

Ten banks now hold 77 percent of all US bank assets.

They have been declared to be too big to fail.


‘Too Big To Fail’ airs on Tuesday May 23 on HBO.

This article appears in May 30 2011.