Too big to fail

There have been so many accounts of the financial crisis that it’s hard to be original when recalling the events leading up to October 2008.

Too Big To Fail isn’t breaking new ground but it has the star quality of a renowned cast and expensive production by US television channel HBO.

Paul Giamatti is Ben Bernanke, chairman of the Federal Reserve, James Woods is Dick Fuld, chief executive of Lehman Brothers, and William Hurt is Treasury secretary Henry Paulson.

The story of how regulators and bankers came to grips with the 2008 crisis is a familiar one but the drama moves along with the pace of other television thrillers like 24 and Prison Break.

The difference is that it is a true story interspersed with real-life clips of news and speeches by Barack Obama.

It’s also more detailed and informative of the problems than other blockbusters such as Wall Street 2: Money Never Sleeps.

This film should be watched by those who work in finance and preferably specialist mortgages in the US as it focuses on toxic assets and crash they caused.

It portrays Paulson as ideologically opposed to a government bailout and he is stubborn about not succumbing to the expectation that he will step in.

He wants a private sector solution and is loathe to help Fuld at Lehman Brothers just because he has made a series of catastrophic investments.

The Treasury is obsessed with moral hazard and Paulson tries to broker a deal with Barclays liaising with then UK chancellor Alistair Darling.

He is convinced a private deal can be arranged through a meeting of banking chief executives. His underestimation of the banks’ desire to do a deal was tragic: calling their bluff and letting Lehmans fail set off a major financial crisis.

Unsurprisingly, his insistence on the US government not playing a major role reverses when he realises the havoc caused by Lehmans’ collapse.

Fuld is portrayed as extraordinarily delusional by rejecting an offer from Warren Buffet for the bank that was generous under the circumstances.

Buffet’s almost philanthropic act is dismissed by Fuld who is convinced the crisis will pass quickly and wants to ride out the storm. He also scares off Korean investors with aggressive negotiating and keeps repeating the false mantra that real estate will come back soon.

His conviction that Lehmans is a sound business that he will not give away cheap is exasperating.

His pride distorts his judgment, leading to terrible commercial decisions which act as a timely reminder just how individual egos can shape events.

The film also addresses the role of the press in a crisis, as with confidence fragile and panic in Wall Street palpable, every news story shakes the markets.

The film is undoubtedly compelling. The characters are well-defined and it delves deeper in the personalities of the main protagonists than other accounts.

The egos, the clutch of former Goldman Sachs employees in the government, the friendships and the rivalries in US banking all played their part in the crisis too.

The film is well worth a watch and is a worthy reminder of how critical the situation was in the dark days of 2008.

As the world teeters on the edge of yet another financial disaster, it is a timely reminder that failure to act can have dramatic consequences.

  • review by Samuel Dale