Saturday, August 16, 2014
This year, I’m going to be teaching a seminar on the financial crisis with a friend of mine from law school, Tanya Marsh of Wake Forest. The seminar will be offered at Wake Forest in the Fall and then again at Duke in the Spring. Among other things, we plan to assign the students to watch several movies about the crisis (some will be watched by the entire class; for others, different groups of students will watch different films, and then discuss them with the class).
In preparation, I watched (or, as the case may be, rewatched) the movies we’re likely to assign. So here are my comments on the movies – which I assume many of you have already seen, but probably not everyone has seen everything – with the caveat that, I’m commenting at least as much as an audience member/amateur film critic as I am as a professor.
(Tanya tells me the students are unlikely to stumble across this post, but in case you do – these are my opinions only, we’ll want to hear yours! And for what it’s worth, Tanya and I disagree on at least one of the films.)
[More under the jump]
Too Big To Fail
I admit, I’d never actually seen this before – when it first aired, it was just too soon for me. I spent September 2008 absolutely obsessed with the financial crisis and TARP and when HBO made a movie of it, I couldn’t bring myself to relive it.
Now, with more distance I can say – this movie succeeds as pedagogy, to some extent, but not as drama.
Basically, it tells – in quite some detail – the negotiations and dealmaking that went into the TARP. There is very little context and backstory; while some mention is made of deregulation and the basic problem of poorly underwritten mortgages, the movie strives to be as apolitical as possible, which it manages by maintaining an extremely narrow focus, and by depicting Paulson as a decisive hero as he attempts to keep the financial system afloat while surrounded by selfish, weak, and short-sighted people.
The movie is at its strongest when it tries to convey some sense of the difficult choices faced by government officials regarding the degree to which it was proper or necessary to interfere with the conduct of private businesses. But like most movies that reenact real life events, it falls short in terms of narrative structure. After a certain point – simply from an artistic point of view – the endless scenes of attempts to force mergers becomes mind-numbing.
The movie takes great pains to try to explain things simply to a lay audience, which I imagine will make it a good pedagogical tool, but from a dramatic standpoint it was truly grating to listen to the actors explain things to each other that their characters would already have known, often with meticulously enunciated technical terms. The most egregious scene in this vein was when two men had to explain the housing bubble in one- syllable words to the only prominent woman in the cast – a Treasury press secretary – so that we, the audience, could understand it.
(I was having flashbacks to that time on the West Wing when CJ didn’t understand the census, so Rob Lowe had to explain it to her. I will never get over that one.)
So, good teaching, I think, especially as an introduction, but poor storytelling.
Queen of Versailles
Like TBTF, this is a vary narrowly-focused look at the financial crisis, but this time in the form of a documentary about a riches-to-rags couple who made a fortune during the housing bubble and lost most of it in the crash. The couple, Jackie and David Siegel, sold resort time-shares; the customers financed the purchases with mortgages, and when the bubble burst, the business was destroyed.
One of the more interesting things about this movie – which for me is a serious flaw but also makes it an interesting addition to the class – is that it is mainly obsessed with highlighting the couples’ vacuousness, and has almost no interest in exploring the broader context of the crisis. So if you saw this movie alone, you’d come away thinking the bubble was caused by the personal greed of the nouveaux riche, and have little sense at all that there were any wider, systemic causes – which itself is a point of view.
The movie condemns the couple both too much and not enough – too much because the endless harping on the couples’ vanity and conspicuous consumption felt, to me, mean-spirited; and not enough because so little time, comparatively, was spent on their real sins – the degree to which they consciously conned people into buying time-shares they could not afford (while, apparently, engaging in extraordinary penny-pinching with respect to their household staff – a point hinted at but never fully engaged). I’d have loved to see more about the tactics they used to manipulate their customers, but the filmmaker was more interested in a character study than a macro economic picture.
Rounding out the “narrow-focus” films, Margin Call was a rewatch for me, and hands down my favorite of the bunch. Margin Call depicts the 24 hours at a generic investment bank just as it realizes that it is desperately overleveraged and that its mortgage holdings are worthless. Unlike TBTF, this movie makes almost no attempt to explain the technicalities to you, because the story it’s telling is not about the specifics of what deal was made when, but about the psychology – how did highly-paid experts make such catastrophic mistakes? And it depicts a world with people who have varying levels of knowledge and self-awareness and denial and rationalization, working in a system where doing nothing is easy and profitable, while whistleblowing is difficult, expensive, and largely fruitless.
It’s a really beautiful illustration of why the DOJ and SEC have had such trouble prosecuting financial crisis cases. Legal concepts like “intent” or “scienter” may not always map very well onto organizational behavior – a point that Donald Langevoort has written about – and even when they do, top executives have very effective ways of quashing evidence that would implicate them.
The Inside Job
From the micro to the macro - this was the first of the “broader-look” movies, and also a rewatch for me. Unlike TBTF, it has a blatant and unashamed political mission: to indict Wall Street for its conduct, and to indict the regulators and academics who allowed and/or ushered in the crisis.
The Inside Job draws a line from the S&L crisis in the 80s, to the internet bubble, to the housing crisis. Unlike TBTF, it focuses squarely on the regulatory system, with essentially direct accusations of corruption by regulatory officials and consultants. And rather than lionize Henry Paulson, Inside Job points the finger at him – including his role in getting the SEC to loosen capital requirements for investment banks.
And as for Charles Ferguson’s questioning of Frederic Mishkin, John Campbell, and Glenn Hubbard - well, let's just say that their floundering is nearly painful to watch.
Obviously, the film makes no attempt to address arguments on the other side – like, the claim that the financial crisis was caused by overregulation rather than lack of regulation, or (as Ezra Klein argues) that many prominent commenters who were not coopted by Wall Street never saw the crisis coming, or Mishkin's claim that Ferguson's attacks on his paper were misleading. That said, it’s a very effective and entertaining piece of advocacy that gives a comprehensive macro view of what went wrong.
Capitalism: A Love Story
The last film I watched, I am sad to say, is a lot less effective as a piece of advocacy than The Inside Job. This is Michael Moore at his most Michael Moore-ish, and this time he’s not just taking on the financial crisis – he’s taking on all of capitalism, or at least, American-style capitalism.
My problem with Michael Moore isn’t his politics, but that he doesn’t take the time to really build his case the way Ferguson does. Instead, he jumps straight to name-calling and unsupported accusations – including a conspiracy theory that the financial crisis was engineered to happen just before an election so as to put maximum pressure on the government (which doesn’t even make sense; the presidential election caused everyone to grandstand and delay the TARP’s passage).
So basically, all I could think while watching it is, if he wanted to indict capitalism, he could have done a much better job.
For example, Moore spotlights the judge in Pennsylvania who accepted bribes to sentence juveniles to a for-profit youth detention center, and mockingly describes this scheme as “capitalism.” But though the story is appalling, Moore makes no attempt to prove this was anything but a one-off criminal conspiracy. If he wanted to take on the system, a better target might have been the extent to which private prison companies lobby for legislation that leads to greater incarceration (see Prison Economics Help Drive Ariz. Immigration Law; but see The Effect of Privatization on the Public and Private Prison Lobbies). Because that kind of problem is both systemic and legal.
And it’s a pity, because when Moore does seriously try to gather evidence, I find him quite entertaining. For example, on his old television show, TV Nation, he chronicled how NYC cab drivers refused to stop for black riders, to devastating effect. But in his films, including this one, the insult-to-substance ratio is far too high.
I still haven’t gotten hold of the final movie we’re likely to assign, The Flaw, so my watching is incomplete. Nonetheless, I like the list so far - they're not all to my taste, but I enjoy the way they come at the crisis from different directions.