Movie and book corner #2: Too Big too Fail
In economics, there is a theory that certain corporations (especially financial ones) are so large that their bankruptcy would have disastrous consequences for the entire economy, not just their sector. Fearing these repercussions, governments are more likely to support them. The concept of "too big to fail" was created long before the Global Financial Crisis in 2008, but the events of 2007-2008 proved that this theory is true.
This HBO production presents the events of 2008 from the perspective of the United States Secretary of the Treasury (Henry Paulson), the Chairman of the Federal Reserve System (Ben Bernanke) and the President of the Federal Reserve Bank of New York (Tim Geithner).
Shortly after Bear Stearns collapsed and was sold to JP Morgan Chase in 2008, the threat of another bankruptcy in the banking sector appeared – Lehman Brothers was at risk. After JP Morgan bought Bear Stearns with government support, Henry Paulson and Ben Bernanke refused further subsidies and forced the heads of the largest banks to solve the problem on their own, without state involvement. I assume that I will not surprise anyone by mentioning that in the end Lehman Brothers declared bankruptcy. Their collapse caused serious problems on the global market (not just banking). People began to withdraw money from banks en masse, banks froze funds in their clients' accounts and stopped granting loans. Commenting on the events of that time, the chairman of the Federal Reserve System stated that “credit has the power to build a modern economy, but it’s lack can quickly and ruthlessly destroy it.” On top of the other failings at this time, insurance giant AIG was also running into trouble. Despite initial reluctance, the Treasury backed AIG with a $85 billion loan.
The credits summarize the film from the perspective of the previously mentioned economic theory – 10 financial institutions own 77% of all banking assets in the United States. These companies are simply too big to fail.
Imdb rating: 7.3/10 (more than 17k ratings)
Available at: HBO Go
