Introduction
Title
“Too Big To Fall” is a 2011 American film that discusses the financial crisis that occurred in the United States in 2007-2008.
Feedbacks
The film “Too Big To Fall” has received unanimous praise from all walks of life and is recognized as a true historical story that describes the 2008 US financial crisis, the tug of war and mutual influence among the key players including the US government, the Federal Reserve, Wall Street, and the stock market, and how they ultimately avoided a truly uncontrollable global financial crisis.
Plot
Message to deliver
The film chronicles the 2008 financial crisis, telling the story of the collapse of the Lehman Brothers investment bank and the knock-on effects it had on the global economy. The company declared bankruptcy after negotiations with potential buyers failed due to toxic assets and regulatory hurdles, causing market chaos. Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke led efforts to stabilize the financial system, including rescuing AIG and lobbying Congress to pass the Troubled Asset Relief Program (TARP).
Description
In 2008, news reports began to emerge about the mortgage industry crisis and the forced sale of troubled investment bank Bear Stearns to commercial banking giant JPMorgan Chase under a federal government guarantee. With the collapse of Bear Stearns, the market turned its attention to another investment bank, Lehman Brothers.
As the stock price fell rapidly, Lehman Brothers tried to negotiate a deal with investors. The deal was conditional on excluding Lehman’s toxic real estate, but it fell through when CEO Dick Fuld insisted that investors reconsider accepting the real estate assets. Lehman’s most likely US buyer, Bank of America, was not interested without the Fed’s involvement, but US Treasury Secretary Henry Paulson insisted that the government would not subsidize any more acquisitions.
Paulson and New York Federal Reserve Bank President Timothy Geithner convened the leaders of several major U.S. banks over the weekend in an attempt to force them to underwrite the deal. But Bank of America reneged and chose to acquire another threatened company, Lehman’s rival Merrill Lynch. Paulson attempted to negotiate with British bank Barclays over the bankruptcy of Lehman Brothers but was blocked by the UK banking regulator. With no buyers, Lehman Brothers was forced into bankruptcy.
The collapse of Lehman Brothers affected the entire financial system. Paulson tried to assure the news media that the decision to let Lehman fail was a sound one, but the stock market went into free fall. At the same time, insurance company AIG may also go bankrupt. The U.S. Treasury provided AIG with an $85 billion loan, deeming it “too big to fail.”
Federal Reserve Chairman Ben Bernanke believes that if they do not act, the consequences could be worse than the Great Depression. The bill was eventually passed and created the Troubled Asset Relief Program (TARP), which provided direct capital injections to banks.
The stock market continued to fall until 2009 when it finally stabilized, marking the end of the crisis. Banks barely used loan funds to ease credit conditions as expected, while Wall Street pay continued to rise, reaching $135 billion by 2010, the conclusion states.
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