By Paul Smart
A number of friends have been discussing The Big Short, the 2015 Oscar-nominated comedy based on one of the factual threads that led to the financial collapse of 2007/2008, which in turn led to the election of Barack Obama as our 44th president, as well as the rise of our current, 45th White House occupant. The film and 2010 Michael Lewis book it was based on looks into the crazy ways in which our financial institutions played the odds on an out-of-control housing market they helped create (and which many now see as a precursor of what’s happening in the Hudson Valley now). The comic element of The Big Short focuses on gung-ho financial wizzes doing all they can to make easy bucks for themselves and their investors. It’s a scary tale of loose morals, where the good guys are good only by degrees of irony.
The story of our Great Recession a decade ago remains tragic, however, given how little effect it’s had in terms of lessons learned, or bad actions reprimanded. Especially now that even the new rules we all insisted on being enacted are getting rolled back in the name of better business for all.
Everyone I know who knows The Big Short in book or film form wants to know, now, what happened to those who pushed our financial systems, from housing loans and much-discussed subprime mortgages to banking practices and the ways in which our government oversees the use of its people’s money, into the Great Recession. Many voice concerns that we were forced to undergo governmental bailouts of private corporate business, in the financial, auto, housing and other big businesses.
Not much, we discovered, especially beyond the world or corporate bankruptcies, renamings, mergers and in legal arenas. Under a hundred bankers got charged with crimes related to the use of bailout funds; many of those were from smaller institutions. Billions of dollars were paid in fines, but that’s against an overall worldwide financial cataclysm that at several points was noted to have made nearly $13 trillion disappear, much of it from private citizens’ savings. Or potential for future income.
Those actually jailed add up to an even lower number, with some saying it’s a handful, maybe one. Worse, the entire history of the debacle has ended up shrouded in partisan versions of its facts. And the entire legal system that was held at bay as we all tried to sort the mess out in the wake of all the large actions needed to keep the world from slipping into a full-blown depression has ended up tainted, as pointed out by a recent New York Times Editorial Board piece.
“This past week, with a billion dollars in new federal penalties for Wells Fargo, we were reminded that nobody has been hauled into court over a range of its sleazy practices one would expect from a boiler-room scam, not the nation’s third-largest bank,” noted that mid-April op ed. “In his book The Chickenshit Club — named for how James Comey, then a United States attorney, referred to prosecutors who never lost a case because they avoided ones they might not win — Jesse Eisinger documents how the Department of Justice has ‘lost the will and indeed the ability to go after the highest-ranking corporate wrongdoers.’”
Which reminds us of one of The Big Short’s great lines: “I have a feeling that in a few years people will be blaming immigrants and poor people.”
And as an afternote for anyone interested in the subject of all that happened a decade ago, including what’s not happened, consider catching this year’s commencement speaker at Vassar College on May 27, Heather McGhee, leader of the nationally known public policy organization, Demos, and formerly co-chair of the task force for Americans for Financial Reform, a group that contributed key provisions of the Dodd-Frank Wall Street Reform Consumer Protection Act.
“What would America look like if we created an economy where we all could succeed?” has been McGhee’s topic of late, including for her work as a member of the World Economic Forum’s Global Agenda Council on Civic Participation.
“Not enough public revenue is invested in the programs and services that improve people’s lives. It takes money to ensure the welfare of a nation’s people, and there’s simply not enough of it,” McGhee wrote after the Big Short hit us all, along with its bailouts and recession. “And what money that does exist is being stripped, now more than ever, from the programs that support the people of this country. In 2016, federal spending on everything that wasn’t defense, Social Security, or Medicare added up to just 3.3 of our GDP—the lowest share in 50 years.”
Oh how slowly history doth move.