Some financial companies are so big and so interconnected that pulling them out of the system would lead to the collapse of the system itself. Such firms were termed Too Big To Fail. Economists believe that if the TBTF’s feel they will be insulated against pressures of the market they will not self-regulate and resist any outside attempts to do so. Alan Greenspan felt that no firm should be too big to fail. He opined, “If they are too big to fail, they are too big”.
Andrew Ross Sorkin wrote his book Too Big to Fail: The Inside Story of How Wall Street and Washington Fought to Save the Financial System—and Themselves, also known as Too Big to Fail: Inside the Battle to Save Wall Street from the eyes of government regulators and the CEOs on Wall street. Written in 2010, it was made into a film in 2011.
HBO’s Too Big Too Fail shines the spotlight on the financial crisis of 2008. Henry Paulson is a man on a mission. A man who moved to Capitol Hill after Wall Street, he is familiar with both worlds.
Paulson’s machinations as he tries to bail out Lehman, Merrill Lynch lose in the face of the crash and he eventually asks Lehman to declare bankruptcy.
Paulson turns his attention to AIG, whose fall can cause irreversible losses. The treasury department arranges for a takeover. The then FED chairman Ben Barnanke who believes in Congress legislation before any further intervention. He urges Congress to act quickly to avert another 1930’s like economic depression.
A failed first attempt later Congress passes the Emergency Economic Stabilization Act of 2008. Banks are happy to get the bailout, but Paulson himself is unhappy to put more restrictions on how the funds must be used, a strange situation since he works for the Government.
The cast includes William Hurt, James Wood, Topher Grace, Paul Giamatti, Cynthia Nixon, Billy Crudup and Mathew Modine. View a clip of the movie.