TOO BIG TO FAIL

Too Big to Fail is an American film based on Andrew Ross Sorkin's non-fiction book of the same name. This film provides a behind the scene during the 2008 economic crisis that hit the United States which almost all countries in the world were affected by the crisis. The economic bankruptcy of the US departed from the trust and stakes of CEOs of financial companies in the US regarding housing loans (mortgages), which had been considered the safest credit in the US, defaulted or failed to pay. 

The film begins with a news report showing the collapse of the giant Bear Stearns (investment bank) which was forced to be acquired by rival JP Morgan. Shortly after the acquisition, J.P Morgan went bankrupt. The fall of the two big giants had a domino effect on other big companies. Fannie Mae and Freddie Mac, which are major housing finance companies in the US, did not escape the abyss of collapse. The US government decided to bail out the two companies because they are big players who control half of the $12 trillion mortgage arrears in the United States. The bail-out was intended to maintain the stability of the US economy.

This policy also invites public questions about whether there is government intervention to Lehman Brothers, the 4th largest financial company in the US, which is also on the verge of bankruptcy after its share price continued to experience a significant decline. The film then focuses on the US Treasury Secretary, Henry Paulson, who refuses to bail out Lehman Brothers. Henry emphasized that he should avoid bailing out private companies because it is feared that it will create a moral hazard.

Henry continued to urge Dick Fuld, CEO of Lehman Brothers, to seek external investors. Some foreign investors like Korean are interested in negotiating. However, Dick Fuld was unable to obtain it due to the large number of toxic assets owned by the Lehman Brothers. Dick Fuld himself continues to deny this fact and says his company is healthy. Then, he continues to sell his shares at high prices amidst the declining stock market price. Therefore, investors kept running. Dick Fuld contacted Henry to ask for an injection of funds from Waffen Buffet – the world's richest man. It did not come to fruition. Henry continues to work on a solution to save the Lehman Brothers.        

The good news came from Bank of America and Barclays, which are known to be interested in the good assets of Lehman Brothers. While waiting for this certainty, Henry gathers the leaders of large companies to raise funds to cover Lehman Brothers' losses. During the meeting, it was reported that Bank of America withdrew from the deal with Lehman Brothers and chose to buy Merril Lynch. On the other hand, Barclays said it was ready to accept the terms of the merger. However, the fell through as the UK banking regulator refused to approve the merger. All efforts were in vain. Reluctantly, Henry asked Dick Fuld to declare bankruptcy before the Asian market opened.

The bankruptcy of Lehman Brothers caused a global financial crisis. AIG (American International Group), the world's largest insurance company, began to collapse. AIG suffered


heavy losses due to the high claims of housing insurance contracts guaranteed to it after the housing credit crisis. Henry realized that if AIG was allowed to collapse, the global insurance   


portfolio would default then the entire financial industry would suffer heavy losses. Represented by the Treasury, the US government took over AIG.

The policy did not have a good impact. Market conditions are increasingly on the verge of death. Henry and his team devise a strategy to buy toxic assets from the bank. With a budget request of $1 trillion, the plan was rejected by Congress. As things got more chaotic, Henry and Ben Bernanke (Federal Reserve Chairman) lobbied Congress. Bernanke stressed that a lack of credit made stocks crash like the Great Depression of 1930. If Congress didn't act quickly, the crisis would be much worse.     

To overcome the prolonged crisis, Henry decided to provide capital injections to several banks. The capital is expected to be loaned back to customers so that credit flows can return to flow. With the help of Sheila Bair (Federal Deposit Insurance Corporation Chairman), Henry managed to convince nine banks to accept capital injections. The banks agreed. The film closes with the final scene where Bernanke hopes that the bank uses the funds properly. After the policy, it was revealed that the banks gave only a small amount of loans so the market fell again. The crisis was slowly avoided in 2009 when the market started to stabilize. Banks began to return the injection of capital obtained. In 2010, compensation on Wall Street rose to a record $135 billion. Ten banks now hold 77% of all US bank assets. They have been declared too big to fail.

In my opinion, the solutions taken by the Secretary of the Treasury and the US government in assessing the economic crisis were not thorough and rushed. Some policies are taken quickly without the overall risk of causing a climactic crisis. In my opinion, instead of using power to defeat the various parties who agree on the best policy of each party to win the economic crisis.

The role I like is Ben Bernanke. Although rarely appears throughout the film, Bernanke plays a big role in overcoming these problems. He is a thoughtful person. He always reflects on the past through an academic approach to avoid the same policy mistakes.

The role I don't like is Dick Fuld. As a leader, he doesn’t want to admit his company's mistakes and continues to manipulate investors with incorrect data. He failed to keep the company because he did not respect opinions and did not trust anyone, including his co-workers. His imposing nature and always exaggerating his company makes investors run away. Until finally, Dick Fuld had to accept the harsh reality, Lehman Brothers went bankrupt.