America's Bankrupt Banks (Inside the Meltdown)
On Thursday, Sept. 18, 2008, the astonished leadership of the U.S. Congress was told in a private session by the chairman of the Federal Reserve that the American economy was in grave danger of a complete meltdown within a matter of days. There was literally a pause in that room where the oxygen left, says Sen. Christopher Dodd (D-Conn.)
As the housing bubble burst and trillions of dollars' worth of toxic mortgages began to go bad in 2007, fear spread through the massive firms that form the heart of Wall Street. By the spring of 2008, burdened by billions of dollars of bad mortgages, the investment bank Bear Stearns was the subject of rumors that it would soon fail.
Rumors are such that they can just plain put you out of business, Bear Stearns' former CEO Alan Ace Greenberg tells FRONTLINE.
The company's stock had dropped from $171 to $57 a share, and it was hours from declaring bankruptcy. Federal Reserve Chairman Ben Bernanke acted. It was clear that this had to be contained. There was no doubt in his mind, says Bernanke's colleague, economist Mark Gertler.
Bernanke, a former economics professor from Princeton, specialized in studying the Great Depression. He more than anybody else appreciated what would happen if it got out of control, Gertler explains.
To stabilize the markets, Bernanke engineered a shotgun marriage between Bear Sterns and the commercial bank JPMorgan, with a promise that the federal government would use $30 billion to cover Bear Stearns' questionable assets tied to toxic mortgages. It was an unprecedented effort to stop the contagion of fear that seemed to be threatening the rest of Wall Street.
While publicly supportive of the deal, Treasury Secretary Henry Paulson, a former Wall Street executive with Goldman Sachs, was uncomfortable with government interference in the markets. That summer, he issued a warning to his former colleagues not to expect future government bailouts, saying he was concerned about a legal concept known as moral hazard.
In our Freedom of Speech society we are not told, nor are we allowed to ask what persuasion a significant and highly disproportionate number of the perpetrators of this immense swindle are.
If you were to investigate, you would more readily understand Henry Ford and others' aversion to that greed and that creed !
I am astonished to know that the very people responsible for this utter crisis were not prosecuted and are still "Reining the Wall Street"! Freaking!!!
The basic foundation of the banking system itself, is wrong. How can banks just 'create' money to loan out? In very simple terms, if someone deposits $100 in a bank, the bank can loan it out as $900, and the collateral is never worth the $900. It all comes down to the time when people start demanding money from banks. Because there is no money to pay, it's only digital money. They might even convince the government to print more currency (like they always manage to do), but it ultimately comes out of the work citizens do. And then everyone hails the government that they prevented a global economic crisis. It's a very simple game, made complex so that people can't see it through.
18,000 children die of hunger every single day, and a handful of American bankers are responsible for this.
My question is,how could the the government bail out the banks when it itself is is bankrupt and has to buy the money at interest from the private bank that prints the currency notes.?
this is a paltry revisionist attempt at history. If you don't know anything else, I'm sorry. It isn't going to get better than this.
Word of advise. You're home (or anything) is only worth what people are willing to pay.
I agree with Ali Kahn. The film portrays Bernanke and Paulson as tragic heros, trying their best to save the country when all they did was save the rich elite bankers and their system. Nothing will change until the Finance sector is re-regulated. The best film on this topic is Inside Job.
TEPEE or not to pee that is the question---whether it's nobler in the mind to have a tent near Wall St---or strike out against a sea of trouble-and by opposing, end them .
Well done...but we-the People -would do better to put our tents outside politicians' houses-----literally-to 'where they live '
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Tthe ancephalous but rich, 'fruit of Gekko's loins 'in their Daddy's office --on Liberty and 48th St --need to see more than this street theatre
Thousands have left Wall St-who profited from the lead of their 'Chiefs ' below-and who remain wealthy and seeking more or are now..... uncommonly wealthy -on permanant vacation near a golf course-somewhere -neither too hot-nor too cold, but just right.
The idols of the latest Apocalypse-included but not limited to the US-variety of-Tim Geithner & Alan Greenspan & Hank Paulson-with that other guy (who looks like a club bouncer -but whose name escapes me-(ah-yes) Lawrence Summers
Their fans of this global X factor game-being.most of the acquisitive ; aspiring ;but least inspiring people of the western world-from DC to Dublin-to Darwin via Dubai. Alliteration has it's uses.
The banking class were patently greedy which is in their DNA-since early last centuryc 1901. Little excuse to miss it.
The real blame lies with the power ;privilege and legacy chasers-who are politicians-
and the assinine but effective media class-including members of the advertising PR-and marketing 'industry'-or sons and daughters of Beelzebub.
Rise up, friends---smell the coffee they're selling you-with everything else-on a burger
and resist further corruption.
We may never have a meritocracy-
we were fooled with a democracy;
the least we can do now is to avoid and deny the hypocrisy of today's 'media o cracy-and their friends in power'.
Maurice Aherne
Ireland
for me this documentary is nothing but an attempt to make paulson and bernanke look good and and white wash the crimes the did against the people of this country. i refuse to beleive that these guys did not know what was coming when, right under their nose, the banking sector was de-regulated to practice the toxic loans and mortgages. i beleive they actually planned it, so american public money be robbed one more time.
Here we are 3 years later and the ecnomy is still floundering from similar circumstance...loss of confidence.
This is just a repacked Frontline report...
Nearly all documentaries from PBS Frontline, while surely being informative, are at the same time far from being objective. Like a government making a documentary, with the obvious consequences to its content.
The banking sector shouldn't have received a cent of our money without accepting very strict regulations of its daily activity. In 5-10 years the financial crisis will surely repeat itself, but this time really crushing everything around it. Why? Simply because the problem hasn't been fixed during the 2008-2009 financial crisis, and the banks keep doing exactly the same. Moreover, they'll be risking even more, understanding that this system is totally unstable and can crush at any moment, so what really matters for them are this year's bonuses made through risky decisions.
Throughout all of the fancy explanations of the good and the bad; with some wearing black hats while others had white hats and rode majestic horses to save the day, there was a mysterious absence. To begin with, what possible stress could the Federal Reserve have to deal with, considering the fact that they will only benefit from the printing of more money from the interest. Interest, that will naturally be paid by the American citizens but that is another discussion.
The fact that the Federal Reserve Banking system isn't provided as constitutional aside, fraud, theft and the conspiracy to commit ... are supposed to be illegal acts. These things were never discussed and that is a huge issue. Consider this; the people involved in the FED, Banking or Wall Street were not only paid multiple times and got very wealthy at the expense of the US tax payers but their greed, surpassed that fact. Those huge checks that were "regretfully" passed out to the 'Big Nine', was a reward for their "supposed" mistakes.
Performance bonuses that were nauseating in size wasn't enough as they came for more money with "reluctance" and the FED, gladly printed additional currency. The aspect of accountability was never discussed and yet the repercussions were implied to become the burden of the tax payer; innocent generations, I might add, who never had a voice in the matter. There can be nothing fundamentally honorable in a system that praises the wicked by using authoritarian force to bring hardships on the decent. The American people have become weak and the people in power have continually exploited our passivity.
There's one thing I don't understand. Why did some of these companies not want to take the money?
Love how they make Paulson and Bernanke out to be the savior of sorts when in reality they rewarded the treatury of the investment banks that were selling bunk CDO's filled with sub-prime loans to investors only to bet against them with credit default swaps. Investors lost everything while the banks got rich from the government bail-out of AIG. 100 cents on the dollar? That is like a huge attaboy. They created this perfect storm by pushing for non-regulation on derivatives while lifting a lenders constraints on how much leverage they could create against current capital. The organizations weren't getting rich during the bubble, individuals inside those organizations were. Watch this documentary, then watch Inside Job, then decide.
I love that voice of the narrator
What a movie! Damn!
Waldo and Robyn
A solution proposed by a few was instead of the life lines to the banks give each american householder a 3 year tax rebate with stipulation that X % be put down on their mortgage. Thust the banks get what they need and the american household gets what they need.
What happened was moral hazard was ok for the banks but not ok for the householders. I can understand the anger people have.
Waldo
I think you should watch Quants a documentary on the first page of the economics category. Go into it about 10 minutes or so and GW Bush is there talking about how some segments of society should be helped and will be helped by the federal govt via Fanny May and Freddie Mac to buy a house.
But the fuel was the Federal Reserve lowering interest rates to 1% and holding them there for years. That combined with fractional reserve banking and an unregulated derivatives area with the blessing of the US govt to help out less qualified people opened the door to gree like none of us have ever seen and hopefully will not see again.
SWM,
Out of curiosity, what did you think about the presentation provided in this documentary?
Ugh, I am starting to notice that this website is deluged with marxist and communist rhetoric. Do you people have a different color tin foil hat for every day of the week or is one sufficient?
It's so easy to blame Wall street for all of this. Americans should look in the mirror and see exactly were this problem began. It started with people spending more than they could afford, wanting a second car so their driveway was just as full as the neighbors one. Americans got greedy and overrated themselves extremely. Work, earn, save, spend and spend wisely. Somewhere people got lost someway down that road.
If you are a country with the size of America, with the economic system of America, with the talk and the confident of America, you should act like it as well. Clearly American citizens and financial institutions weren't able to cope with the responsibility they were given. A true shame. This all proves once more capitalism these days isn't worth much without control of a government.
Marx, wake up! show them the way!
@phil
if a bank goes bankrupt the loans are sold to other banks for pennies on the dollar the mortgage,car payment and so on are still owed.secondly many of these banks hold peoples retirement (directly or indirectly) or savings now there is insurance held by the bank for deposits (there is a cap tho) but the failure hurts the middle classes retirement and savings dramatically.
They should let lehman fail, shoulda let bear stearns failed and shoulda let aig fail. If they made bad investments they deserved to fail, anyone who was dependent on them to the point it would cause them to fail shoulda failed too! If your bank fails, you own your house, you own your car,you have no mortgage, no car lease payment, no car payments, no loan payments. Americans woulda been rolling in dough but hank paulson hates middle class america and Obama government is anti middle class white people and want to keep black people poor so that we can be dependent on government forever so they can expand big government