Access Journalism: The Movie

It is not true, as a Wall Street Journal reviewer claimed, that the HBO movie version of Andrew Sorkin's book “Too Big to Fail” was “Too Boring to Watch.” On the contrary, the problem with the film, featuring excellent acting and taut direction, as with the richly anecdotal book, is that it is all too effectively misleading.

Fortunately, if viewers have already watched “Inside Job,” the spot-on Academy Award winner, they will not be led too far astray by this film's adulation of the likes of Henry Paulson and Timothy Geithner.

Paulson is portrayed as an eminently decent man, troubled by the imperfections of the TARP bailout, and when he throws up off camera in one scene it is not at all suggested that perhaps he could be disgusted that the misery he brought to the world had left him a billionaire.

When he resigned his position as head of Goldman Sachs to become treasury secretary, he cashed in $485 million in Goldman stock and was saved from a $100 million tax liability because he was entering government “service.” The film barely mentioned that Paulson was the head of Goldman Sachs when his company deceptively packaged and sold the collateralized debt obligations (CDOs) based on the subprime and Alt A mortgages that proved so toxic.

As Paulson concedes in his memoir, after George W. Bush appointed him treasury secretary, the president asked plaintively as the economy was crumbling, “How did this happen?” In Sorkin's book, it is stated that the treasurer “disregarded the question, knowing that the answer would be way too long.” But in his memoir, Paulson provides a clearer insight: “It was a humbling question for someone from the financial sector to be asked — after all, we were the ones responsible.”

No such honesty has yet emerged from Geithner, who was an undersecretary of the treasury during the Bill Clinton years, when he worked closely with his bosses, first Robert Rubin and then Lawrence Summers, to pass the radical deregulation hinted at but never fully explained in either the Sorkin book or the film. There is scant reference to the obliteration of the Glass-Steagall Act, a repeal that permitted the too-big-to-fail merger of companies such as Travelers and Citicorp, which became Citigroup — a company that had to be bailed out with $50 billion in taxpayer money.

Nor is there any reference in the film to the fact that Rubin, mentor to both Summers and Geithner, went on to help run that new megabank at a salary of $15 million a year. Geithner, who later became head of the New York Fed, a job obtained with the effusive recommendations of both Rubin and Summers, worked to salvage Citigroup from the mess its packaging of toxic mortgages had created.

Geithner is lionized in both Sorkin's book and the film version. As Nancy deWolf Smith put it in The Wall Street Journal: “Some viewers who remember the book may be galled again by the portrayal of certain characters. For instance, Timothy Geithner (Billy Crudup), then-president of the Federal Reserve Bank of New York, still comes across as a blameless saint and Wunderkind with a compassionate finger on the pulse of the victimized ordinary man.”

The fawning in the book is embarrassing, as in the description of Summers and his treasury assistant in the Clinton years going off to tennis camp, with Sorkin noting, “Geithner, with his six-pack abs, had a game that matched his policy-making prowess.” Not to be overlooked is “his usual firm, athletic handshake.”

That policy prowess must extend to the destructive CDO deregulation that Geithner and Summers pushed through Congress and that, in an image in the movie, we see Clinton signing into law. That legislation, not specifically referenced in Sorkin's book, was called the Commodity Futures Modernization Act (CFMA). It banned the application of any existing regulation or regulatory agency authority to the emerging market in CDOs, which turned out to be disastrous.

These were the same CDOs that AIG backed with phony insurance “swaps,” resulting in the Geithner-led $170 billion bailout of the company with the money passed through to Goldman and the other banks covered by AIG. Neither the CFMA nor the heroic and incredibly prescient Brooksley Born, then-chief of the Commodity Futures Trading Commission, whose dire warnings about the new financial gimmicks were effectively silenced by the CFMA, are mentioned in the index of Sorkin's book.

At the end of HBO's film about how skillfully Henry Paulson, Ben Bernanke and Timothy Geithner managed to force the top banks to accept $700 billion in bailout money, the question is posed as to whether the banks so saved would turn around and lend money to save the homes of ordinary folks. The outcome was quite the opposite.

The economy remains in deep trouble thanks in considerable measure to the “bankers-first” priorities that Geithner and Summers brought with them to the Barack Obama presidency. The housing industry is deeply depressed, new home construction starts this year are expected to match the lowest point since records first were kept in 1963, housing values are predicted to decline at least 5 percent more this year, and without an improvement in housing there will be no significant increase in consumption or jobs.

Further, on the day HBO premiered the film, The New York Times reported that the top banks now have an inventory of foreclosed homes that is twice as high as when the crisis began four years ago, and, “In addition, they are in the process of foreclosing on an additional 1 million homes and are poised to take possession of several million more in the years ahead.”

The film and the book, by centering on TARP, make that bailout the big deal, and when the bailout money was paid back to free the bankers' bonuses from regulation, it was celebrated by Geithner as “the most effective government program in recent memory.”

Rubbish! As Paul Atkins and two other members of the Congressional Oversight Panel on TARP wrote in a blistering WSJ column exposing the TARP settlement: “It hides the full story of the government's financial crisis effort, of which TARP is but a minor part”; the major part being the $1.1 trillion in toxic mortgages that the Fed purchased from the banks, the $380 billion bailout of Fannie Mae and Freddy Mac, and the loan guarantees of “other Fed and FDIC programs (that) added another $2 trillion of taxpayer money at risk to the 19 stress-tested banks alone.” And then there is the 50 percent run-up in the national debt, thanks to the banks' savaging of the economy that will haunt us for decades to come.

Perhaps the main value of the book and film is the instruction they provide on the limits of mainstream journalism in the decade that led up to the meltdown. Sorkin, who rose to be a business editor at the Times, covered Wall Street deal-making in exquisite detail, relying on an access journalism that has often proved deeply flawed in traditional business news coverage.

What was largely ignored as it was unfolding was the story of the unbridled power of Wall Street financiers over the political process that caused this tragedy for so many tens of millions who have lost jobs and homes.