In 2008, news channels are full of reports about the mortgage industry crisis and the forced sale of troubled
investment bank,
Bear Stearns, to commercial banking giant
JPMorgan Chase, with Federal guarantees. With Bear Stearns out of the picture,
short sellers turn their attention on another investment bank,
Lehman Brothers.
With their share price falling rapidly, Lehman Brothers tries to negotiate a deal with Korean investors. The deal hinges on the condition that Lehman's
toxic real estate is excluded, but falls through when CEO
Dick Fuld insists the Koreans reconsider accepting the real estate assets. The most promising US-based buyer for Lehman,
Bank of America, is uninterested without Fed involvement, but
U.S. Treasury SecretaryHenry Paulson is adamant that the government will not subsidize any more acquisitions.
To resolve the situation, Paulson and
President of the Federal Reserve Bank of New York,
Timothy Geithner, gather the leaders of the biggest US banks over a weekend, trying to coerce them to underwrite the deal. The bank leaders seem to reach an agreement, but Bank of America backs out, choosing instead to buy another threatened firm and Lehman's rival,
Merrill Lynch. Paulson tries to negotiate for Lehman with British bank
Barclays, but their involvement is blocked by
British banking regulators. With no buyers remaining, Lehman is forced into
bankruptcy.
Lehman's collapse affects the entire financial system. Paulson tries to reassure news media of the soundness of the decision to let Lehman fail, but the stock market goes into freefall. Meanwhile, insurance firm
AIG also begins to fail.
French Finance MinisterChristine Lagarde warns Paulson that he must not allow AIG to fail, as the crisis is affecting Europe as well. Unlike Lehman, the Treasury rescues AIG with an $85 billion loan, deeming it “
too big to [let] fail”.
Ben Bernanke, Chairman of the
Federal Reserve System, argues that
Congress must pass legislation to authorize any continued intervention by the Fed or the Treasury. With the availability of
credit drying up, Paulson's plan is to buy the
toxic assets from the banks to take the risk off their books and increase their cash reserves. Bernanke and Paulson lobby Congress, with Bernanke emphasizing the potential of fallout worse than the
Great Depression if they fail to act. The committee of representatives appear close to agreeing, when
U.S. Senator and Presidential candidate
John McCain, with great fanfare, announces that he is suspending his campaign and returning to Washington to work on the legislation.
Paulson has to threaten McCain not to interfere, and beg the Democrats not to back away from the negotiations. After a wave of panic and personal haranguing from
PresidentGeorge W. Bush, the
legislation passes on a second attempt and the
Troubled Asset Relief Program (TARP) is created. Paulson's team realizes that buying toxic assets will take too long, leaving direct capital injections to the banks as their only option to use TARP to get credit flowing again. Along with
FDIC Chair
Sheila Bair, Paulson informs the banks that they will receive mandatory capital injections. The banks agree to the loans, but TARP legislation stops short of forcing them to use the money to restore credit for ordinary consumers.
The stock market continues falling until 2009 when it finally stabilizes, signaling the end of the crisis. An epilogue notes that the banks made little use of the loan money to ease credit conditions as intended, while Wall Street compensation continued to rise, reaching $135 Billion by 2010.[1]
On
review aggregator website
Rotten Tomatoes, the film holds an approval rating of 74%, based on 27 reviews, and an average rating of 6/10.[3] On
Metacritic, the movie received a weighted average score of 67/100 from 17 reviews, indicating "generally favorable reviews".[4]