Ten years ago, the Lehmann Brothers investment bank collapsed, sparking a world-wide banking crisis and recession. The economy lost at least 5 million jobs, pushing the unemployment rate from 5 percent to 10.5 percent in just a few months. The US stock market lost $7.4 trillion in value while the real estate market dropped $3.4 trillion. This translated to a loss of $30,000 per American household. Americans were thrown not only out of work but also their homes—5.5 million, to be exact. In addition to these very personal losses, the American taxpayer bailed out the big banks to the tune of 4 trillion dollars.
Since 2008, a stack of books has been written about the causes and consequences of the crisis. But if you want to get a quick survey, then three movies will do the trick.
The first film is The Big Short from 2015. This film has taken Michael Lewis’s riveting book of the same name and turned it an entertaining docu-drama. The film follows several different investors who all figured out that the banks were selling toxic securities based on sub-prime mortgages. The movie stops at various points to actually instruct the viewer in the problem at hand. The film also does a good job of portraying the willful ignorance of the investment banking establishment which refused to believe that a financial tsunami of their own making was on its way.
The second film is Margin Call. This riveting drama chronicles 24 hours in the life of a fictitious investment bank which is hurtled into crisis when a junior-level risk analyst discovers that the firm is on the brink of insolvency. The strength of this film is that it does not try to over-explain the financial issues of 2008. It gives a big picture, without the kind of detail of The Big Short. Margin Call also provides an unflattering view of investment banking culture through the character of Will Emerson, the firm’s top salesman. When Emerson gives a detailed accounting of how he spent his $2.5 million dollar salary—mortgage, Mercedes, clothes, rainy day fund—his math-oriented colleague notes that he left out $75,000. Emerson’s reply? “Booze and hookers.”
How Emerson frivolously spent $75,000 provides a poignant backdrop to Hell or High Water, released in 2016. This film opens with two brothers, Toby and Tanner Howard, confronting the imminent foreclosure of their recently deceased mother’s home in West Texas. As their mother was dying of cancer, she refinanced her home using a reverse mortgage to pay for her medical care. Convinced that the local bank, Texas Midlands, had cheated their mother with the mortgage deal, the two brothers decide to rob branches of Texas Midlands in order to raise the $45,000 they need to pay off the mortgage. An experienced Texas Ranger, played by Jeff Bridges, starts to track down the bank robbers, offering his social and economic commentary along the way.
Hell or High Water paints a picture of the consequences of the financial collapse of 2008 for Middle America. If Will Emerson in Margin Call won’t have as much money for “booze and hookers” due to the crisis, then Hell or High Water underscores the fact that millions of Americans don’t have enough money to hang on to their homes.
Some commentators argue that the American economy has not recovered from the collapse of 2008. The lingering recession and slow growth certainly played a role in the election of Donald Trump. These films are worth watching to be reminded of what happened, why it happened, and why it may not be over.
John Elliott is a Senior Fellow at Intellectual Takeout.