The Surprising Value of “The Big Short”

I grudgingly went to see “The Big Short” tonight, believing I wasn’t going to like it for making heroes out of a group of people who profited from the global financial meltdown of 2008.

Sure the movie focuses on a handful of guys who saw the danger in mortgage-backed securities coming and chose to bet against the American economy. I expected Hollywood would turn this into a tale of some wacky, financial industry mischief-makers who gleefully took advantage of the system with no harm/no foul for the rest of us. (While Ryan Gosling’s Jared Vennett pretty much falls into that category, he does give voice to some of the most unpleasant truths about the real-world impacts of the crisis.)

My favorite part of this movie is that it spelled out the lunacy of no one going to jail for this nonsense. It laid it out on the line by speaking the fundamental truth that drives each generation of Wall Street robber barons—when it all goes to hell, don’t worry. We’ll blame it on the immigrants and the poor (and in this case, for the first time, the teachers).

To this day, I never cease to be gobsmacked by the number of people who want to blame Barney Frank and Democratic efforts to stop redlining as the real driver of the 2008 financial debacle. As if banks somehow finally caved in to Barney Franks’ awesome power and just started writing mortgages to anyone he sent their way.

Umm, no. Banks started writing mortgages to anyone with a pulse because they found a way to make money off it. Poor lending practices were not the result of imposed do-gooderism on the industry. They were the result of complex, largely unregulated securities created by Wall Street that ended up dominating the balance sheets of too many big banks.

So you may hear some crackpot running this rap about Democrats strong-arming banks into giving poor people mortgages. It usually comes when they are attacking financial regulation or blasting Elizabeth Warren for being too tough on the banks and trying to pretend that the 2008 collapse was about something other than Wall Street malfeasance. When you do, mention this movie or to the original book of the same name by Michael Lewis. If they’ve seen it and are still peddling such nonsensical arguments, there’s no hope, so it’s best to just move on. But if they haven’t seen it, maybe there’s a chance for a teachable moment.

Because if nothing else, “The Big Short” takes the story that was so compellingly told in the documentary “Inside Job” and lays it out in a more digestible, entertainment product. Maybe, just maybe, we can learn something from this mess.

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