Watch a Shocking excerpt - beginning at 5:30 in - from the below segment
WATCH THE April 24th - IN TWO SEGMENTS: PART ONE & TWO (HERE)
This PBS FRONTLINE program investigates the inside story and exposes the unprecedented and uneasy partnership between government leaders and titans of finance. The program also explores some of the key decisions, missed opportunities and struggles to rescue and repair a shattered economy.
Decades of deregulation kept the government’s top officials in the dark about the complicated financial products that drove the meltdown. As Wall Street innovated, its revenues skyrocketed, and financial institutions of all stripes tied their fortunes to one another.
Josef Ackermann, Deutsche Bank CEO: “We were bullish on the mortgage market in general, and {bundling and selling} subprime {mortgage risk} was an element of it.”
Beginning with the government bailout of the collapsing investment bank Bear Stearns in the spring of 2008, the film tells the story of how the country’s leaders - Treasury Secretary Henry Paulson, Federal Reserve Chairman Ben Bernanke and New York Federal Reserve President Timothy Geithner - struggled to respond to a financial crisis that caught them by surprise.
Phil Angelides, the chairman of the Financial Crisis Inquiry Commission: “One of the most striking parts of the story is … how little people in charge of our system knew and/or did in the wake of the oncoming crisis”
In 1994 at a luxury hotel in Boca Raton, Fla., JPMorgan financial executives created a new product and {financial innovation for the} marketplace in which banks could buy and sell risk. A team of bankers, all in their 20s, dreamed up a new "insurance product" for loans called a credit default swap. It was the beginning of absurdly huge profits for the banking industry....and fuel for a boom in global investing.
Satyajit Das, 30 year Wall Street consultant: “The basic business that {Investment Firms and Banks} created was immensely profitable…..we were just moving the risk from one party to another party.”
As the real estate market was booming, bankers successfully tweaked the credit default swap to bundle and sell home mortgage loans to eager investors. But despite the money flowing into banks’ coffers, credit default swaps also loaded the financial system with lethal risk.
Bill Winters, the former co-CEO of JPMorgan’s investment bank said it was a way out for the banks and “The defining problem was that banks were unable to adequately deal with their own credit risks,”
When the housing bubble burst, the credit default swaps - originally designed to stabilize the financial system - brought the global economy to its knees. Regulators, who had often stood on the sideline and allowed Wall Street to police itself, watched in horror as the consequences rapidly unfolded before them
Phil Angelides, the chairman of the Financial Crisis Inquiry Commission: “Here we are three years-plus after, and very little has changed...and in many respects, the financial crisis never ended."
Phil Angelides, the chairman of the Financial Crisis Inquiry Commission: “Here we are three years-plus after, and very little has changed...and in many respects, the financial crisis never ended."
FRONTLINE’s veteran financial producers Martin Smith (College Inc., The Madoff Affair) and Michael Kirk (Inside the Meltdown, The Warning), probe deeply into the story of the big banks - how they developed, how they profited, and how their {financial profit} model produced unfathomable wealth {and} planted the seeds of financial destruction.
In the first hour of Money, Power and Wall Street, FRONTLINE correspondent Martin Smith interviews leading bankers, government officials and journalists which shows the epic rise of a new financial order and the trouble that followed. The investigation charts the largest government bailout in U.S. history, and a series of decisions that rewrote the rules of government and fueled a debate that would alter the country’s political landscape.
Federal Reserve governor Daniel K. Tarullo: “It was quite clear to me that a number of really quite large financial systems had {no} management information systems which allowed them even to know what all their risks were.”
In the second hour, FRONTLINE producer Michael Kirk investigates how the American government confronted the crisis while dealing with sharp internal divisions and a relationship with Wall Street marked by mistrust and dependence, mutual interests and competing goalsPBS: Full Program Press Release (HERE)
BLOOMBERG: "Money, Power, and Wall Street"- "Takes No Prisoners" (Read HERE)
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