need to understand this....

Btw, did the movie mention how Bill Clinton & his rethug buddies created the housing bubble? I heard the govt's role was left out & the focus was solely on Wall Street. But I guess the 2 are the same now, so same difference.

It was all put out there.

They talked a lot about Greenspan.

I can't wait to see it.

Thanks~

I disagree that the absence of GS in a Hollywood movie is credible evidence that repealing Glass-Steagall did Not have great influence upon the 2007/2008 crash. I agree it may not have been a Singular cause...and I agree Greed is and always has been the driver..but certainly not cause. Cause was created by the slow and ever expanding chipping away at our protections via de-regulation - including the repeal of GS..
imo
http://www.dailykos.com/story/2011/06/28/989196/-The-Death-of-Glass-Steagall-and-the-Crash-of-2008
http://www.americanbanker.com/175/greenspan-urges-glass-steagall-repeal-1044317-1.html?zkPrintable=1&nopagination=1
http://www.huffingtonpost.com/2013/09/17/janet-yellen-glass-steagall_n_3940730.html

was designed to prevent through separation of investment banks, commercial banks, and insurance (betting against securities one does not own through insurance giant AIG).

They were investment banks not commercial banks that were trading in credit default swaps.

The mortgage companies and banks that made bad loans would not have been prevented under Glass Steagall

AIG was an insurance company, their actions would not have been prevented under Glass Steagall.

Banks have always pooled mortgage backed securities and have sold them. Glass Steagall would not have prevented that.

and in many cases, were encouraged to write more loans, especially ones that are subsidiaries of the investment banks. That put bank depositor money at risk as well as leaving the public on the hook. The commercial banks sold the notes on the secondary market where they combined with other loans through commercial banks creating the derivatives known as CDOs.

There was a thing called TARP. I remember it, don't you?

It was a hail mary to save us all from a complete and utter collapse that would have been much worse than it was, and much more difficult to recover from.

A stable one, until the banks started making bad loans.

Glass Steagall would not have prevented banks from selling mortgage securities and other instruments related to mortgages.

(as in real estate) but packaged loans with non-real estate debt.

That not only should Glass Steagall be reinstated but GS should be modernized to incorporate modern financial schemes.

HRH & her supporters act as if the other two Democratic candidates simply want the old version reinstated, end. stop.

I find the omission of honesty to be....a lie in this case.

Let's create/introduce layers of protections that DO NOT privatize profits for the 1% ers and socialize the risk among the 99%.

Let's just put a stop to all that over the top, free range and predatory capitalism of the 1% minority.

It's just a starting point. Lewis is a populist - if you want to understand the role that the shenanigans around Glass Steagall played, along with the Clinton Presidency, I'd suggest "All the Devils are Here" by Bethany McLean and Joe Nocera. Much more complete overview on what could have been done and what should have been done to nip these problems in the bud.

That said you are completely correct about the negligence and corruption inherent in the rating services. That's just not the whole story.

Bryant

Whether or not Glass Stegal would have prevented that specific scenerio, it is very depressing to see supposed liberals opposing a different regulation that is still important.

GLASS STEAGALL.

I think it much more liberal to look for the real causes and focus on those, versus a simplistic one liner, that isn't the truth.

was one of the "real causes." They created an environment where the corruption of various wall street firms could flourish. And Clinton, Sanders and O'Malley aren't running for the President of Goldman Sachs - they are running for the President of the United States; their attitudes towards regulation are an important part of understanding who should be selected.

Bryant

Of the bigger forest for the trees.

The whole system has gotten too concentrated and deregulated and monopolistic on all levels. We have allowed a handful of institutions to become too big and immoral, while allowing the middle to disappear and get swallowed up.

That's what we have to go after, and GS (or an updated equivalent) is a symbol of one of the steps that should be taken to go after that bigger pucture.

passed shortly after Gramm Leach Bliley. Without the Commodity Futures Modernization Act of 2000, what they did on Wall St. would have been illegal under NY gambling laws.

Hollywood is not reality.

Honestly, the propaganda movies seem to come out every election.

I read the book (which was good, but limited) and it didn't seem like propaganda to me.

Bryant

Is always propaganda, as it never can tell the whole story and generally only tells parts. Some are better than others at depicting events truthfully, some are only made for entertainment.

People see these movies and use them to judge the real life events the movies were based on.

The movies appear to me to come out more often during election cycles.

Seems like a form of propaganda to me.

Propaganda implies a willful desire to deceive or to shape public opinion. "information, especially of a biased or misleading nature, used to promote or publicize a particular political cause or point of view." is how google puts it.

While it is true (as I've stated above) that the Big Short (film) is unlikely to be a complete explanation of the 2008 financial meltdown, that doesn't mean it can't have value as a starting point. Even if the movie is all some people bother seeing, it at least exposes the lie that the 2008 meltdown was caused by poor people taking out loans they shouldn't have (which is the popular conservative argument as to why 2008 happened).

And the idea that a movie based on real life events is always propaganda suggests that movies should not take on real or historical stories. That's nonsense; many good and even great movies have been made based on historical or real life events.

Bryant

So by your reasoning, it's propaganda. I suggest your theory is not fully explored.

Indeed the only difference i picked up on was the nature of Eisman's (named Baum in the film) personal tragedy. Oh and the names were changed.

If you want to call it propaganda, can you kindly point out what was inaccurate or misleading?

My talk is of the more general type, of media creating the naratives of the country.

but if not, definitely directly referenced without using the words "Glass Steagall"

From people who actually understand the history of it. Somehow "reinstate Glass Steagall" become a bitter cry, and is never a nuanced discussion because so many don't understand it whatsoever It's on very generic "to do" list of certain progressive thought

It's highly debatable from what I've read, that it would/wouldn't have prevented the crash--the repeal certainly contributed to the bubble crash, with individual greed being the main issue there as well. The better question being would a modernized version prevent future ones, or does a better regulation/reformation legislation need to be written.

Glass Steagall when it was in place was also interpreted for and in use for banking corruption. It didn't magically prevent it. So, yes greed is the one factor that cannot be denied. Wall Street and banking are intricately tied together and very much need good legislation. People refer to "Wall Street" as a monolith, and I suppose it is, but a monolith made of millions of global individual acts. Are people attracted to finance inherently greedy? We certainly need strong regulatory oversight over all areas of finance Or do they simply like numbers? Is it the systems themselves inherently corrupt?
Is Glass Steagall the right legislation? Or more modern plans that take into account current financing the answer? I think the latter myself.

I certainly care and think about these things. I have a retirement fund. I shop for groceries. Like most people, I am investing from a distance all the time.

I think I'll find a good book on it, if I can find a reasonable one. Sadly, I won't find a good discussion here I think.

The real cause must be traced back to concerns about the deregulation that led to pervase incentives, lack of SEC oversight, and regulatory failings.

Good ratings mixed in with bad ratings ended up hiding the crap loans.

EOM

I also like Chasing Goldman Sachs by Suzanne McGee, which goes a bit more into the mentality of the Wall Street Trader and why regulations need to be put in place to ensure they don't act destructively.

Bryant

I've had "Chasing Goldman Sachs" on my reading list for some time--I'll up my timetable

good summary about what happened. Too Big to Fail was a time investment, but it was also good.

I'm looking forward to seeing the movie. I am so fascinated by this crash, I read everything I can get my hands on about it. Partly, because it is so unbelievable what people do, and so unbelievable how our financial system works. My conclusion is that very few people understand what happened and the factors that caused it are still all in place to cause another one.

I think Glass Steagall would have had an effect, though its lack was not the primary cause. The lack of Glass Steagall regulations allowed the financial institutions to put more money into what were essentially crap shoots than they otherwise would have had access to. The issue though was those crap shoots, which were based on mountains of things that were called financial assets, but which were essentially little more than air.

Repealing Glass Stegall, as I understand it was not the cause, as you say, but probably took away certain regulatory protections.

I remember hearing things about "The Shadow economy" which was essentially reinvesting profits from interest rates. Which still happens of course. It gets confusing and crazy quickly.

If you heard the term 'synthetic' before any financial instrument, it pretty much meant that it was probably just made up out of whole cloth.

Guy A would say, "If these securities were in a portfolio, which they are not, I bet that portfolio would lose value." Guy B (usually Goldman Sachs) would then make you a financial instrument that let you bet either for or against that thing that didn't exist.

Loons, all of them. Problem is, they ultimately used our money to do it.

A run rampant monopoly game

"I went and saw the movie."

I think everyone should watch PBS Frontline's "The Warning before watching "The Big short"

Greenspan, Rubin, Summers told Her to kick rocks

"Now it’s true that Clinton faced an extremely hostile Republican Congress for the last six years of his presidency. But his administration actively encouraged the big deregulatory legislation, and squashed its own dissenters, like Brooksley Born, who saw disaster ahead"
http://www.cjr.org/the_audit/bill_clinton_the_republicans_m.php

...that saving banks made home-loans to people who couldn't repay, and then re-packaged the loans as a product for their investment bank division to sell.

be a pretty good resource.

I haven't seen the movie, but I plan to. I did read the book.

How about you? Do you perfectly understand what happened, so that you couldn't possibly learn anything from such a movie?

It's a movie after all, it's not even a documentary, it's a comedy/drama. I know we tend to get news from the Daily Show, but that doesn't carry over outside of the show.

He understands it more than anyone and the humor he throws in doesn't hurt either. That said, I'm a reasonably intelligent person and I had a hard time understanding some of the financial shenanigans he describes. One thing I had never heard of before was something called the "orphan month." Somehow, some way, if a business wants to hide something in their dealings they can change the dates for there quarterly reporting and if there's a month in between, it somehow disappears into thin air. I also didn't know Alan Greenspan was a rabid Ayn Randian. That explained a whole lot.

A turd is a turd is a turd. Nothing terribly new occurs on Wall Street. The Bucket Shops and Side Bets of the late 1890's and the panic of 1907 are great precursors to the market fall of 2008. Uncle Teddy moved to shut these down. What is probably most important about the repeal of GS is the attitude that "new" market forces relegated the "old" market ideas obsolete. As Steve Carell's character admonishes the group he addresses - since when has fraud ever worked? The movie points out how private mortgage backed securities set the whole stage for this downfall. We had the S&L crisis in the 1980's and apparently learned nothing from it in these United States of Amnesia. Did the GS repeal cause the meltdown? No, but the attitude required to remove the restrictions imposed by GS is what led to the laissez faire philosophy governing investing on Wall Street. The Big Short is an excellent movie and I would highly recommend folks give it a viewing.