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Frontline: Inside the Meltdown

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Inside the Meltdown is an episode of the popular "Frontline" television series, giving the behind-the-scenes stories of the Bear Stearns and Lehman Brothers business collapses that kicked off the present day economic crisis, followed by efforts to support insurance giant AIG and a 700 billion dollar bailout. Inside the Meltdown especially focuses upon the sudden, catastrophic dilemma thrust upon Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke, whose fear of "moral hazard" - the concept that bailing out a failing business will only promote and encourage more failure on their part - had to give way to the larger, possibly economy-destroying threat of a resounding ripple effect stemming from the collapse of giants. An absorbing documentary that presents the downfall of multigenerational institutions in plain terms for viewers of all backgrounds, Inside the Meltdown is especially recommended to public library DVD collections. 60 minutes, color.

I always liked the PBS Frontline series as they tend to be less biased than most documentaries, especially when it comes to politics. I remember seeing the announcement on TV by Secretary of the Treasury Henry Paulson stating that if congress didn't immediately pass the bailout bill, the entire economy would crash by Monday.

This video gets into the gory details of the response to the meltdown and why certain things were done and others were not. Bear Stearns, Lehman Brothers, AIG, the catalysts that set off the worst economic downturn since the great depression.

If you want a more extensive view of the meltdown, I would recommend watching this in conjunction with FRONTLINE: Ten Trillion and Counting, i.o.u.s.a., and Frontline: The Warning. This combination gives a much bigger picture of the U.S. financial crisis.

Brilliantly informative and understandable for the layman. This video should be required watching in the high schools and colleges.

PBS didn't manage to interview the main character here: Treasury Sect. Henry Paulson. Still, the 60 minute tv documentary does a decent job of boiling down what led up to and after the financial crisis of the fall of 2008 when the nation's biggest banks almost collapsed due to their subprime loans falling apart. Paulson's recent memoir, "On the Brink," tells his story very well. Here, you get a few too many reporters and not enough real players. But the effect is still informative.

This Frontline DVD provides a dispassionate chronological retrospective of the financial meltdown. It gives an opportunity to consider the step by step crash and burn of the economy which we do not have as the events occur.

Its strength is 1) the interviews with some of the key players such as Barney Frank and economics specialists; 2) the discussion in the conference rooms with Geithner, Paulson and the heads of the Wall Street Banks; and 3) the discussion with Bernanke and Paulson in meetings with House and Senate leaders. We learn their reactions at the moment events occur. There is a discussion of the Henry Paulson-Richard Fuld realtionship when Paulson was at Goldman Sachs and the pivotal role that played in the failure of Lehman Brothers. Apparently, Paulson failed to anticipate the banking systems' reaction to the Lehman bankruptcy.

We also learn CNBC's role broadcasting rumors that "greased the slope" into the meltdown.

I recommend this as an unbiased view of the pressures that lead to the decisons made. It ends in February, 2009 a month after Obama takes office, so expect a critique of his handling.

September 18, 2008 the Secretary of the Treasury, Henry Paulson and Ben Bernanke arrived in the capital for an emergency meeting. They had already bailed out one bank, allowed another one to fail, and nationalized three of the nation's largest companies. Senior legislators were told that unless they were given 700 million dollars immediately there would be no economy the following Monday. That was Thursday. This is the start of Frontline's: Inside the Meltdown.

Frontline covers the gathering economic recession that became evident in the spring of 2008 and the actions and reactions of the Secretary of the Treasury and the Federal Reserve. It was the fall of dominos starting with Bear Stearns which had billions of dollars in what came to be known as toxic assets of mortgage securities and credit default swaps. Paulson, a long-time believer in free market economics found himself challenged to let the market chips fall where they may, or stave of economic panic with federal subsidies. He goes with the latter.

But Paulson's nightmare is not over with. Next is the privately run and owned Freddie Mac and Fannie Mae, two of the largest mortgage lenders. Paulson finds himself in the dubious position of once again staving off disaster by nationalizing both companies. Before he can fathom the intervention he has always shunned, he finds a new disaster cropping up in Lehman Brothers. This time he follows his principle of "moral hazard." That is to let the company fail from its own mismanagement. He does, and the reverberations are not only felt nationally but around the world.

As the bell sounds twice, thou shalt deny free market capitalism thrice to paraphrase the Bible, and Paulson is becoming big in denial of lifelong beliefs. A.I.G. the largest insurance company in the world never expected a company like Lehman to fail or be allowed to fail. They hold credit default swaps that guarantee the toxic assets of the Lehman, and now they are on the hook for its collapse--only they don't have the capital to honor their commitments. Paulson now realizes that his decision to allow Lehman's demise is about to trigger global recession, and he will preside over the greatest depression in history, unless he does something--again.

Only Paulson's attempt to get help from the Congress backfires as his own Republican colleagues there kill the bill. The last ingredient for the disaster recipe is complete. Ireland has financial woes. Iceland goes bankrupt. Great Britain begins bailing out banks. His only remedy left is inserted in a bill that most conservative congressman miss, an injection of capital from the federal government. Paulson, a life-long capitalist comes full circle becoming one of the most interventionist Treasury Secretaries in history.

He summons the bankers and tells them the government will lend them money to loan out to cash-strapped insitutions. In effect, the government will become part owner in the nine biggest banks in the country. While the bankers balk, he tells them it is not negotiable. He is not asking; he is telling. They will sign a paper agreeing to the commissions before they leave New York that evening. A cool 150 billion in bailout money is on its through the economy. Paulson's last resort, capital injection, an act he personally abhors is initiated.

This program aired one month after Obama replaced Paulson with Tim Geitner at Treasury. It ends telling us that 350 billion was pumped into the economy and only time will tell how much more will be needed and if it will be enough.

It turns out, it wasn't.




Also recommended:

The Financial Crisis Inquiry Report, Authorized Edition: Final Report of the National Commission on the Causes of the Financial and Economic Crisis in the United States

The Looting of America: How Wall Street's Game of Fantasy Finance Destroyed Our Jobs, Pensions, and Prosperity--and What We Can Do About It One of the best books on the economic collapse and crisis. Very informative read.

Free Lunch: How the Wealthiest Americans Enrich Themselves at Government Expense (and Stick You with the Bill) This is an outstanding presentation how we have moved from a democracy to a plutocracy in a few decades. This is not to be missed.

Frontline: Breaking the Bank One of the first clues of the coming economic debacle.

Frontline: The Warning Or what I would like to think is Brooksley Born's "I told you so." Fifty-two minutes of pure information and entertainment.

Frontline is a great show and this program really brings the crisis alive. There are excellent interviews with key people. This should be watched with another good video Ascent of Money to get an historical perspective. I have a Listmania list relating to this subject on my profile if people would like to learn more.

Released in 2009 this is a diary of those few weeks of turmoil, the 2008 financial crises . The same producer released another documentary in 2010 Frontline: The Warning. He should have released Warning before this one but I am sure that the producer of this documentary did not know about the banking system untill he got to do this documentary and realized that the banking mess has been going on since 1996 and no one had done anything about cleaning the mess till now. To see why there is a mess, watch The Warning and that is why I call this Part 2 and The Warning Part 1. Bravo.

If you do, then this is the DVD to watch. Great interviews, very well done.

I found this DVD on the financial crisis quite interesting and informative. I have been following the crisis the past two years after Bear Stearns had it's financial problems. I agree with the other commentators that this video should be shown in High Schools and Colleges to educate the students on what really occured. This is top rate reporting and I highly recommend this DVD for anyone who desires to know what really took place in 2008 to cause the problems we have today.