Archived from Wednesday, June 17, 2009
FRONTLINE's “Breaking the Bank” reveals the inside story of two banks at the heart of the financial crisis—Bank of America and Merrill Lynch—the rocky merger, and the government's new role in taking over the American banking system. Join a live discussion with producer Michael Kirk.
Archived Chat
Hello and welcome to the Engage Live Chat series. Today we welcome Michael Kirk, producer of FRONTLINE's "Breaking the Bank." Thanks for joining us today Michael. Let's get started.
Kyle:
What allowed the banks to get into such debt in the first place?
Michael Kirk:
The banks—especially the Wall Street Investment Bans (like a lot of us) realized the housing market was extremely lucrative. There were few regulations on the sophisticated (exotic) financial instruments they invented to make bets in this particular market…so they often built up incredibly large debts vis a vis the amount of cash they had on hand. They also joined with other banks in risky swaps of mortgage-backed securities. Then, when it looked like the bubble might burst they miscalculated and stayed too long at the party. When the bubble burst they were left holding the bag. At least two—Bear Stearns and Lehman Brothers collapsed. Merrill Lynch survived but it’s debt is huge and we taxpayers will end up up paying for it for a long time.
Dawn Carr, Oxford, Ohio:
Is the change in the structure of the banking system an indicator of a reformation of democracy?
Michael Kirk:
Seems to me we are watching something fundamental happen to the relationship of government and private industry. The banking system is one sector, so is the automobile industry and soon we may hear more about an enhanced government role in the health care industry. The financial crisis has truly frightened many people in Washington, on Wall Street and throughout the nation—obviously the government has decided to take a more direct role in trying to stop further crisis. How long they will be involved in directly managing the banking industry (for example) and how much it will cost is—at this point—a function of forces much larger than almost anyone imagined a year ago. The people we talked to tell us they have no idea how long, or how deep the government involvement will be.
Bunny McCratchy:
What's the number one lesson that we, the consumers, can learn from this?
Michael Kirk:
#1 lesson…Save, don’t over extend yourselves. Maybe if we do that, the banks will learn from our positive example.
Cay Lacey, Lincoln, Nebraska:
Please explain how deregulation, from repeal of Glass-Stegall through Phil Gramm, can be reversed? Can we at least combine OTC and OCC?
Michael Kirk:
We will more directly answer your question with the next film in our series (we're working on it right now). It will air on FRONTLINE in the fall. In general--there is an extremely interesting battle shaping up right now in Congress about this very matter. The White House has taken a position and so have various banks and other lenders. It will be fun and important to watch it all shape up this summer and next fall.
Kelly Kimble, Grand Junction Colorado:
Ken Lewis got screwed by merril and Paulson.BoA should show Lewis some mercy don't you think?
Michael Kirk:
I think our film demonstrates how complicated the relationship between Lewis, Thain and Paulson was/is. Law suits abound...shareholders want to get to the bottom of this and so do elements of the government and the attorney general of New York state. One of the questions at the heart of those inquiries is what did Ken Lewis know (and when did he know it)? Never forget--Ken Lewis is a very good dealmaker and infighter (as are Thain and Paulson). The truth--if we ever know it--resides with those men themselves.
Cay Lacey, Lincoln, Nebraska:
Follow-up question: Can you explan the steps along the path of deregulation that led us into this mess?
Michael Kirk:
It would take more time than we have for me to go into enough depth to properly answer you question here. I would encourage you to watch the last film we made about this topic, "Inside the Meltdown", for part of the answer. PBS.org/frontline/meltdown is a good film to watch.
Harley, Ottawa, Canada:
Why not leave the banks to themselves, nationalize the Federal Reserve and re-instate Glass-Steagall?
Michael Kirk:
The administration and many others feel the unregulated banks were a big part of why we are in the mess we are in. They feel it's time to take a stronger role in the way the banks operate. We will see if that works. The Federal Reserve is already part of the US government. There are efforts to reinstate Glass-Steagal. We'll be watching those closely.
Stephanie, Honolulu, HI:
Reporters in the film were particularly negative in their description of Lewis. Was that to offset Thain as the only bad guy?
Michael Kirk:
The reporters have been watching Lewis, Thain and Paulson closely throughout this crisis. I'm not sure I would generalize about whether their comments were "negative" about Lewis (in particular). We did not include the comments we chose to offset any other opinions--but rather to help explain the story we were trying to tell as accurately and with as much detail as possible.
David Hutchison, Greenfield, IN:
Not a question just WELL DONE!
Michael Kirk:
lol.
Stephen Smith, Cambridge, MA:
Do you have faith in the federal government to solve these problems by giving over one trillion dollars to these capitalist manipulators?
Michael Kirk:
I'm not qualified to personally have an opinion--but many of the people we talked to were extremely concerned about one central fact about the crisis: hardly anyone--not the bankers, not the government--has demonstrated an effective understanding of how big the problems is or what it will take to solve it.
Carlos Zuniga, Washington, DC:
I am convinced that this government has obtained powers that our founders did not intend. Agreed?
Michael Kirk:
That's why we have a Supreme Court. We'll find out if cases are brought and the Court decides to hear them and rule on the matter.
Aaron Keller, Gloversville, New York:
Do you encounter resistance/interference from PR machines or political interests? How do you handle it and still get the interviews you need?
Michael Kirk:
Yes we always encounter resistance/interference from PR machines and/or political interests. It's a given when you think about the kind of subjects FRONTLINE takes on. The important thing is that we NEVER succumb to their hectoring or their (rare) threats. We push back...we try to extract information that is useful for you (the viewer) and we try (and often are successful) to convince them that a public airing of important information is the best way to handle contentious and complex information. Believe it or not, that argument often wins.
Marie Joseph, Georgia:
What are the consequences of letting a bank fail?
Michael Kirk:
We all saw what happened when Lehman Brothers went down in September. Credit froze, the world held it's collective breath and experts tell us we nearly experienced a total meltdown. When smaller banks fail they are usually carefully taken into bankruptcy by the federal government. If a large bank (Citi or Bank of America) were to be closed down--no one really knows what would happen--simply because they are so large. Some argue it could all be controlled and depositors and creditors alike would emerge intact--others are not so sure.
Ann Smith, Potomac, MD:
A recent NYTimes article reviewed the power & influence of Blackrock. Why are they not mentioned in your reporting?
Michael Kirk:
FRONTLINE is 52 minutes and 46 seconds long. That's a lot of time on television these days...but not enough time to cover all the myriad elements of a complicated story like Bank of America, Merrill Lynch, the history and implications of their merger, the backgrounds of the two CEO's involved, the history of both organizations, the state of play Treasury, a biography of the Secretary of the Treasury, the collapse of Lehman Brothers, the creation and expenditure of some of the TARP funds, the election of President Obama and his response to the economic crisis. Blackrock is one of many, many important players on Wall Street--but not nearly as important to the story we were telling as the episodes mentioned above.
Jimmy:
How does the US' response to the financial crisis differ from those of other countries?
Michael Kirk:
The world is so interconnected. The countries--large and small--have had to cooperate in ways that were not imagined 10 months ago.
Richard, New York City:
Your films on Frontline all have a very nice look to them. Can you talk about your visual style and how you came to it?
Michael Kirk:
Thank you. How the films look is very important to me. I take very seriously the idea that we are making something important and historical and my team and I work hard to make films that "feel" that way. We use black and white photographs of our main characters because I believe viewers listen better to narration or interviews with the images are less demanding (than moving pictures or stock footage). I also think the photographs take viewers inside meetings and offices and allow them to use their own imaginations to fill in the blanks here and there. As to the interviews--I'm a sticker (with our director of photography Ben McCoy) for make the people we talk to look as good as possible. Their answers to our questions form the heart of our films and we really work hard to make them as accessible as possible to viewers.
William:
Did you approach T.Geithner or H.Paulson for this film? They were the ones holding the shotgun in this marriage. No comment from them?
Michael Kirk:
We have tried very hard to get Secretary Geithner and former Secretary Paulson to grant us interviews. I believe they have a responsiblity to talk about what happened and give Americans the benefit of their expertise and experience during these critical times. Sadly, so far, they have both denied (or their handlers have denied) our repeated requests that they share their knowledge and insight with our viewers. It continues to be an open offer--any time, any place, I will happily (and gratefully) sit down with them--armed with the important and hard questions I would think they would want to answer--if for no other reason than to clear up the historical record.
Thank you for joining us today, Michael. Many thanks to the audience for participating as well. To learn more about the financial crisis, or watch the full program online, you can visit the FRONTLINE site at www.pbs.org/frontline.
Starred (*) questions have been edited by PBS editors for brevity and/or clarity. The original, unedited question can be found to the right under Audience Questions.
Thain's bonus argument is false.
Thain's argument about paying out bonuses is false. There is no reason to pay out bonus to managers and executives that caused the company to meltdown. The company was collapsing and going out of business from decisions they made. There's no reason to retain for a company that is not going exist the next day.
Money is the one resource that is SOLD to all of us that we depend on to buy other goods and resources. Humans like Thain, Lewis, and all those other bankers should be monitored closer by the so called finical media.
Frontline is a fantastic program.
Frontline is one of my most favorite programs outside of the Red Green Show. It's well put together and thought provoking. Thanks.
Love the Show!
thank you very much for this show! It has cleared up so many questions that I have had about the markets. I am always excited when I hear that a new Frontline Documentary is airing. I think it is the best Documentary on television! How can I help Frontline? I am already a PBS member. What can I do to help?
PBS, Frontline and The Red Green Show
I'm with you kid. Anyone who watches and understands Frontline and The Red Green Show knows the diversity of subjects PBS covers. I also like both of these seemingly mentally contradictary programs. One is serious as a heart attack and the other is inane and laugh out loud funny.
PBS is by far the only truly mentally stimulating channel. From our funny bones to our higher learning bones.
I can't wait to see Ken Burns National Parks series.
Is this the end of the free (?) financial markets
Why is nobody mention the result of this gov.takeover, esp. the lost of trust of the free world into our system.
Why is Paulsen not responsible for his biggest mistake, underestimating the reactions of the bankruptcy of lehmann, wich was a terrible mistake.
whos to blame
why are the key players( this includes the lawmakers who failed the people so miserably) ever held accountable for their actions?
it seems that anything goes these days
Gov. Agenda
Michael, Wil you ever do a Controversial Episode regarding the true Agenda of the Federal Reserve? As you know the U.S only holds shares within the FED. All of this b.s that is going on in concert to there alterior motive which is to obtain a new Currency Called The Amero. This is a very risky story. Do you have the Ballocks to do a story like that?
Rockefellers
I would also like to see a report on the FED and Rockefeller conspiracy. I highly doubt it will ever happen...seeming as they own the media. Oh well.
Esoteric Agenda
Mike,
As a reporter i truly believe you would truly enjoy "esoteric Agenda on you tube. Please find time to view it.
Breaking the Bank
This was a fabulous piece of reporting. It read like a good mystery novel.
So all the repuglicans calling Obama a socialist were all wrong as usual. Socialism of the banks happened under Paulson and the Bush administration.
For people who are supposed to be so smart, they sure screwed up royally - all for greed.
I think keeping our money under our mattresses might be a good idea
greed ,incompetence,and history
WITH MULTIPLE FINANCIAL CRISIS UNDER OUR BELT THE NATIONS EDUCATED EXPERTS MUST LEARN TO TEMPER THOSE INVOLVED WITH SANCTIONS AND NOT REWARDS..THIS IS NOW MORE CRITICAL AS WE HAVE SPREAD OUR TOXIC AAA RATED PRODUCTS ALL OVER THE WORLD.WITH FEWER EXPORTS WE HAVE POLLUTED OUR TRADING PARTNERS LIVES AT THE EXPENSE OF BENEFITS FOR VERY FEW AND FINANCED THESE MISTAKES WITH DEBT OWED TO OUR ONETIME FEARED ENEMIES..LET US HOPE THEY REFRAIN FROM SQUEEZING US IN THE NEAR FUTURE AS WE PAY FOR THIS LATEST MISTAKE WITH BORROWED MONEY THAT WILL HAVE RAMIFICATIONS YET UNKNOWN
I don't see the changes
Your story ended with "the party is over" but watching my friends at Goldman Sachs I certainly don't see any changes. They still get $300k a year or more. They still get giant bonuses. And if they get laid off they are at another financial firm immediately making the same salaries.
We'll never be free until we break the bank!
What a pile! The "saga" unfolds, presenting crooks like Paulsen and Thien like they're living legends soon to be portrayed by Vin Diesel and Christian Bale in some future minseries about this seminal moment in our history! Big Money continues to rip us ALL off with these shenanigens as it consolidates control and power thru these people. Goldman Sachs has been working us all since before we were born and continues to do so. Surely they funded this thing one way or another--right?! This program is just a smokescreen veiling the truth on the new pbs--propaganda broadcating system.
"The currency of our lives is being stolen".
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