breaking the bank

photo of kenneth lewis and john thainphoto of moneyphoto of president obama
Where do your sympathies lie in this story, if anywhere...?

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Red-herring Journalism--Folie à Deux!?

I'm utterly incredulous that you could fail--for, at least, the second time--to report the underlying cause of the global financial meltdown--the so-called "shadow banking system," with an over-the-counter derivatives market estimated at $680 Trillion, which is far more than the total value of all the stocks, bonds, real estate, etc on planet Earth!? This OTC system helped allow for reckless over-leveraging by financial institutions and banks of all sorts.

I'm especially incredulous because I used to sing the praises of Frontline, which I deemed finest investigative journalism program in the country; but I'm forced by your gross journalistic negligence to place Frontline among the ranks of other corporate and public media who have concealed the unimaginable size of this colossal mess from public purview and scrutiny. Law professor and former trader Frank Partnoy (recently interviewed on NPR's Fresh Air) claimed that the Wall Street Journal had even devised a policy to replace the word "derivatives" with the euphemism "securities," which sounds rather assuring, but are anything but! Public media have been in many ways worse, given that the public investments came with the promise of in-depth news. Instead, we were deceptively fed in-depth silence.

Now, I must consider the possibility that Frontline's documentaries are only riveting, in style; in this piece no one exemplifies this sanctimony better than Andrew Ross Sorkin's hubris-filled deliveries, which are in striking contrast to the New York Times's own failure to published the size of the OTC derivatives market more than a handful of times (and until very recently, they buried it in the back pages).

Please make amends by amending your commitment to investigative journalism. The public needs at least one media outlet with journalistic integrity and commitment to truth and transparency.

New York, NY


There are many critics who bash public education but, what did all those shooting stars on Wall St. learn about economics and finance at the nation's "premier" business schools? Evidently, playing cards after hours became more than a pastime. Maybe gambling is bad but, at least one knows that they are being cheated by the house!

Elmer Beck
Bethlehem, PA


A very interesting perspective. Certainly not a complete story, but interesting non-the-less. The Wall Street bankers think they are Gods, as did Paulson. I don't think this crisis is going to change that. Although it was entertaining to watch the whippings... watched them at the time on CSPAN as well. It was obvious then and is still obvious that our elected congress people have not a clue as to what is going on and they are hoping that Treasury or SOMEONE will save us. They get to play-act as the good guys, chastising the bankers and Treasury, but they should be absolutely ashamed at what they DON'T know ! I am not sure who is buying the bull in these whippings. They are just as greedy, and not as well educated and trying to deflect any blame from themselves.

Hermosa Beach, CA


It really frightens me when I learn that my government has strongarmed the biggest bank in America. Al Capone would be proud. It would seem the Fed is the most powerful entity in this country and it isn't even a branch of government. I support H.R. 1207 and would like to see the Fed abolished. I would like a return to the gold standard and sound money.

Joe Harrison
Panama City, Florida


Admittedly there is blame enough for both government and private sector. Breaking the Bank concentrated on the late stages of the unraveling from the bankers' viewpoint. Like real human beings they postured to blame each other and accepted government critique as a "whiplashing" they simply had to endure but ultimately of no consequence. But were the wizards of analysis in hindsight not also the architects of this disaster?

Where were the Cassandras, and why did no one listen to them? At least Alan Greenspan admitted he erred in trusting the system to police itself. Too late, agreed, but a suffering nation would rather hear Lewis, Thain, Geithner, Paulson, Frank, Dodd, and the rest breathe a mea culpa, than have them toss the hot potato of blame to one another.

James Manista
Cleveland, OH


The "Lone Ranger" portrayed by Barry Obama, rode in and saved the town. Who wrote this garbage, Robert Gibbs or Rahm Emanuel???????

Surely you could have found more credible Washington sources than Frank and Dodd for their "purely objective points of view". They should have been the subject of your story.

When is anyone going to ask the House or Senate hindsight committees what they were doing the past 30 years? Is it not their responsibility to protect our interests in this area? Why is it they always know what should have been done but never get asked why they did not implement it "before we got in the mess"?

Where was little Timmy Geithner when all these deals were taking place? Apparently he designed or assisted in all of them since he was the only person in the world that could "fix" the mess we are in.

This is the second Frontline story on this subject and it is more pathetic and biased than the first. Give us a real story; tell us when and how the mortgage debacle began, how it developed and what brought it to light. We already know what happened afterward.
Maybe next time you can get the "purely objective point of view" from Rush Limbaugh and Bill O'Reilly.

Woody Thomas
Russellville, Ohio


You imply that Paulson offered Lewis no quid pro quo for going through with the Merrill acquisition other than not having him and his senior management team thrown out. Leaving aside the small-mindedness that capitulating to this threat implies on Lewis' part and the dubious proposition that Paulson could legally do this or even would want to, you don't even mention the enormous protection the government has provided Bank of America for going through with the deal, as described on page 184 of B of A's 10-K:

" January 2009, the U.S. Treasury, the FDIC and the FederalReserve agreed in principle to provide protection against the possibility of unusually large losses on an asset pool of approximately $118.0 billion of financial instruments comprised of $81.0 billion of derivative assets and $37.0 billion of other financial assets. The assets that would be protected under this agreement are expected generally to be domestic, pre-market disruption (i.e., originated prior to September 30, 2007) leveraged and commercial real estate loans, CDOs, financial guarantor counterparty exposure, certain trading counterparty exposure and certain investment securities. These protected assets would be expected to exclude certain foreign assets and assets originated or issued on or after March 14, 2008. The majority of the protected assets were added by theCorporation as a result of its acquisition of Merrill Lynch. This guarantee is expected to be in place for 10 years for residential assets and five years for non-residential assets unless the guarantee is terminated by the Corporation at an earlier date. It is expected that the Corporation will absorb the first $10.0 billion of losses related to the assets while anyadditional losses will be shared between the Corporation (10 percent) and the U.S. government (90 percent). These assets would remain on the Corporation’s balance sheet and the Corporation would continue to manage these assets in the ordinary course of business as well as retain the associated income. The assets that would be covered by this guaranteeare expected to carry a 20 percent risk weighting for regulatory capital purposes. As a fee for this arrangement, the Corporation expects to issue to the U.S. Treasury and FDIC a total of $4.0 billion of a new class of preferred stock and to issue warrants to acquire 30.1 million shares of Bank of America common stock."

Charles Titterton
Pleasantville, New York


This story scares me more than you can possibly imagine. All of those men deserve what stress they get. They, and the govt., have betrayed the Middle Class. We are the losers in all of this, yet we still keep thinking that govt. will save us. I see no hope for an adjustment in their priorities. Those men will never figure out what is truly valuable in life.

Kelli McMillan
San Diego, CA


Thank you for this brief review of the 2008 financial disaster. It may be clear that we are not out of the woods yet. But it is also clear the meltdown could have been much worse.

While few feel sorry for these bank executives, the foolish choices were not theirs alone. The feds failed to see the downside to keeping interest rates artificially low and creating a real estate bubble. We all behaved with "irrational exuberance" that the next generation will have to pay for.

shane algarin
san diego, ca


I just finished watching your program and the one comment that stood out was a comment that the White House had little sympathy towards the bankers because their greed is what caused this melt down.

I agree that greed was the root cause of the melt down but what seems to be forgotten is that everbody's greed is at fault. The banks for doing loans that they should not have just to make money, the home buyers that purchased a home that they knew they couldn't afford and the government for being able to stand up and announce how the "American Dream" of home ownership was increasing.

President Bush held a press conference how minority home ownership was increasing (basically touting how great his policies are). People seem to forget that President Obama was once a "community activist" which apparently means that he helped businesses and individuals improve their situations (home ownership).

Greed is the root cause but for all parties involved not just the "evil" banks.

Chris Schlaffman
Las Vegas, NV


Unfortunately, this documentary left a gaping hole in it's detail of the demise of the American banking system. No doubt, it was a good documentary of the fallout, but it would have served it's audience better if there had been a brief intro outlining the roles Congress (especially the banking committees), past presidents, (Democrat and Republican alike) and organizations such as Acorn, played in this debacle of greed. The story was not fully told. Alas, it was a one hour show.

If more time was spent on this, the fallout, which we viewed tonight, would have been better understood by the masses. It would serve as a warning to keep government out of commerce and high finance. None of this would have happened in the first place had it not been for the repeal of The Glass-Steagall Act which was supposed to be a fail safe against this. Shady politicians, such as Barney Frank, also played a major role.

Unfortunately, for the American people more fallout is inevitable as a result of this massive government intervention.

Gettysburg, PA


,I began viewing your program, Breaking the Bank, with an open mind hoping that all angles of the financial industry meltdown would be examined. Sadly, I was disappointed. I would agree that the majority of the program contained factual information specific to the Bank of America acquisition of Merrill Lynch, but the last few minutes delved into opinion rather than fact, leaving the viewer with the impression that greedy bankers are soley to blame for our current economic circumstances. There was no condemnation of the government's role in promoting the risky behavior, regulators failing to perform their duties, nor high ranking officials, including President Obama, threatening corporate executives with no legal basis.

This is why I do not support Public Broadcasting. If I wanted left-wing liberal biased reporting, I would get my news from one of the major networks.

Gary Dorris
Snellville, GA


The banks have always had this hubristic attitude of privilege ... noblesse oblige.. notwithstanding. Our whole economic view of our place in the world has led us to the abyss. If we do not find our way to a sustainable economic system and out of the hands of those trained to extract their wealth from our work we are in deep trouble. The system of the world needs to change, bankers are part of the problem. Their role does not deserve the remuneration they extract.

Ah well that is not going to happen ... good program anyway!!

charlie thomas
cascabel, AZ


The real story of the crisis is still the one that hasn't been told.

The worst economic decision since the fed tightened money supply in the 1930s and FDR tightened the federal budget in 1937 is allowing Lehman Bros. to go bankrupt in Sep '08.

How, in the world, did anyone think allowing Lehman to go bankrupt was a good idea? What was different about Lehman vs. Bear? Who was in the room and what did they say? How is it that they did know about AIG? Who was in charge and were any elected leaders involved?

The cost of this decision is in the trillions of dollars and growing. And that's just the US. That's the real story. The so-called smart men, sitting around a table, made a single decision that had impact on the employment, well-being of millions of Americans and who was there to speak up for them?Did anyone oppose Paulson? Why didn't they take this to the President of the U.S.? (Can you imagine such a decision being made now without Obama's direct involvement?)

That's what the American public needs to understand! Try a frontline on that. (In my view, the earlier frontline on the Lehman bankruptcy did not sufficiently cover these questions.)

Novato , CA


Your story was so far off base - Bank of America and other US banks did not create this crisis - try looking at the mortgage industry and the Wall Street Banks that created and sold this toxic waste. That's where the BIG MONEY was made. Were you just out to villify Ken Lewis or are you really this stupid?

Morrie Fletcher
San Francisco, CA


posted june 16, 2009

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