“Too Big To Fail” Movie Review

Too Big To Fail
The story took place when America faced financial meltdown in year 2008. This story focusing on the actions of U.S. Treasury Secretary, Henry Paulson to contained the problems during the period of August 2008 to October 13, 2008. Dick Fuld, CEO of Lehman Brothers, is seeking external investment, but investors are wary as Lehman is seriously exposed to toxic housing assets and the Treasury is ideologically opposed to offering any sort of bailout as they did for Bear Stearns. Paulson directs Fuld to declare bankruptcy before the market opens after both Bank of America and Barclays, whose express interest in Lehman's "good" assets fails the deal. The crisis then has spread to Main Street after GE is unable to finance its daily operations. Paulson decides that the only way to get credit flowing again is direct capital injections. The banks agree with the terms of that they will be receiving mandatory capital injection and they must use this money to get credit moving again, but Paulson balks at putting additional restrictions on how the funds are to be used. Paulson's Treasury deputy for public affairs laments that the parties who caused the crisis are being allowed to dictate the terms. At the end, although markets did stabilize and the banks repaid their Troubled Asset Relief Program funds, credit standards continued to tighten resulting in rising unemployment and foreclosures. As bank mergers continued, these banks became even larger and at the time of the film, 10 financial institutions held 77% of all U.S. banking assets and have been declared too big to fail.
The first stakeholder of this movie is the main character itself, Henry Paulson, U.S. Treasury Secretary. He is affected by the problems that take place in the movie. The second stakeholder is Dick Fuld, CEO of Lehman Brothers, which he seeking external investment to save Lehman Brother. The third stakeholder is the Main street where had been affected when GE is unable to finance its daily operations.
Henry Paulson ethical dilemma is whether he could come to the rescue of investment banking giant Lehman Brothers and stop the crisis from spread further.

There are several ethical issues that been put up in this story. Ones of the ethical issues that had been identifies is when the housing marketing began faltering in 2007, Fuld was entrenched in a highly aggressive and leveraged business model, not unlike many other Wall Street players at the time. Unlike the competitors, a few of whom had the foresight to identify the pending collapse and evaluate possible consequences of mortgage defaults, Fuld did not rethink his strategy. Instead he preceded into mortgage-backed security investments, continuously increasing Lehman Brothers’ asset portfolio to one of unreasonably high risk given market conditions. In short, he was obstinate, but when the time came to recognize his error, he did not assume responsibility or admit wrongdoing.

The second ethical issues is in which was perhaps the most premeditated and fundamentally wrong, was Callan’s approval of siphoning assets away from Lehman Brothers accounts and into Hudson Castle, the phantom subsidiary created for the benefit of its parent company’s balance sheet. This blatant misrepresentation of financial health, perpetrated through the employment of Repo 105, was an attempt to grossly manipulate the bank’s many stakeholders and also clearly indicative of a much bigger problem. Even more telling is the fact that this technique was used in two consecutive quarters.
Lastly, Ernst & Young, the only third party privy to the happenings at Lehman Brothers, failed to reveal the extensive steps taken by executive leadership to conceal financial problems. As a firm of certified public accountants expected to honor and uphold an industry-wide code of ethics, Ernst & Young may be accused of being responsible for gross negligence and lack of corporate responsibility.