"You wanna call it a game? This is the game!"
Much like watching the film Margin Call, the Lehman Brothers gave me further insight into the breakdown of a large company, and what really goes on 'behind the scenes'. All the panicking, crisis talks and tough negotiations, it's easy to forget that all of this happened over the course of just a few days. Admittedly, I doubt anyone got any sleep that weekend.
What became very apparent to me throughout the course of the documentary was just have arrogant and almost clueless all the top bankers seemed to be on the situation. Or just how none of them really knew how to handle the situation. It seemed that they had created a very egotistical environment amongst themselves, which eventually became too big for any of them to handle, causing a huge downfall, of which effects were felt all around the world. During a phone call between Paulson and Fuld, Paulson remarks that "the laws for this weekend haven't even been written yet, nobody knows what to do". Yes, at that current moment they are discussing the inevitable demise of the largest Wall Street bank, but I can't help thinking that maybe this is meant more as a general comment. Nobody does know what to do in this situation, but maybe he is trying to suggest that none of them really seem to know what they are doing in their jobs. Arguably, if they did, maybe they wouldn't have ended up in this mess!
There is also an underlying sense of arrogance running throughout the film. That the bank thinks that are too big to fail. Too powerful. The look of pure shock on their faces when the Fed tells them there is no public money to bail them out is a key example of this. The fact that they just assumed that the people would come to their defence and give them a bailout really shows how egotistical this bank was. Maybe they should have been more concerned about how this would affect their shareholders, rather than nursing their bruised egos. Maybe that is why the Fed let the Lehman Brothers collapse. To show that they aren't too big to fail, and to use this as an example to the others banks. It is clear that reckless behaviour, especially with this kind of money, and only being concerned about yourself, really isn't sustainable in the finance world.
Now, I want to discuss this whole idea of SpinCo, setting up a 'bad bank' in which to transfer all the toxic assets. Just how naive do they think the world is?! Basically, they would be moving the issue from Lehman's balance sheet, on that that of another. Whilst this may seem like a nice tactic at first, getting rid of the assets and being 'free' of them, surely this would be an indicator that something has, or is about to, go awfully wrong? This wouldn't be something that even the most confident investor couldn't just brush over.
Unfortunately, the finance world seems to be very interdependent, however many banks fail to see or believe this. They are far too concerned with securing the lowest cost of capital for themselves and linking companies and investors, that the financial crisis was bound to happen. They are too busy looking after number 1 and unwilling to help each other out, however maybe if, for once, the banks had worked together, the crash may not have been so overwhelming for everyone.
The film ends with a quote from Bernie Madoff, or "the greatest con artist of all time" as he is commonly known. That "everyone wants something for nothing; you just give them nothing for something". I think this summarises the whole crisis pretty well. Everyone was out looking after themselves, and expecting people to come and help them, when really nobody was willing to do something that wouldn't benefit them.
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