Vice Media recently released the documentary Panic: The Untold Story of the 2008 Financial Crisis on HBO. As the title suggests the documentary tells the story of the 2008 financial crisis and subsequent bailout of Wall St. This might seem like well trod territory given the success of The Big Short, and Inside Job. However what makes Panic unique is that it interviews a whose who of the nexus between US politics and financial capitalism.

The documentary features former US Presidents George W Bush and Barack Obama, the 2008 crisis wannabe Avengers team — Former Treasury Secretary’s Hank Paulson and Timothy Geithner, and Former Federal reserve chairman Ben Bernanke. It also features a rogues gallery of financial titans, JP Morgan CEO Jamie Dimon, Morgan Stanley CEO John Mack and Berkshire Hathaway CEO Warren Buffet. As well as a slew of Democratic operatives including Nancy Pelosi and Rahm Emmanuel among others. Given the cast, Panic goes beyond access journalism. Panic must be seen as a propaganda project of the elite of the governing political economy.

What unfolds over the 90 minutes is a self serving justification for the bailout of Wall Street, a hand washing of the populist political sentiment across the country that resulted in the election of Trump, and an attempt to prime the US public for the bailouts that will surely come with the next financial crisis.

A history lesson for a historical documentary

Nothing captures the films tone deafness better than the opening scene where the “saviors” of global capitalism meet in an opulent Ancien regime style ball room. The white and mostly male Wall Street and DC players who oversaw the taxpayer funded bailout of Wall Street gathered on the 10th anniversary of the 2008 crisis for an evening of patting themselves on the back.

The American aristocracy saves the day.

The film then takes us right to the end of the 2000’s housing bubble with a montage of evening news soundbites foreshadowing the global economic meltdown to follow. Here we see the films inability to grapple with both the political and financial classes culpability in the meltdown.

The film neglects to mention the decades of financial deregulation that led to the 2008 financial crisis. The Alternative Mortgage Transaction Parity Act of 1982 allowed the use of adjustable rate mortgages and balloon payment mortgages that would drive up the amount of defaults in the mid 2000’s. The Federal Housing Enterprises Financial Safety and Soundness Act of 1992, while providing mortgage access to lower income individuals, also created the market for subprime mortgages.

The Gramm-Leach-Bliley Act passed in 1999 under the watch of the Clinton administration repealed the Glass-Steagal that separated trading activities like derivative trading from regular banking deposits. In the years preceding the Gramm-Leach-Blilely Act, the bills name sake, Senator Phil Gramm’s top three campaign contributors were investment banks.

President Clinton signs the Gramm-Leach-Bliley Act that repealed the Glass-Steagall Act

The Commodity Futures Modernization Act of 2000 passed under Clinton deregulated the market for derivatives like the credit default swaps that acted as a nuclear weapon in the financial meltdown. Senator Gramm again led the charge on passing this piece of financial deregulation.

The nexus of finance and politics that is evident in the Vice documentary, Panic, is the same force that led to the deregulation that melted down the global economy. Yet nowhere in the discussion of the 2008 financial crisis do the heads of global capital or the US Federal government discuss the very actions that led to the meltdown over which they presided.

The lack of historical context for the 2008 financial crisis makes the films justification of the bailout all the more galling. Without historical context, there is no one to blame. Without historical context, there is no reason to discipline the bankers. Without historical context, there is no reason the taxpayer should not foot the bill.

The bailout

If Wall Street was focused on deregulation and the free market before 2008, the 2008 financial crisis saw them come begging the state for salvation.

In the documentary, the justification for the massive taxpayer bailout of Wall Street time and again was that it was required to prevent another Great Depression. While there were no breadlines like in the 1930’s, the massive wealth destruction and subsequent upward redistribution in the “recovery” does make one wonder whether another Great Depression was ever truly averted by the financial-political class. As a result of the crisis, US households lost $16 trillion in net worth. The subsequent recovery was distributed unequally, such that the majority of gains flowed to the top 1% of earners.

At no point in the film do the financial or political players discuss alternatives to the taxpayer funded bailout of Wall Street. One particular alternative that was ignored was the nationalization of US banks. In 2009, President Obama ordered his then US Treasury Secretary Tim Geithner to explore the possibility of nationalizing Citigroup as a way of bailing out the institution without just handing the bankers a blank, taxpayer funded, check. Geithner then reportedly slow walked the Presidents order such that it was not able to be implemented when the time came.

Former Treasury Secretary Tim Geithner (Photo: Brooks Kraft/Corbis via Getty Images)

Another alternative was for the Federal government to assist the home owners whose defaulting mortgages were the underlying asset of the derivatives that destroyed liquidity in the financial markets. The thinking went that if the Federal government could help the home owners and stop them defaulting on their mortgage, the financial assets held by the banks would become less toxic and therefore save the banks from destruction. In a particularly heroic feat of irony, Geithner argued that this would create moral hazard among home owners who would then strategically default.

The Federal assistance that was eventually provided to homeowners, was as Geithner deftly put it, there to “foam the runways”, ie to save the banks and not the American people who were about to lose their homes.

No alternatives to the taxpayer funded bailout of Wall Street were discussed in the documentary. The viewer is expected to take it for granted that these heroes saved us all from economic catastrophe. The only interviewee with the self awareness and insight to question whether an actual economic catastrophe would have occurred without the bailout was, strangely enough, former President George W Bush.

Follow the money

The documentary fails to acknowledge the financial connection between those who provided the bailout (the political class) and those who received the bailout (the financial capital class).

During the 2004 presidential campaign, President Bush received $36m in campaign contributions from the finance industry. During the 2008 presidential campaign, President Obama received $43m in campaign contributions from the finance industry. Goldman Sachs was his second highest individual contributor with $1m. During the 2012 presidential campaign, President Obama received $21m in campaign contributions from the finance industry.

During the 2008 campaign Congresswoman Pelosi’s received more in campaign contributions from the finance industry than any other industry.

In 2010, Ram Emanual, acting as White House Chief of Staff while administering the bailout, owned an estimated $7m in investments with JPMorgan.

Finally, we have Treasury Secretary Hank Paulson. From 1999 to 2006, Paulson was CEO of Goldman Sachs. As part of the bailout overseen by Paulson, Goldman Sachs received $10B from the US taxpayers via the Troubled Asset Relief Program (“TARP”). Goldman also received an additional $13B by way of the taxpayer bailout of AIG.

While Paulson did not hold stock in Goldman during the bailout, he does make an interesting admission early in the Vice documentary. Paulson muses

When I arrived In July of 2006 I thought there was a very good chance that in the two and a half years I was in Washington we would be facing a financial crisis.

In mid-2006, Goldman Sachs stock price was reaching all time highs. From his position atop the global economy, then Goldman CEO Paulson now admits he could sense a financial crisis on the horizon. Any financial crisis would have a potential to devalue the Goldman stock price. (It should be noted that only five months after Paulson stepped down as Goldman CEO to become US Treasury Secretary, Goldman Sachs began betting against the US housing market.)

The Avengers we deserve (photo courtesy of Business Insider)

In mid-2006 prior to becoming US Treasury Secretary, Paulson owned an estimated $600m in Goldman Sachs shares. Any financial crisis would also destroy Hank Paulson’s personal fortune as it was tied up so heavily in the Goldman share price. Fortunately for Paulson, by becoming US Treasury Secretary at the peak of Goldman share price, and right before it was hammered by the financial crisis he was concerned about, Paulson was able to cash out his Goldman shares tax free by becoming US Treasury Secretary. This public service tax loop hole saved Paulson a tidy personal fortune of almost $50m. Not to mention the hundreds of millions Paulson would have lost had he held onto his Goldman stock into the 2008 financial crisis. Stock he could never have sold as Goldman CEO without fear of creating a panic.

On the other side of the camera in the Vice documentary, Panic, we have executive producer, and Vice Media founder, Shane Smith. Shane Smith’s net worth is an estimated $1.4B thanks to his ownership stake in Vice Media. It is understood that Vice Media is considering an Initial Public Offering. A Vice Media IPO would require the assistance of an investment bank like Goldman Sachs, while at the same time netting a fortune for the founders and major shareholders of Vice Media.

Where are they now

What Panic was truly lacking was an American Graffiti style “Where Are They Now” epilogue. Here is a brief run down on what the players have been up ton since the 2008 crisis.

Jamie Dimon remains JPMorgan Chase CEO. His net worth has grown from $200m in 2006 to $1.2B in 2018. JPMorgan Chase received $125B in taxpayer assistance in 2008.

Tim Geithner is now president of a private equity fund named Warburg Pincus. Warburg Pincus owns a company that makes money by mass-mailing unsolicited checks to poor people, and then suing them for twice the amount even if they do not cash the check. Prior to the 2008 crash and bailout, Geithner had an estimated net worth of $400,000. Following his stints at the helm of the bailout, first as NY Fed Chairman and then as Treasury Secretary, Geithner went through the revolving door into the financial industry and is now worth an estimated $6m.

Following his presidency, President Obama has been collecting a pay day by giving speeches to Wall St when he isn’t hanging out with billionaires in the Caribbean. Prior to becoming president, President Obama had an estimated net worth of $3.6m .President Obama’s net worth is now estimated at $40m.

In 2018, Democratic Majority Leader Nancy Pelosi’s regained the house leadership role she lost in 2010. She is estimated to be worth $100m. Congresswoman Pelosi’s net worth has doubled during the post 2008 economic “recovery”.

Federal Reserve Chairman Ben Bernanke spent the post 2008 crisis years advising the government to impose austerity on the very taxpayers whose money he used to bailout Wall St. Bernanke also spent his post 2008 years advocating of the government to gut Medicare and Social Security.

Hank Paulson has been serving on the board of a climate change non-profit sponsored by all the major oil companies.

Panic II: Electric Boogaloo

The timing of the release of Panic is auspicious. At the time of release in December 2018, global stock markets have experienced convulsions similar to those experienced in 2008.

Panic does not just act as self-serving justification. It must also be seen as a primer for the next financial crisis. Former Presidents, chief technocrats, and busy CEO’s use their hallowed position in our society to implore the viewer that Wall St needed to be bailed out. When the next financial crisis hits, all Wall St will need to do is replay this documentary to congress and they will walk out with a novelty sized bailout check.

Panic closes with a speech by Tim Geithner:

We were lucky too. We had the financial resources large enough to really do anything. Not many countries have that privilege.

The next time any member of the governing elite, be they in the private sector, the public sector or even be members of your own political party, tell you that we do not have the resources to achieve public policy that benefits the people of the United States, we will throw Geithner’s quote in their face. The United States does have financial resources large enough to really do anything. It is time that we wrest control of the levers of power away from the financial/political nexus, and return it to the people. We can then deploy those financial resources to create a better world for all.

Solidarity Forever.