A Financial Reform Commercial I Want To See
Here is a commercial I want to see someone create, that I’d like to see go viral:
The screen is dark. There is a soft heartbeat in the background
White letters appear on the screen: 1998 Glass Steagall Repeal
Voiceover: In 1998, the Glass Steagall act was repealed by Congress. Since 1932, it successfully kept banks separated from Wall Street (pause) . . . After its repeal?
(Citigroup, Countrywide, and Washington Mutual logos on screen. They shatter and collapse).
Voiceover: Major banks collapsed, causing the worse recession in generations and costing taxpayers billions.
(Heartbeat gets a little louder and quicker).White letters Commodity Future Modernization Act of 2000
Voiceover: In 2000, Congress passed the Commodity Future Modernization Act. It made one group of financial instruments — Derivatives — completely free from all regulation (pause) . . . The result?
(AIG logo appears, explodes)
Voiceover: The AIG collapse cost taxpayers $185 billion in bailouts.
(Heartbeat is now louder and faster).Letters: 2004 SEC permits Wall Street to dramatically increase its leverage
Voiceover: In 2004, the 5 biggest investment houses in the country got permission to lever up (pause) . . . The result?
(Logos appear; Bear Stearns, Lehman blow up; Merrill Lynch turns gray and keels over; Goldman Sachs, Morgan Stanley spiderweb crack — but don’t fall)
Voiceover: Lehman & Bear — gone. Taxpayers spent billions helping Bank America rescue Merrill Lynch. Goldman and Morgan became bank holding companies.
(Heartbeat is very rapid and loud).More white letters: 2010 Financial Reform legislation . . . is . . . blocked
(heartbeat stops . . . screen fades to white light)
Voiceover: Partisan fighting in Congress is blocking financial reform . . . but YOU can help move it forward. (heartbeat starts again) Tell your congressman and senator to stop listening to Wall St lobbyists, and pass financial reform NOW.
Because the last thing any of us wants is another financial heart attack.
Lettering: Please pass financial reform . . . or else.
(heartbeat stops, letter replaced with flatlined EKG)
Lettering: Call your congressman today (phone number)
~~~
Logos after the jump
If any of you graphic wizards wants to create it, I have commitments to get it on television . . .
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April 28th, 2010 at 7:39 am
Certainly accurate and educational.. but the right would be up in arms with no mention of Fanny,Freddie and the CRA. At least inject the bailout of the GSE’s at the some point, not sure when they started buying all the junk.
~~~
BR: Sorry, But I am reality based . . .
April 28th, 2010 at 7:56 am
The ‘right’ can buy their own time on TV….
April 28th, 2010 at 8:08 am
re: Letters: 2004 SEC permits Wall Street to dramatically increase its leverage…
So which President was most responsible for our economic collapse? Bush. Hands down.
Which banks failures precipitated the collapse? Bear Sterns, Merrill Lynch, Lehman Brothers. Hardly a coincidence.
This action more than anything else made Wall Street a casino. 5 investment banks given near unlimited ability to acquire assets. Once real assets became hard to find, they turned to synthetic assets and side bets.
This is the “fraud” story that needs to be ferreted out. The economic collapse can be pinned directly onto those who participated in this SEC rule change. All else is immaterial in comparison or just the consequences of this action.
Who were the actors who convinced the SEC to do this? Do you think Lloyd perhaps played a role? Was this part of some back room deal making with Congressmen? What role did the Goldman Sachs alumni play?
Did Greenspan support it? For that matter, why did Greenspan not actively oppose it? It does not take hindsight to understand the horrific consequences of giving risk takers unlimited access to taking risk. I will no longer defend the guy. He will and he should go down in history as the worst Central Banker ever.
source: ParaPundit, 2008 September 21, http://www.parapundit.com/archives/005558.html
SEC Leverage Rule Change Contributed To Investment Bank Failure
The Securities and Exchange Commission can blame itself for the current crisis. That is the allegation being made by a former SEC official, Lee Pickard, who says a rule change in 2004 led to the failure of Lehman Brothers, Bear Stearns, and Merrill Lynch.
The SEC allowed five firms — the three that have collapsed plus Goldman Sachs and Morgan Stanley — to more than double the leverage they were allowed to keep on their balance sheets and remove discounts that had been applied to the assets they had been required to keep to protect them from defaults…
Barry Ritholtz says this rules change helps explain the extreme amounts of leverage in the crashing investment banks.
April 28th, 2010 at 8:13 am
Unfortunately, repealing Gramm-Leach-Bliley isn’t being discussed – or did I miss something.
If only we could go back to the days of Glass-Steagall.
The financial reform we need isn’t part of the discussion.
How do we get there?
April 28th, 2010 at 8:17 am
Here’s another…
http://www.youtube.com/watch?v=KHtW0E2l-Tc
April 28th, 2010 at 8:23 am
Yeah, that’s my problem too. We need reform but not necessarily the “reform” being discussed (at least not at this point). Putting derivatives on an exchange is probably a good idea. The rest of the bill seems likely to do either nothing positive or (worse) create even more instability in the banking system. And no matter what is in the legislation, as long as the Fed keeps blowing bubbles, we’ll keep having periodic financial crises…
April 28th, 2010 at 8:24 am
I’ve been wanting to do a commercial for about a decade. It shows, in gloomy colors, a man and a woman in a rowboat with two children. The parents are bailing water out of the rowboat as fast as they can. The baby is screaming – just screaming. The older one, who looks about 3, is constantly asking questions: “Mommy, what are you doing? I want to play, Mommy – are there fish in the water Mommy? Can the fish get into the boat with the water? (etc.)” The mother just keeps saying “Please baby, let mommy bail. Mommy is really busy. HERE – here is a bucket, why don’t you bail with mommy and daddy?” The child drops his colorful beach pail over the side.
As this is going on, a yacht passes by in the foreground, obscuring the rowboat from view as it passes for a few beats. When it has passed, we see the rowboat violently rocking on the wake from the boat, and we can see that the boat was pretty much swamped. The family stare in horror at the huge boat and their situation.
The narration then says “Are you SURE that a rising tide lifts all boats?”
Then there are words across the screen that say “No middle class, no democracy. Reform finance and government now.”
I know, socialist and all. But I feel that it accurately reflects what has happened to most American families during the past decade.
April 28th, 2010 at 8:26 am
Where in the current legislation does it reinstate Glass-Steagall, repeal the CFMA or set an upper limit on leverage?
April 28th, 2010 at 8:30 am
Sooo..
1) bad act of Congress
2) bad act of Congress
3) Incompetent Regulators
4) Fear monger to drum up support for another bad act of Congress that among other things gives more power to incompetent Regulators?
I’m not saying there is nothing good in the Fin Reform bill, but the bad seem to outweigh the good right now and I doubt that will change with both sides bought and paid for by the big Wall Street players.
April 28th, 2010 at 8:32 am
whats the Manhattan Island expected turn around for that nicely scripted project? curious .. but this week has been nuts .. inducties to local Hall of Fame, HS Prom Mock DUI crash, resume, graduation, portrait, “Oliver” musical midsummer weddings .. on top of that Census training & walkin. Can’t figure why got so busy .. maybe the “squeaky wheel gets the grease” list of local issues I spouted off about
April 28th, 2010 at 9:31 am
Go BR! Unfortunately I’ve got the art skillz of a 2nd grader (but South Park got on air, so maybe there’s hope?) I’ll have to cheer from the sidelines…
April 28th, 2010 at 9:36 am
4 changes, 4 sentences, less than one page of text – simple, easy for everyone to understand, and has better than average shot at fixing the “system?”
Even if we do call our elected representatives, even if they listen to us, even if the bill passes it’s going to be 2000 pages of garbage and loopholes big enough to drive Buffet’s railroad train loaded with derivatives through them!
IMHO, to get a real bill (ie what BR proposes) out of the Congress, there has to be another economic disaster, much worse than 2008 stock market drop. A crisis substantial enough that the people in DC start to fear real retribution from the people for their negligence of the country. Only then they might enact real changes.
Poll of the day: how many of the Senators that were interrogating GS will end up working/consulting/lobbying for a walls t firm after they retire/forced to retire from the government?
April 28th, 2010 at 9:36 am
The part “Tell your congressman and senator to stop listening to Wall St lobbyists” can be represented with a bunch of fat-bellied bankers tossing greenbacks onto the Democratic and Republican logos and a bubble comment above saying “We don’t care, it’s not our money — we get it all from the taxpayers anyways”, accompanied with big grins.
April 28th, 2010 at 9:40 am
The costs of having a graphic artist do scrollbys of that would seem to be miniscule compared to getting it on air.
April 28th, 2010 at 9:42 am
Awesome commercial.
Agree with others that the right would go apedoodoo. To listen to them, Fannie, Freddie, and the CRA were the sole causes of the 2008 crash, a doctrine of faith that they accept like some kind of Unholy Trinity. It doesn’t matter that no less an authority than Lloyd Blankfein admitted before Congress yesterday that the main cause was that too many financial institutions were making risky, misunderstood bets while seriously overleveraged.
You might also get a trademark infringement claim from those (surviving) companies whose logos are used. You would win on First Amendment grounds in a heartbeat, but that doesn’t mean you won’t get sued– reference the Fox News “Fair and Balanced” lawsuit against Al Franken. http://www.cnn.com/2003/LAW/08/22/fox.franken/
April 28th, 2010 at 9:55 am
perhaps better to NOT pass current ‘Reform’ bill
build head of steam – as in steaming mad – to pass Phase1: Glass Steagall
Phase 2, 3, …: continue down the laundry list
77 years of changes to undo
April 28th, 2010 at 10:17 am
I agree with @MrDan242 (8:30a). He makes a well-formed argument. Let’s all — at least — consider @MrDan242′s solution.
Wait… what was the proposed solution?
April 28th, 2010 at 10:17 am
[...] A Financial Reform Commercial I Want To See By Barry Ritholtz – April 28th, 2010, 7:00AM [...]
April 28th, 2010 at 10:27 am
Why cautious reform is the risky option
The problem is more what is allowed than preventing what is not. This is not to deny that there was much fraudulent behaviour behind the financial crisis. As John Kenneth Galbraith wrote, the “bezzle – the stock of embezzlement” – always rises in good times, But the real catastrophe, as I argued last week, is the risk taken on by the gamblers working legally inside the machine.
The role of big institutions is obviously problematic: they are, at one and the same time, the house, the biggest players at the gambling tables, agents for the other players and, if all goes wrong, beneficiaries of limited liability and implicit and explicit government bail-outs. This is a guarantee of repeated catastrophe. Under the gold standard, the scale of bail-outs was constrained. In a fiat system, there is no such limit, until the value of money collapses.
So what is to be done? Let us start with the least one could do to make greater stability credible.
An obvious solution is to revert to a tightly regulated, oligopolistic banking system. This is the sort of system Canada has enjoyed. But it is stodgy. It is also inconsistent with globalisation. Access by residents to foreign finance and by domestic institutions to foreign risks makes such cartels inherently unstable.
The alternative, then, would be to seek to make the present relatively free-wheeling system safe. To do this, we would have to make institutions and connections among them more robust, improve the quality of information and motivate the players to be less careless. There would be seven main elements.
April 28th, 2010 at 10:30 am
For the conservatives on this board who are against the current form of the fin reg bill, can anyone explain one specific problem with the bill, distilled into a concise, coherent argument? Be sure to avoid the Fox News talking points (lies) about how the current bill guarantees “too big to fail” bailouts in the future.
April 28th, 2010 at 10:32 am
Isn’t this kind of ad a lot more likely to make people enact quick ill thought out legislation based on fear. What’s to say the bill would actually do anything good.
April 28th, 2010 at 10:37 am
I think reform of the GSEs which is rumored to be included in the latest Republican version of the bill should be addressed in some form in a bipartisan bill. Call me crazy.
April 28th, 2010 at 10:42 am
I don’t have the knowhow nor the software. I’d be happy to do it if I could.
April 28th, 2010 at 10:45 am
You guys are missing things. First you need somebody who can make money on the new rules…TO BANK ROLE THE AD CAMPAIGN! Then one need to hope the networks don’t find the ads “too controversial to run on air”…ie. undermind current advertiser(see logos above) best interest.
April 28th, 2010 at 10:48 am
[...] Somebody please make this commercial. [...]
April 28th, 2010 at 10:48 am
@BR
Barry I am actually surprised that you would support this reform bill
1. It does almost none of the things that your commercial acurately points out as major causes of the crisis. Except for derivitive exchange.
2. While GSE might not have been THE reason for credit bubble I can hardly believe you think they should be immune to reform given that thier leverage levels were north of 80:1 and helped distort the marketplace.
3. This Bill does nothing about Breaking up the TBTF banks.
This thing should be thrown into the scap heap so that REAL reform with the objectives you and me desire.
April 28th, 2010 at 11:18 am
I thought BR’s stance on 1998 Glass Steagall Repeal was that it didn’t conclusively cause the crisis. See the “but for” post.
~~~
BR: Ahhh, but it made it much worse.
That is the difference between a qualitivative factor – Was this a root cause? — versus a quantititative factor – how much more was lost due its existence?
Capice?
April 28th, 2010 at 11:55 am
BR, I am not sure if the current reform bill that the democrats are pushing would do the things that you have listed.
Obviously, a real financial reform is needed, but the current reform bill is rather unclear in details.
The current reform bill does not sound like it’s good enough. However, the congress doesn’t sound like they can make the bill much better. Is it even possible to get the Congress to come up with a real financial reform? Even without the lobbyist, I am not sure if most senators have enough financial knowledge to come up with a good bill.
April 28th, 2010 at 12:00 pm
OK, you want a concise statement of what is wrong with the bill. Here goes:
It addresses none of the core issues of what brought us to this place, and just sets us up for a “bigger than too big to fail” recurrence in the future.
Worse than doing nothing, it gives new regulatory powers to the Fed, who has proven that they’re a toothless regulator with the powers they have now.
April 28th, 2010 at 12:23 pm
Brilliant. I hope you find someone to do this.
April 28th, 2010 at 12:36 pm
it’s a nice Trope, no doubt.
too bad, it completely ignores the underlying Reality–the current schema is predicated upon Currency lent, at interest, into existence.
it is, for that simple Mathematics, designed to Fail.
every thing else is simple hedge-trimming and/or bunting-hanging..
~~
past that, BR, put a U$D 150 bounty on that job, and it’ll, probably, be done inside of 36 hours..
April 28th, 2010 at 2:01 pm
llandson2000: I’m not a conservative but I’ll try to summarize some of the issues as I see them–
1) Standardized derivatives on an exchange: “standardized” derivatives and swaps aren’t the problem. Its the one-off non-standard transactions that are promoted a quality instruments when they are not.
A side issue is who will manage/own the exchange? Will a second or third or fourth competing exchange be allowed to operate as well? and who will own these competing exchanges? Remember the banks and b/d’s own most of the OTC stock exchanges already so they get to profit from order flow on top of the prop trading/mkt making.
2) Nothing is being done to remedy the problems inherent with the current ratings agency system.
3) It gives the Fed regulatory/oversight power which it wasn’t originally designed to have.
4) It still doesnt go far enough to manage leverage, offshore entities, mark-to-market, Repo 105s…
Here is the Republican response according to the NYT:
http://thecaucus.blogs.nytimes.com/2010/04/27/republicans-offer-alternative-financial-overhaul/
April 28th, 2010 at 2:07 pm
llandson2000 Says:
April 28th, 2010 at 10:30 am
“For the conservatives on this board who are against the current form of the fin reg bill, can anyone explain one specific problem with the bill, distilled into a concise, coherent argument?”
This conservative cannot. Passing it is a good start. Perfection is the enemy of progress.
Republicans should be emphasizing deregulation and tax policies that encourage growth on Main Street. How they fail to see that investment bank deregulation nearly destroyed main street is beyond me.
Republicans are playing a “lose-lose” game. They are trying to make nice with the banks to bankroll their 2010 campaigns while “pretending” to be concerned that the financial reform package does not go far enough. They are about to walk in front of the bus with this approach.
April 28th, 2010 at 2:23 pm
Great ad. Except the ending needs to say; call your congressman and senators and ask them why government officials that refused to do their job are still government employees. Then tell them to pass a real financial reform bill. A bill that reinstates Glass Steagall. A bill that forces all derivative transactions onto an exchange. (Sorry Warren, no exceptions. Laws will now apply to everybody equally). A bill that sets strict leverage limits. A bill that forbids off balance sheet transactions. A bill that immediately removes from government employment and claws back the salary of any government employee, including members of congress, that does not do their job enforcing financial regulations.
Although we do need reform, what we need more than reform is government regulators that do the job they are paid to do. The problem with the Senate bill is it does not reform anything. It is 1,300 pages of nothing, except a way for politicians to deflect blame.
April 28th, 2010 at 2:45 pm
Don’t forget to show GS vacuuming up all the broken bits of other companies and getting bigger in the process.
Oh and don’t forget to show the US Taxpayer TARP IV feeds making the logos get bigger too.
April 28th, 2010 at 3:39 pm
Borrowing from “A Financial Reform Commercial I Want To See”, why not a film I’d like to see: One more ‘Dirty Harry’ movie!
Crotchedy, gruff, borderline arthritc Clint Eastwood (80+? now) gets his retirement statement in the mail and learns it’s drastically decreased in value. Further, his condo property investments in Florida have turned to dust and he’s paying $3+ for a gallon of gas. And to top it off, he’s told his CDO holdings (which he didn’t even know he had) are “worthless”. Inspector Callahan calls up the FDIC (or SEC) to “volunteer” his services. Through investigative work, Harry starts with some former Countrywide mortgage brokers (finds them back at the car wash they came from), and ultimately works his way to Jamie Dimon, whom he (to put in current times) grounds and pounds and puts in a guillotine choke until he gets the complete story on credit default swaps. The film concludes with Harry standing on a street corner with 85 Broad St. in New York in the background. A metermaid tells Harry smoking is bad for him. Harry cracks a wry smile and tosses his cigarette over his shoulder and a brilliant fireball a la “Die Hard” illuminates the screen.
April 28th, 2010 at 7:01 pm
@BR: SPECTACULAR!!!!!!!!
Word looks really weird outside a sentence.