The Big Snort

Scott rightly scores The Big Short for its, um, shortcomings. John Goodman lays out ten lessons that ought to be understood about the whole story, including these two key lessons completely omitted from the film:

Lesson 5: It is also a movie about a massive failure of government.

As the movie makes clear, government regulators had no interest prosecuting fraud, even when the protagonists put the evidence right in front of them. And the government’s indifference continued, even after the facts were made public.

John Xenakis claims that the guilty parties “all used a portion of their fraudulently obtained millions to make large contributions to the Obama campaign or projects sponsored by Obama. Not one single person has been prosecuted.”

Lesson 6: But the movie ignores the role of government in contributing to the problem it exposes.

If there is a fault in the movie, it is the failure to emphasize the role of the federal government in contributing to the crisis in the first place. As American Enterprise Institute scholar Peter Wallison notes, it was national policy to lower lending standards and make more loans to low-income and minority families – a policy supported by many Democrats in Congress.

Hear, hear. If I had time, I’d do a mashup of The Big Short and Truth—if ever there was a moment when I wished you could buy short options on film futures it would have been Truth—and call it The Big Truth About Hollywood’s Shortcomings. Or maybe I’ll do a remake of The Big Short some day about Washington’s role in the saga, can call it Frank and Beans, after Barney.

But if you thought The Big Short was deficient, go back and take in 2011’s Margin Call, which was actually worse in terms of substance. It was a pure character sketch of what Wall Streeters are supposed to be like. Like many Hollywood products, it’s eminently watchable, but afterward you realize it was less satisfying than an MSG-free Chinese meal.