Adam McKay, the director who made “Anchorman” and “Talladega Nights,” hit Washington last month on an Oscar campaign tour of sorts, which included a meeting with several of President Obama’s closest economic advisers. They wanted to talk about harnessing the power of pop media to explain economics. But first, they had a bone to pick with his latest film.
That film is “The Big Short,” a half-caper, half-explanatory-journalism account of the 2008 financial crisis, which has been nominated for five Academy Awards, including best picture. Sen. Roger Wicker (R-Miss.) recently described McKay’s film as “a movie masquerading as an educational event, or an educational event masquerading as a movie.” It is that odd combination that has made McKay’s film, based on the Michael Lewis book, a serious contender for best picture. It also has opened McKay to criticism over whether his film’s concluding message is accurate.
Most financial writers and movie critics agree that the movie nails the run-up to the crisis, and engagingly so. (Who else would use a blackjack-playing Selena Gomez to explain complex financial products?) The issue is what happens on screen after the crisis hits.
“The Big Short” ends with the narrator declaring that nothing has been done to punish the bankers who crashed the system, or to stop other bankers from crashing it again in the future. After the crisis, he says, “Congress had no choice but to break up the big banks and regulate the mortgage and derivatives industries. [Pause.] Just kidding. The banks took the money the American people gave them and used it to lobby the Congress to kill big reform.”
The Obama administration, which spent two years crafting and passing the Dodd-Frank financial regulation bill in response to the crisis, does not share that view. The movie says nothing about that effort, which is why McKay found himself arguing with a senior administration official in the Eisenhower Executive Office Building.
As McKay recalled in an interview, “He said, we very much enjoyed the movie. I must say, we do not appreciate that at the end of the movie, you did not mention Dodd-Frank and acted as though nothing has happened.” (Administration officials confirmed the meeting took place. They did not challenge McKay’s account of what was discussed.)
“I understand there’s some good stuff in Dodd-Frank, there’s no question,” McKay said. But he still sees banks as too big — in fact, larger than they were before the crisis, because so many of them have acquired smaller banks in recent years — and carrying too much risk on their balance sheets, because they aren’t required to hold more capital.
He remains incensed that the Justice Department never prosecuted any senior officials from banks, or from credit ratings agencies that abetted them. McKay said he raised that point with the Obama team. “I think that’s the one really shameful thing on Obama’s watch,” he said. “Really, you don’t put anyone in jail? When me, as a comedy director, can read this and see like seven, eight clear incidents of fraud.”
Experts are mixed on these issues. Some agree banks should be holding more capital, but they do have more than before the crisis. Some experts say there was fraud, though others say the lack of prosecution probably means a fraud case would be too tough to succeed.
A few critics have ripped the film directly. Michael Grunwald, a Politico writer who ghost-wrote former Obama treasury secretary Tim Geithner’s autobiography, wrote last month that “The Big Short is designed to make people angry. Maybe it wouldn’t have succeeded as a work of art if it had ended with responsible government crisis managers making horribly unpopular decisions that stabilized the financial system and prevented a second Great Depression. But that’s what happened, and people ought to know that.”
Steve Eisman, the real-life hedge fund manager and big-bank critic who’s the basis of Steve Carell’s character in the movie, wrote in a recent New York Times op-ed that regulators have made “significant progress” to reduce the risks of the financial sector, and that big banks should not be broken up by the government. Other critics have noted that the government more than recouped the money it spent in the 2008 bailout approved by Congress.
Past Oscar nominees have been consequential politically, like when “Zero Dark Thirty” implied that torture helped find Osama Bin Laden. “The Big Short” is especially potent in a presidential election year, as the Wall Street issue divides the candidates in the Democratic primary.
The film essentially embraces the Bernie Sanders view that banks remain a menace to the U.S. economy and must be chopped down to a more manageable size. The critics sound more like Hillary Clinton, who is critical of Wall Street risks but talks about the progress made under Dodd-Frank, and whom Sanders has criticized for accepting money to speak to banking groups.
McKay delights in that context. “I like the fight that Bernie and Hillary are having over taking bank money,” he said. “I think it’s healthy as all get-out.”
Last week, McKay returned to Washington for a Capitol Hill screening of his movie, which was preceded by fawning speeches from Republicans (Wicker and Sen. Johnny Isakson of Georgia) and Democrats (Sens. Jack Reed of Rhode Island and Sherrod Brown of Ohio). The previous month, shortly before meeting with the Obama team, he had enjoyed what he called a “love fest” with the best-known critic of big banks in Congress, Sen. Elizabeth Warren (D-Mass.).
McKay said he hoped the D.C. trips would impact financial policy going forward. They were also clearly part of a show for Oscar voters — just like when Bradley Cooper came to town to talk mental health before the voting on “Silver Linings Playbook.” McKay was asked whether a movie’s influence on policy could cause Oscar voters to favor it.
“They definitely want movies that make a difference, but I’ve never thought about it that way,” he said. “That would be nice.”
If McKay comes back to Washington soon, there’s one more stop he should make. It’s a nondescript office filled with the sort of math nerds who populate his movie. They’re not bankers, they’re government economists, who work in something called the Office of Financial Research. It’s a new organization, created by Dodd-Frank, tasked with measuring the risks the financial system poses to the economy.
The bureau’s latest annual report just came out. It finds that the largest banks are, indeed, still dominant in the American financial sector. It also finds that financial risks have fallen since the crisis, but have risen slightly in the last year.
It’s a complicated story, in other words. Not exactly a Hollywood ending.