I saw “The Big Short” last night. Great movie. Manages to be funny and dramatic while also explaining some very tricky financial concepts.
And there was one scene near the end that reminded me very much of The Man Who Would Be Governor, Bruce Lisman. He’s the native Vermonter who spent most of his adult life in the shadowy canyons of Wall Street, working his way up the ladder to the very top ranks of Bear Stearns.
Yes, the financial firm that went kerblooey in the great crash of 2008.
The story of “The Big Short” is that a few marginal investor-class weirdos were the only ones who saw how the mainstream investment community was vastly overextended in the housing market — to such an extent that a crash was inevitable. It also features various Wall Street “geniuses” who were clueless about the coming debacle.
Here’s a key scene in the film. Dramatis personae: Mark Baum, oddball hedge-fund manager who saw the crash coming; and Bruce Miller, Wall Street insider. They are debating each other on the truth or fiction of the housing crash — just as it begins to happen.
Miller, a shortish gray-haired man with a receding hairline, bears an unfortunate physical resemblance to Bruce Lisman. But the more important resemblance is the message each man delivered.
First, “Bruce Miller” responds to Mark Baum’s baleful warning. During which, every cellphone in the room has started pinging ominously.
THE HOST Does our bull have a response?
BRUCE MILLER Only that in the history of Wall Street, no investment bank has ever failed except when caught in criminal activities. So I stand by my Bear Stearns optimism.
[A YOUNG BANKER stands, unwilling to wait for the Q & A.]
YOUNG BANKER Mr. Miller! Sorry. Quick Question. [consults his Blackberry] From the time you guys started talking, Bear Stearns stock has fallen more than 38 percent. Would you buy more now?
BRUCE MILLER [pause] Sure. Yeah. I’d buy more. Why not?
MARK [whispering] Boom.
[The whole room scrambles for the exits.]
Ha-ha, oh what a knucklehead, that Bruce Miller. A captive of conventional wisdom, unable to see the end of his world staring him in the face.
And now, real life. From a Wall Street Journal account of Bear Stearns’ last days:
In the middle of the afternoon, Bruce Lisman, the usually taciturn 61-year-old co-head of Bear Stearns’s stock division, climbed atop a desk near his fourth-floor office and demanded his traders’ attention. “Let’s stay focused,” he bellowed. “Keep working hard. Bear Stearns has been here a long time, and we’re staying here. If there’s any news, I’ll let you know, if and when I know it.”
Bruce Lisman, captive of conventional Wall Street wisdom, giving false words of assurance that echo those of “Bruce Miller.” Within a few days, Bear Stearns would no longer exist. And the meltdown was on, causing Americans to lose trillions in equity and (in too many cases) their homes and futures.
I’m not saying that Lisman was culpable. I’m not saying that a whole lot of people didn’t share his lack of foresight. What I am saying is that Lisman’s Wall Street experience tells us nothing about his fitness to be Vermont’s chief executive.
Lisman has insisted he had nothing to do with the sectors of Bear Stearns that brought the company down. And he’s right. But where was he when the shit hit the fan? Issuing full-throated but ultimately hollow reassurances to his workforce.
In the years since 2008, the bankers and investors and rich guys and their apologists have muddied the waters and done their best to divert blame. But here’s the bottom line from the end of “The Big Short” — the real cost to Americans like us.
“When the dust settled from the collapse 5 trillion dollars in pension money, real estate value, 401k, savings, and bonds had disappeared. 8 million people lost their jobs, six million lost their homes. And that was just in the USA.”
This may sound harsh, but a tiny fraction of those lost trillions is currently in Bruce Lisman’s wallet. He was part of that system. He profited mightily from it. He failed to see the bad stuff coming. Why should I have any faith in his financial insight, his managerial ability, when he was on the bridge of the Titanic and didn’t see the iceberg?