Frontline explains the 2008 financial meltdown

“They had to throw their principles out the window and save the economy.”

God bless Frontline. This PBS show consistently tackles the most pressing issues of the day, the critical stories we should know more about, the complex ones we feel guilty avoiding. And did we ever get an essential delivery from them last night.

If you are confused about what happened to the financial markets last year, or angry about the government’s response, last night’s rebroadcast of the Feb. 19, 2009, episode (“Inside the Meltdown”) is 50 minutes of essential viewing for the conscientious citizen. (View the episode online here).

Frontline, Feb. 19, 2009

Backed by the confident narration of Will Lyman (he could call a round of bingo and make it sound imperative), Frontline cuts snicker-snack through the confusing events and decision tree of our near-miss financial collapse. Frontline’s producers excel at interviewing smart, articulate people and tying together their statements into a narrative that is easy to follow, from the first signs of trouble, to the decision to bail out Bear Stearns, to the decision not to bail out Lehmann Brothers, to at last, the rickety mine cart of the economy racing out of control through the markets, over the public, and across the desks of Congress.

The Sept. 18 powwow where Bernanke dropped the "global financial epic fail" bomb on Congressional leaders.

The Sept. 18 powwow where Bernanke and Paulson dropped the "global financial epic fail" bomb on Congressional leaders.

What’s clear now is how close the global financial markets came to utter ruin. After Lehmann’s failure had begun to drag down markets at top speed, top Congressional leaders met in Nancy Pelosi’s office on Thursday, Sept. 18. According to Connecticut Sen. Christopher Dodd, they were told by Hank Paulson (Treasury secretary) and Ben Bernanke (Federal Reserve chair) that, “unless you act, the financial system of this country and the world will melt down in a matter of days.”

Global meltdown.

The fix, said Bernanke, was for the government to make a massive investment in our banks. “If we don’t do this tomorrow, we may not have an economy on Monday,” he said reportedly.

No economy on Monday.

“There was literally a pause in that room when the oxygen left,” said Dodd. Well, no wonder.

Frontline doesn’t begin to approach the issue of blame: Is it the financial institutions who were engaged in risky — but perfectly legal — investments and swap schemes? Is it the homeowners who borrowed as much as their lenders said they could? Is it the unregulated free market which has created so much much wealth for this counry and others?

But what Frontline does do well is chronicle the decisions that Paulson and Bernanke faced and how they fit into the context of the moment: Why save Bear Stearns but not Lehmann? Why save AIG and the banks? It’s clear the two felt they had run out of options for curing the “contagion” the markets had developed, and that most of Congress agreed. Though both men rose to power as staunchly conservative proponents of the free markets, as one commentator said, “they had to throw away their principles to save the economy.”

I admire them for facing the hard choices and making the calculated risks. Economist Paul Krugman hypothesized what Paulson must have been thinking after he refused to throw Lehmann a life preserver: “You may have just made the decision that destroyed the world.” Can you imagine going to bed with that on your mind?

Frontline’s coverage of the story is even more impressive when you visit its site at pbs.org. In addition to the online playback of the entire episode, they complement their content with an interactive timeline as well as supplementary material from many sources, paired up with specific moments of the video playback. It’s a thorough and astounding interface, and it ensures you can dive deeper where you wish, or look over their shoulders as a fact checker.

As I watch my beloved newspapers struggle to stay afloat, journalism like Frontline’s looks more and more like a national treasure akin to the Smithsonian or that Nic Cage movie about stealing the Declaration of Independence. Even if you don’t choose to watch the “Meltdown” episode, I hope you consider checking in on Frontline from time to time. As the future of news delivery looks to be come self-selected — as in, we’ll only click on headlines that appeal to us rather than reading a story because a newspaper editor placed it before us — it’s critical we turn our attention to places like Frontline that tell the stores we need to know. Especially if we didn’t know we needed to know it.

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