Aspects of the 2008 Financial Crisis

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Table of Contents

Introduction
Discussion
Conclusion
References

Introduction

Too Big to Fail is the story of Dick Field losing his capital and looking for ways to build it up. The idea was to get his Korean colleagues to eliminate the problem of toxic assets. Assets became worth $4, but the company did not get positive momentum and eventually collapsed (Hanson, 2011, 26.00-28.40). According to Eisinger (2011, page 2, para. 3.), none of the participants in the story in the film had any idea of the coming crisis. The film’s characters strive to save what they cannot foresee due to their selfishness. In addition, Eisenger (2011, page 4, para. 5) suggests that the lack of plans and management led to offers for sale to the banks on favorable terms, not for the companies themselves. The financial mortgage lending systems for real estate were the result of carelessness and an inability to prepare for the consequences of toxic assets.

Discussion

Such a stance by large companies leads to a social responsibility problem that most do not come to grips with after they have made decisions. One of the connections between the film and the textbook is that of corporate social responsibility. Beatty et al. (2018) point out that corporations use limited liability as their primary legal weapon (Chapter 2, section 2.4). This allows them to avoid the critical consequences of mistakes in their business. Not unimportant is the fact that real estate companies, as shown in the film, do not calculate risk. As Eisenger (2011) rightly points out, the lack of plans for failure leads to overall failure. Beatty et al. (2018) lay down the idea that shifting blame is a frequent strategy in financial firms (Chapter 2, section 2.4). Consequently, companies seek to bridge the numbers gap with absurd reports and stakes.

Conclusion

Another meaningful connection between the film and the textbook is real estate sales and lending transaction aspects. The film’s position is that lending on uncertain terms leads to the collapse of businesses. Beatty et al. (2018) confirm that transactions in bad faith can cause collapse (Chapter 34, section 34.5). The film demonstrates that characters pay for the collapse of companies because of their own decision to make improper loans. Studies of the 2008 crisis differ on the government’s role in the real estate collapse. In one way or another, they boil down to two main aspects – corporate social responsibility and the lack of action to resolve uncertain transactions.

References

Hanson, C. (2011). Too big to fail [Film]. HBO Films.

Beatty, J., Samuelson, S., & Abril, P. (2018). Business law and the legal environment. 8th ed. Cengage Learning.

Eisinger, J. (2011). In HBO’s ‘Too Big to Fail,’ the heroes are really zeroes. ProPublica. Web.

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Aspects of the 2008 Financial Crisis

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