One real advantage of American cinema is that sooner or later it ends up putting on film historical events, whether bright or dark, or even pitiful. Indeed, we’ve already seen three very powerful films on the financial crisis which originated that ill-fated month of August 2007 that announced the disappearance of Bear Stearns and shortly after of Lehman Brothers. One of them was the early documentary Inside Job (2010), which was followed by the unnoticed but very interesting Too Big to Fail (2011) and, finally, the best in my opinion on the origin of the crisis: Margin Call (2011).
And this is now the background to The Big Short, through four investors who discover by various means that CDOs (Collateralized Debt Obligations) had feet of clay, as they were based on sub-prime loans, and the bubble was about to burst. And with this dramatic knowledge they decided to make a profit by betting against those assets, going against the current in the market.
As we know from Freud’s day that we are forgetful of incriminating memories, I think it’s not a bad idea for the film to remind us of those events, portraying how the unthinkable was possible: for a significant part of the financial sector to be disloyal to its mission, betray its customers and also deceive other entities with toxic assets. In other words, what happens when banking –especially investment banking– does not measure up to itself and betrays individual, social and State trust (from Latin con-fidere, “having faith in others”). In this sense, The Big Short causes a real catharsis in the audience with the commotion it generates, and it is a moral obligation for all of us to watch it sooner or later. To draw professional, organizational and procedural lessons so it doesn’t happen again, and incidentally, not to forget what happened. Let’s remember that Aristotle claimed that through catharsis, the spectators, after watching the work, understood themselves better and would not repeat the chain of decisions that led the characters to their ominous end. That’s why our film is a must.
A deep look at the film shows a reality we already sensed in Margin Call: how the origin of the crisis of the financial sector can be found in the gradual loss, over the last decades, of what the Spanish thinker Maeztu, a great expert in international banking as a correspondent in London’s City, called the reverential aura of money .
Because there are two opposing perceptions of money, as shown in the table below:
There is a sensuous (or cynical) sense of money that regards it as a mere means at the service of our pleasures. Wealth is thus understood only as the possibility of obtaining pleasure and its dimension is immediate: it doesn’t consider the long term. It acts under the motto, so common in Latin countries, that money is round “because it’s made to roll”.
The antithesis of this is a reverential worship of money, which views it as a positive power, i.e. the possibility of carrying out different beneficial actions for the future: for example, funding a business project, a self-employed worker, a public investment plan, savings, etc. This is why money commands respect and faces the consequences of its use, which implies that our financial activity is not separate from the rest of our lives. And this enables the State to plan in the long run, and businesses to think about and anticipate the future. Underlying this view is the splendid distinction made by Kierkegaard between the esthetic man and the ethical man.
And what we watch in astonishment in The Big Short is how the financial institutions portrayed precisely lack this reverential concept and replace it with the cynical use of money.
Because what tells us most about whether one has a reverential sense of money or not is how it is invested in the bank, which is what our film analyzes with the traffic of CDOs, in this case devastatingly with its display of easy money, fiction, carelessness and outrageous remuneration.
And the banker’s job is at the same time the most noble, the most complex and tricky, as our thinker points out. We shouldn’t forget that banking works with deposits that are -should be- sacred. It has to concentrate a generation’s savings to prepare the work for the next generation, profitably and cautiously managing the funds entrusted to it. This is why financial managers need to be trained and educated in the reverential sense of money because otherwise the disaster is assured, as has been the case and this film shows. Because all that’s left for banking professionals is the ascetic of caution, which involves having control of ourselves and of our passions. Otherwise we will witness what was already announced in 1873 by Bagehot, the great English economist and author of Lombard Street. A description of the money market:
“A large bank is exactly the place where a vain and shallow person… if he be a man of gravity and method, as such men often are, may do infinite evil in no long time, and before he is detected. If he is lucky enough to begin at a time of expansion in trade, he is nearly sure not to be found out till the time of contraction has arrived, and then very large figures will be required to reckon the evil he has done.”
But the most terrible thing portrayed in The Big Short is something Bagehot could not foresee, but Maeztu did: that men with a cynical sense of money will no longer be an exception, more or less understandable in financial institutions given human weakness, and become the executive prototype of certain banking elites, particularly in investment banking. In light of this disaster, we should consider the role played by the best business schools in the United States, or even in Spain, in the incubation and promotion of these profiles. And also the recruitment, remuneration and development mechanisms of our own institutions.
In this situation, all that’s left is to accept this demanding catharsis, as in Inside Job and Margin Call. We either return to the vital caution that leads to a reverential use of money in our financial institutions, or there will be no regulation –especially now with the upcoming MiFID II– capable of preventing what should never have happened. This is the cultural challenge faced by a large part of the financial sector. Don’t miss it.
Ignacio García de Leániz Caprile
Professor of Human Resources (Universidad de Alcalá de Henares) / Consultant
 I highly recommend that any professional in the financial sector should read the articles I collected in: Ramiro de Maeztu, the Reverential Aura of Money, published and with a preface by Ignacio García de Leániz Caprile. Ediciones Encuentro, 2013.