People who understand financial things: Did Sorkin get this right?

This is from one of the last episodes of Newsroom. Don told Sloan that she never explained the subprime mortgage scandal in a way that most people could understand. Here is her attempt. Did Sorkin get it right? PS: Someone give Olivia Munn her own series.

Sloan: Markets rely on Standard & Poor’s to objectively rate debt. But the companies that want a favorable debt rating are the same companies that pay Standard & Poor’s. You follow so far?

Don: Yeah.

Sloan: Banks wrote a ton of bad mortgages to people they knew were going to default. It’s called predatory lending. Then hid those bad mortgages inside good mortgages to shine up the books for S&P, which gave them triple-A ratings. Then they’d bundle the whole thing and sell the debt to Fannie Mae and Freddie Mac, which is owned by–

Don: You and me.

Sloan: Yes. And then the banks bet on those loans defaulting. Not that much different from fixing a college basketball game except a ton of people wind up broke and homeless. Those people can’t buy things anymore, so businesses start going out of business and more people are broke. When you start eliminating consumers, you start eliminating jobs, which eliminates consumers, which eliminates jobs, which eliminates consumers, and you see where this is going?

A Christmas tree behind the Jefferson Market Library (aka where Miranda and Steve got married in Sex and the City).


Stacy Horn

I've written six non-fiction books, the most recent is Damnation Island: Poor, Sick, Mad, and Criminal in 19th-Century New York.

View all posts by Stacy Horn →

2 thoughts on “People who understand financial things: Did Sorkin get this right?

  1. Speaking of fixing college sport games:

    I was looking at UNC as one of several to which I plan to apply in the fall. I am finishing my MA this summer and want to do a PhD in philosophy (in ethics!) somewhere top rated. Oh dear. I guess since they fired their only ethicist for being unethical, UNC is not for me.

    NYU consistently gets top ratings for philosophy. Not sure I could afford to live there, however.

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