The Giant Pool of Money

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"The Giant Pool of Money" is an episode of the radio show This American Life which originally aired on May 9, 2008. The episode described to a general audience the causes and factors which led to the subprime mortgage crisis. Specifically, the show aimed to show the chain of people who were "participants up and down the subprime food chain". [1]

Contents

The show featured Adam Davidson, a business correspondent for National Public Radio and Alex Blumberg, a producer for the show, interviewing and reporting on the financial crisis. Blumberg described it as trying to answer the question "why are they lending money to people who can't afford to pay it back?"

Content of the show

The episode's name "The Giant Pool of Money" is derived from the description used in the show of fixed-income securities; it was identified in passing with the global saving glut. Davidson described it as follows:

Most people don't think about it but there's this huge pool of money out there, which is basically all the money the world is saving now. Insurance companies saving for a catastrophe, pension funds saving money for retirement, the central bank of England saving for whatever central banks save for. All the world's savings.

The show begins at a black tie gala, where an award is being presented for CDO of the year. The show does not lay blame on the financiers directly, going so far as to say "Let me just say, they’re aware that there’s a certain irony, giving awards to the instrument that almost destroyed the world’s economy. They did consider canceling this year but it’s been a really tough year, it’s been really gloomy for them." [2] They then proceed to the opposite end of the spectrum, with a borrower whose mortgage is in default.

After some background on what caused a shift in capital to mortgages, which they hypothesize to be Alan Greenspan's keeping fed funds rates low during the early 2000s, the show moves to Mike Francis, a Wall Street financier who worked at Morgan Stanley. From there, the show describes "another Mike", Mike Garner, who worked down the chain, at Silver State Mortgage. He described the pressures and motivations faced by mortgage salesmen. After describing that area of the chain, they moved on to a CDO investment management firm run by Jim Finkel of Dynamic Credit, LLC. Davidson through an interview with Finkel describes the nature and creation of CDOs.

After describing these market players, the show goes on to discuss the nature of the speculative bubble, highlighting real estate TV shows that sprung up during the bubble, such as A&E's Flip This House . The show then revisits some of the interviewees, describing the bursting of the bubble, both in terms of their business and personal fortunes. Blumberg and Davidson end with a prognosis of the financial system. Blumberg states "there's more talk that the next few years will feel like the 1970s. There are lots of technical differences between this crisis and Jimmy Carter's malaise. But for the average person, it could feel the same."

Reception and legacy

The show was well received by listeners, stimulating ten times more listener feedback than average, all of it positive according to reporter Adam Davidson. [3] In February 2009, Adam Davidson and Alex Blumberg were awarded the Polk Award for the episode. [4] Chicago Public Radio's This American Life and National Public Radio, News Division won a Peabody Award for the episode, which the awards body deemed "impressive for the arresting clarity of its explanation of the financial crisis we're in, and even more so for its having aired so early - May 2008." [5]

In 2010, "The Giant Pool of Money" was chosen by New York University's Arthur L. Carter Journalism Institute as one of the top ten works of journalism from the 2000s decade, ranking it number 4. [6] [7] In 2014, Slate ranked the episode on its list of "The 25 Best Podcast Episodes Ever" at number 2. [8]

In 2021, the episode was deemed "culturally, historically, or aesthetically significant" by the Library of Congress and selected for preservation in the United States National Recording Registry, making it the first podcast to be added to the registry. [9]

Continuing coverage

The same team of producers have created three follow-up episodes to "The Giant Pool of Money" as "Your Guide to the Meltdown". On October 3, 2008, This American Life broadcast "Another Frightening Show About the Economy", [10] examining what regulators could have done to prevent the economic crisis. "Bad Bank" [11] aired February 27, 2009, explaining insolvent banks and toxic assets. Finally, on June 5, 2009, "The Watchmen" [12] aired and examined the role of Congress and regulators since the creation of the American financial system in the 1930s.

A fifth episode entitled "Return to the Giant Pool of Money" [13] was aired on September 25, 2009. Davidson and Blumberg have also gone on to work with other NPR reporters on a regular podcast covering economics, global finance, and other business topics using similar storytelling techniques: NPR's Planet Money .

Related Research Articles

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This American Life (TAL) is a weekly hour-long American radio program produced in collaboration with Chicago Public Media and hosted by Ira Glass. It is broadcast on numerous public radio stations in the United States and internationally, and is also available as a free weekly podcast. Primarily a journalistic non-fiction program, it has also featured essays, memoirs, field recordings, short fiction, and found footage. The first episode aired on November 17, 1995, under the show's original title, Your Radio Playhouse. The series was distributed by Public Radio International until June 2014, when the program became self-distributed with Public Radio Exchange delivering new episodes to public radio stations.

<span class="mw-page-title-main">Mortgage-backed security</span> Type of asset-backed security

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A collateralized debt obligation (CDO) is a type of structured asset-backed security (ABS). Originally developed as instruments for the corporate debt markets, after 2002 CDOs became vehicles for refinancing mortgage-backed securities (MBS). Like other private label securities backed by assets, a CDO can be thought of as a promise to pay investors in a prescribed sequence, based on the cash flow the CDO collects from the pool of bonds or other assets it owns. Distinctively, CDO credit risk is typically assessed based on a probability of default (PD) derived from ratings on those bonds or assets.

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No income, no asset (NINA) is a term used in the United States mortgage industry to describe one of many documentation types which lenders may allow when underwriting a mortgage. A loan issued under such circumstances may be referred to as a NINA loan or NINJA loan.

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<span class="mw-page-title-main">Alex Blumberg</span> American radio journalist

Alex Blumberg is an American entrepreneur, radio journalist, former producer for public radio and television, best known for his work with This American Life, Planet Money, and How to Save a Planet. He was the co-founder and CEO of the podcast network Gimlet Media.

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References

  1. ↑ Carr, David (2008-09-28). "Daring to Say Loans Made No Sense". The New York Times . p. 2. Retrieved 2008-09-30.
  2. ↑ "The Giant Pool of Money". This American Life . Episode 355. 2008-05-09. Transcript.
  3. ↑ Shepard, Alicia C. (2008-05-28). "The Giant Pool Of Money". NPR Ombudsman. NPR. Retrieved 2021-11-12.
  4. ↑ McFadden, Robert D. (February 17, 2009). "For Their Risk-Taking, Journalists Garner Polk Awards". The New York Times. Retrieved May 25, 2010.
  5. ↑ "Complete List of 2008 Peabody Award Winners". The Peabody Awards. 2009-04-01. Archived from the original on 2009-04-02. Retrieved 2023-06-28.
  6. ↑ Communications, NYU Web. "NYU's Carter Journalism Institute Names Five Newspaper Series, Four Books, and a Radio Program Decade's Top 10 Works of U.S. Journalism". www.nyu.edu. Retrieved 2023-06-08.
  7. ↑ "Top Ten Works of Journalism of the Decade, 2000-2009". NYU Journalism. Retrieved 2023-06-08.
  8. ↑ Haglund, David; Onion, Rebecca (18 Dec 2014). "The 25 Best Podcast Episodes Ever". Slate. Archived from the original on 17 Dec 2014. Retrieved 8 June 2023.
  9. ↑ "National Recording Registry Adds 'Rhythm Nation' Among 25 New Selections". Library of Congress. Retrieved 2021-03-25.
  10. ↑ "Another Frightening Show About the Economy - This American Life". This American Life. 2008-10-03. Retrieved 2018-10-12.
  11. ↑ "Bad Bank - This American Life". This American Life. 2009-02-27. Retrieved 2018-10-12.
  12. ↑ "The Watchmen - This American Life". This American Life. 2009-06-05. Retrieved 2018-10-12.
  13. ↑ "Return To The Giant Pool Of Money - This American Life". This American Life. 2009-09-25. Retrieved 2018-10-12.
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