The Big Short - film review
ICAS tutor Gillian Vaughan reviews a major film based on the true story of the financial crash
This is an opportunity to watch a really entertaining film with a fantastic cast (Brad Pitt, Steve Carell, Ryan Gosling, Christian Bale) while inadvertently understanding how and why the financial crisis of 2008 happened.
The film is adapted from Michael Lewis’s bestseller, The Big Short: Inside the Doomsday Machine, which centres on a group of investment bankers who foresaw the collapse of the US housing market and set out to profit from it. There are no heroes in this film, but rather a sliding scale of lack of scruples and greed. And it’s not just the bankers who are seen in a bad light, but regulators as well.
Why should you go and see it?
Well, you will refer to the financial crisis and its after-effects throughout your ICAS studies - in FR (financial reporting), ABS (assurance and business systems), Afin (advanced finance) to name but a few subjects. And rather than sitting in class thinking everyone else clearly understands the causes and implications, so I better not ask a stupid question, why not get ahead of the game and get to grips with some definitions and the reasons for the crisis?
Or you may already be through TPS (Test of Professional Skills) heading towards TPE (Test of Professional Expertise) and membership then, as a future CA, you should have a clear understanding of the crisis. After all, many clients are still recovering from the effects and dealing with the regulations that arose from it.
Let collateralized debt obligations, derivatives and synthetic bonds soak in
The film uses wit and clever analogies delivered by cameo performances to explain, among other things, collateralized debt obligations (CDOs), derivatives, subprime mortgages and synthetic bonds. Not sold on it yet? Perhaps if I explain that Margot Robbie describes derivatives from a bubble bath while drinking champagne, you might get a better idea of the film – it is not a documentary.
I think after watching the film, you will feel better able to judge whether the accounting and auditing standards and the regulation that have arisen from the crisis are sufficient and appropriate. It will perhaps also make you think about ethical issues – who knew what, when and why they chose to profit from it rather than do anything to prevent it? It raises the big questions. Does society need protecting from ourselves when it comes to debt or do we simply need protecting from financial institutions and unscrupulous individuals?
It’s a great film and nominated for a clutch of awards. Go and see it – it’s entertaining and informative.