The news of today reported by the journalists of tomorrow

The Beacon

The news of today reported by the journalists of tomorrow

The Beacon

The news of today reported by the journalists of tomorrow

The Beacon

“Too Big to Fail” author gives an insider’s view of Wall Street

Failure of General Electric, McDonald’s not being able make payroll and an 25 percent unemployment rate paints a grim portrait of society. Andrew Ross Sorkin, New York Times journalist, co-host of CNBC’s “Squawk Box” and author of “Too Big To Fail,” described this scene as what could have been in America during his presentation at the Allan P. Kirby Lecture Series on October 18.
Sorkin’s speech focused on the financial crisis of 2008, which featured the major landmarks of the sale of Merrill Lynch, the bankruptcy of Lehman Brothers and the $85 billion bailout of AIG.  This economic meltdown, Sorkin said, continues to leave scars on the economy today.
Sorkin was in the middle of the whole economic disaster, reporting from his insider’s view on the inner workings of Wall Street for what he termed “one of the most remarkable weekends in our economic history.”
A 25 percent unemployment rate in the U.S., compared to the current 9.1 percent rate, is one of the stark projections Sorkin referenced in a scenario where there was no government interference on this event.
“We could have been living in a very, very different world,” Sorkin said.
Sorkin said while these numbers are hypothetical, the very real problem of businesses struggling to pay employees was a very real indication of how this crisis impacted more than just major corporations.
“The impact was not really strictly about Wall Street. It really was about Main Street in a way that we often don’t appreciate,” Sorkin said.
Sorkin’s intimate view on the impact of this crisis led him to write his New York Times besteller, “Too Big To Fail: The Inside Story of How Wall Street and Washington Fought to Save the Financial System — and Themselves.”
The goal of Sorkin’s book was to bring readers into the conference room of CEO’s in major corporations so they could understand the background of the crisis. He said that many people have their opinions on what happened, but those might change with a viewpoint from the inside.
“If we could get inside the room, if we could actually see what the choices were that were on the table, our perspective may ultimately be different,” Sorkin said.
Sorkin explained that he ultimately is not trying to shape peoples’ opinions, but to simply inform them on the event.
“My goal was not to tell people what to think, it was to tell people what happened, so that we could actually understand where we are today,” he said.
Jeffrey Alves, Sidhu School of Business Interim Dean, was involved in bringing Sorkin to the lecture and said that Sorkin has an ability to effectively inform his audience on the technicalities of the financial system. This ability was a main reason the business school invited Sorkin to Wilkes.
“He’s one of those rare journalists with the  ability to translate that into a language that you and I can understand,” Alves said.
Sorkin used this event as an attempt to translate the financial situation into perspective and a bigger picture for his audience. He said that there are a lot of impactful issues he hopes locals can appreciate.
One focus that Sorkin took is how the poor financial state came about. He said that people often like to pick favorites to blame, but he is not sure if it can be singled out on one group.
“Unfortunately there’s a lot of fathers to this crisis, and a lot of blame to go around, and we can always pick out the one group that we think is more responsible than the others,” Sorkin said.
Sorkin said that a frequent target is the bank executives that were so involved in the event, but there are other influences that need to be considered.
“We’ve sort of talked a lot about the banks and the role of the banks and their role and responsibility and clearly they played a huge role in the crisis, but there’s also functionally the government’s role, in not just exacerbating the crisis in some cases or not mitigating it the way people would have wanted but in creating the crisis unto itself.”
The major issue Sorkin highlighted was debt, stating that it is the major catalyst in many financial breakdowns.
“You could have everybody doing everything wrong, but as long as there’s not too much leverage in the system, it actually doesn’t matter,” Sorkin said. “It’s the leverage and the debt, that is the match that lights the fire, every time.”
He said another major problem right now is the concentration within banks. He said bank assets are more concentrated than ever before, and that the top ten banks today control 77 percent of all bank assets.
The current corporations have an issue that Sorkin terms “too big to manage.”
“It’s hard to think that one, two, three, five, six, even a dozen people who are on a board of directors or a CEO or a management team can actually know what’s going across these institutions,” Sorkin said.
Sorkin said he is disappointed that the glorification of greed in these corporations has continued from before the days of the meltdown.
“If there’s anything I was most sad about, it’s actually that the ethos on Wall Street has not changed one bit,” Sorkin said.  “The sense that greed is good is still alive and well.”
This sense of greed is one thing that the recent Occupy Wall Street protestors have spoken out against. Sorkin said he believes many people have sympathy for the occupiers. He believes there is a main message that many are connecting with.
“There’s a larger message that everyone seems to be willing to agree on, which is the system isn’t working for them,” Sorkin said.
While he said that Wall Street is not concerned with the protestors and a potential of change in their industry, they are paying attention to this larger message and the social unrest around it.
Sorkin said there is some potential for change from these protests, but they will most likely be within the educational system through cheaper tuition and simplified loan processes.
He said that he has been impacted by the cases of students graduating with massive debt and not having job opportunities.
“I’ve been very moved by the stories that graduates tell about not having employment, about having some ungodly numbers in term of the debt they have to pay off, and that clearly is not working for people,” Sorkin said. “That’s a system that is functionally broken, I would argue.”
From the analysis of all of these ongoing problems, Sorkin said the most effective goal to address them is to find a leader who can truly instill hope in people.
“Whether you’re homeless, whether you’re middle-class, or whether you have a billion dollars, you still want to be loved, you still want to be told that things are going to be great,” Sorkin said.

About the Contributor
Kirstin Cook, Editor-in-Chief
Editor-in-Chief Kirstin Cook is a senior Communication Studies major at Wilkes University concentrating in journalism, broadcast journalism and rhetoric. This is her second year as editor-in-chief of The Beacon. Kirstin has a passion for news, and her dream is to work as a television news reporter. Her internship at WBRE really sold her on the broadcast industry, because she loved every second of being in the fast-paced environment. She especially loves writing and video editing. Kirstin is also a reporter for the student-run, live news program Wilkes Now, and is in her fourth year of working with the Wilkes TV station. She also writes for Diamond City and Electric City, works as a Telecommunications Counselor for the Wilkes admissions department and runs cross country. She loves hiking, and plans to complete the Appalachian Trail after graduation while blogging about the experience. Kirstin is from Maine, and will always consider it her home. She has five younger siblings and a cat named Nadia, and she misses them all while at school.