No matter who wins the best picture Oscar at the Academy Awards tonight, last year was a good one for topical flicks. Spotlight is a brilliant success. So is The Big Short. Both translate important news stories into Hollywood vernacular.
Spotlight describes how in 2002 a series of stories by a Boston Globe investigative team put an end to efforts by the Archdiocese of Boston to cover up over the years the behavior of pedophile priests. Theater viewers have often applauded at the end of showings; some left the dark in tears.
The Big Short tells how in 2006 three disparate groups of investors sought to bet against big mortgage lenders, and how, despite their ingenuity, they failed to make as much money and/or fame as they hoped they might. Running commentary, their own and others, on the cupidity of Wall Street provides counterpoint to the bittersweet saga. People leave the theater laughing and shaking their heads.
Each movie drives home important truths. Predatory priests wreak havoc on young lives. The hierarchy of the Catholic Church in Boston defended its pedophile priests’ immunity from the criminal justice system until the Globe undertook an all-out reporting campaign to overturn its indifference.
Mortgage lending in the US and elsewhere went crazy after 2003, but the market stayed manic longer than the film’s prescient short-sellers were able to maintain their bets that it would fall. Only several months after they got out did the market crash.
But there’s movie truth and newspaper truth. What follows is newspaper truth.
Spotlight depends for its drama on the fiction that a chasm separating darkness from light existed between Globe editors and reporters who worked for the Taylor family in the 1990s and the paper under management sent in 2001 by its new owner, the New York Times Co.
In fact, two successive Globe editors in the ’90s, John S. (Jack) Driscoll and Matthew V. Storin, gradually turned the stories of various local pedophile priests, James R. Porter, John R. Hanlon, and John J. Geoghan in particular, from short items about lawsuit filings tucked away well back in the paper’s Metro section into front-page news. In each case they were reacting to the efforts of crusading attorneys. They were gingered in varying degrees along the way by Globe reporters, including Steve Kurkjian, Linda Matchan, Don Aucoin, Alison Bass, Daniel Golden, James Franklin, Diego Ribadeniera, and David Armstrong; by reporter Kristen Lombardi, of the Boston Phoenix; and by Globe columnist Eileen McNamara.
As early as 1993, Cardinal Bernard Law had called down “the power of God” on the Globe, as he sought to downplay the newspaper’s reports of priestly misconduct. By 2000 he had himself been accused of protecting a notorious pedophile. By the next spring it had become public knowledge. By the summer of 2001, the story was simmering just below the boiling point.
That’s where the movie begins, as a new editor arrives at the Globe. Martin Baron (played in the film by Liev Schreiber), a highly skilled news editor, is fresh in from the frontlines of watchdog journalism in Florida as chief editor of the Miami Herald (the Elián González custody battle, the contested 2000 presidential election vote count). He’s also an outsider to Boston, untrammeled by the tribal loyalties of the city. He quickly recognizes that there is more to the story of priestly abuse than had been made of it so far. So starting his first day on the job, he turns up the heat.
He assigns the story to the Spotlight Team, the pioneering investigative unit the Globe had created thirty years before, led by Globe veteran Walter (Robby) Robinson (portrayed in the film by Michael Keaton) and supervised by assistant managing editor Ben Bradlee Jr. He signals his intent by going to court to unseal depositions.
The 9/11 attacks intervene, but behind the scenes the Spotlight Team searches through records, pesters lawyers, and interviews victims, seeking to document the extent of the problem. In November a judge unseals a stack of critical depositions. By January Spotlight is ready to commence the public phase of its investigation, with a blockbuster story about Cardinal Law sending serial offender Geoghan to a new parish, despite having been warned against him by a trusted lieutenant. Tips flood in as the film ends.
That much is both newspaper and movie true.
The movie takes plenty of small liberties to retain its sharp focus and buttress the storyline of darkness and light. All seem to fall within standard Hollywood practice known as “based on a true story.” The statistics are a mess, because the stories discussed are describing events that took place over a span of forty years. The only real laugh-out-loud moment comes when the actress playing the crackerjack columnist McNamara whispers, “You mean there’s more than one?”
During the twelve months of 2002, the Spotlight treatment turned what had been a series of stories about a series of bad apples and their punishments into an overarching scandal of a church hierarchy mired in stubborn denial of its problems, unwilling to take the steps necessary to fix them. The Spotlight Team grew from four to ten persons, who together wrote some 600 stories. Cardinal Law resigned in disgrace in December. And the next April, the Spotlight Team won its third Pulitzer for the Globe, this one its Gold Medal for Meritorious Public Service. By then, the story had begun to be replicated around the world.
Unfortunately, no book has been written about that epic contest of wills, though David France’s Our Fathers: The Secret Life of the Catholic Church in an Age of Scandal Crown, (2004) employed the story as its spine. There are only the newspaper stories themselves, published as Betrayal: The Crisis in the Catholic Church (Little Brown, 2002); a Columbia Journalism School case study from 2009 that reads like a film treatment; and, of course, the screenplay itself, by Josh Singer and director Tom McCarthy. Baron, who retained his ties to Hollywood (earlier he had been business editor of the Los Angeles Times), apparently advised the filmmakers throughout. In 2013 he became executive editor of The Washington Post.
The film version departs from what a good newspaper story would tell back at that chasm. A new sheriff who takes in hand a troubled town is a plot familiar from many a classic Western. It doesn’t describe what happened in Boston.
Certainly there had been a time within memory when the Globe routinely downplayed news that the Boston archdiocese found distressing. For much of its first century, the Globe catered to readers in Boston’s rapidly expanding working class – preponderantly Irish, Catholic, Democratic, and, with every passing decade, more females. Editors clearly went out of their way not to offend. As recently as the early 1960s, sentences deemed inappropriate in coverage of the church were quietly excised by a senior editor thought to be in close touch with church headquarters.
After Thomas Winship took over as editor, in 1965, this began to change. The Globe had bested the respectable old Herald in a no-holds-barred newspaper war during the late 1950s and through the ’60s. Winship took advantage of his paper’s victory to rebuild the Globe into New England’s dominant newspaper, which made its mark with editorials like those that criticized the Vietnam War and vigorously supported court-ordered desegregation in Boston, if not always the busing that aimed to achieve it. After William O. Taylor succeeded his father as publisher, in 1978, the paper continued to soar. The Globe credo was still spelled out in the words of its founder on a brass plaque in the lobby: “My aim has been to make the Globe a cheerful, attractive and useful newspaper that would enter the home as a kindly, helpful friend of the family….” (The saga is scrupulously told in a chapter of Common Ground: A Turbulent Decade in the Lives of Three American Families, the classic account of Boston’s busing troubles in the 1970s, by J. Anthony Lukas.)
In 1993, the New York Times Co., corporate parent of the Times and a handful of much smaller papers, bought the Globe for $1.13 billion, the highest price ever paid for a newspaper up until then. For the next few years, the Globe continued to thrive under Boston management.
The NYT Co.’s makeover of the Globe began in 1998, when star columnist Mike Barnicle was humiliated and then forced to quit instead of scolded as he might have been in the past for any lapses. His defenestration was preceded by that of another columnist, Patricia Smith. People still argue about the merits of the cases, even as they forget the details. Both separations were inevitable in the circumstances.
In 1999, NYT Co. chief executive Arthur Sulzberger Jr. dismissed Globe publisher Benjamin Taylor and replaced him with a previously unknown executive from New York. Senior staffers Martin Nolan, David Nyhan, Gerard O’Neill, and Thomas Mulvoy took buy-out packages.
Then in summer 2001, Storin announced he, too, was leaving and New York hired Baron as the new editor. He made it clear he intended to make over the Boston paper to a more stringent standard. The Taylor family credo had been discarded. “Make the news more relevant to readers,” as one newsroom catch-phrase had it at the time; “the joyless pursuit of excellence,” according to another. (I was one of those who left the Globe not long after Baron arrived.)
The other thing the movie leaves out is the backlash. There’s no easy way of telling what broad efforts by New York’s managers to re-shape the Globe cost the paper in terms of readership, especially since the decline in its revenues and circulation coincided with invention of search advertising and the rise of social media. But the Globe’s downhill slide since 2002 appears to have been more precipitous than that of almost all other major papers, such that in 2009 New York threatened to simply close down the newspaper if labor concessions weren’t forthcoming.
Finally in 2013 NYT Co. sold the Globe, for $70 million, or around 6 percent of what it had paid twenty years before, not to the Taylor-led group that had sought to buy it, but to another outsider, Boston Red Sox owner John Henry. Henry recently has become embroiled in misadventures of his own.
Thanks to the movie, the Globe’s brand has never shined brighter. And the paper itself, far slimmer than before, seems to have returned to its roots, under editor Brian McGrory. The business model, however, is badly damaged, perhaps even broken. The story of what happened to the Globe after it was sold awaits its Tony Lukas.
The Big Short is based on The Big Short: Inside the Doomsday Machine, by Michael Lewis. Starting with Liar’s Poker: Rising through the Wreckage on Wall Street (Norton), in 1989, then with another ten books, Moneyball and The Blind Side among them, Lewis has demonstrated an astonishing knack for finding the right characters in order to tell important stories.
There are four main characters in the film – three idiosyncratic speculators, unknown to one another, each obsessed with betting against the housing market, and the bond trader who showed them how to play their hunch, using the new and less risky derivative instruments known as credit default swaps.
Actor Christian Bale plays real-life California neurosurgeon-turned-hedge-fund-manager Michael Burry; Steve Carell plays a Wall Street New York veteran who resembles real-life Steve Eisman in the book; and Brad Pitt is the worldly mentor to a pair of thirty-something friends who had worked briefly managing money on Wall Street before going into business for themselves in a backyard shed in Berkeley, California.
Ryan Gosling plays the Deutsche Bank bond trader – Greg Lippmann in real life – who taught them all the new way to make their trades. He is “Patient Zero,” in author Lewis’s pungent phrase. He is the narrator of the film. And since traders don’t do things by themselves, each of the four has associates, lawyers, therapists, family members – a highly interesting cast of characters who make the movie version remarkably true to real life in markets but who nevertheless get in the way of understanding.
The better way to place a wager against a market that Gosling peddles in the film is the strategy he describes in presentations that he makes to potential investors, “Shorting Home Equity Mezzanine Tranches.” Director and screenwriter Adam McKay ingeniously treats the strategy as a McGuffin – a device that sets the plot in motion without needing to be fully understood – though he makes two attempts to explain it as he goes along.
In the first instance, actress Margo Robbie describes the pooling and securitization of subprime mortgages – from a bubble bath (itself a sly joke, since Robbie appeared in considerably less in The Wolf of Wall Street, as Leonardo di Caprio’s mistress/second wife); in the second instance, in a Las Vegas casino, University of Chicago Booth School of Business professor Richard Thaler and singer Selena Gomez explain the nature of derivatives.
So much for the MacGuffin. What exactly is a credit default swap? It is an insurance contract, a derivative of a security, not the underlying asset itself. The esoteric new market was created in the 1990s and proved so useful to investors, for various reasons, that it grew exponentially. Gillian Tett, of the Financial Times, tells the origin story in Fool’s Gold: How the Bold Dream of a Small Tribe at J.P. Morgan Was Corrupted by Wall Street Greed and Unleashed a Catastrophe, Free Press, 2009.
And the advantage such markets offered over traditional methods of shorting an asset? Author Lewis describes the basics this way in his book.
The beauty of the credit default swap, or CDS, was that it solves [a] timing problem. Eisman no longer needed to guess exactly when the subprime mortgage market would crash. It also allowed him to make the bet without laying down cash up front…. It was also an asymmetric bet, like laying down money on a number in roulette. The most you could lose were the chips that you put on the table; but if your number came up, you made thirty, forty, even fifty times your money.
There are two important things you don’t learn from the film version of The Big Short. One is that there was an investor, John Paulson, who actually made “a Soros trade,” a killing so great as to enter the ranks of legendary investors. The poignancy in the film derives from the fact that none of its heroes makes nearly as much money as he had hoped, because various backers run out of nerve.
Neurologist Burry makes $750 million for his investors in 2007, but the fund he is managing shrinks to $600 million, and threats of withdrawal continue throughout the coming year. Disillusioned, fearing for his health, Burry closes his firm in Cupertino a year later, despite gains of 489 percent over seven years. Those thirty-something investors who started their fund in a backyard shed? By 2008, they are managing $135 million, up from $30 million, but can’t enjoy their subprime triumph because they are too worried about how to invest next. Eisman has sold his last CDS back to Lippmann in July 2008. He enters the autumn conventionally invested in the stock market, betting that the banks will fail.
Meanwhile, Paulson, a relatively well-known Wall Street investor previously deemed to have been a reliable hitter of singles and occasional doubles, succeeded brilliantly where Burry earlier had failed. In 2006 Paulson raised $137 million (including $30 million of his own money) with no other purpose than making bets with credit default swaps against subprime mortgages. He and his associates picked the right securities to short, and hit the jackpot: $15 billion for his hedge fund in 2007, including some $4 billion for himself. The story, with many of the same characters as The Big Short, is told in The Greatest Trade Ever: The Behind-the-Scenes Story of How John Paulson Defied Wall Street and Made Financial History (Broadway Books, 2009), by Gregory Zuckerman, of The Wall Street Journal.
The second thing you don’t learn from The Big Short is what actually happened after Lehman Brothers failed in September 2008, triggering a run on the banking system. The climax of the film comes in March 2008, as Bear Stearns is merged into J.P. Morgan, The scene at the end of the movie, with the Eisman character (Carell), sitting with his partners on the steps of St. Patrick’s Cathedral in Manhattan on September 18, 2008, as the whole world teeters on the brink, serves in the film, as in the book, to emphasize the immense harm that is about to ensue: the homes foreclosed, the jobs lost, the confidence shattered, the political divisions exacerbated. The reason why has already been given: simple greed.
Never mind. The Big Short is a brilliant success, conveying the same truths about financial markets in 2007 that Michael Lewis adduced in the book – that finance is complicated, that money managers talk fast and crack jokes, that life is unfair. So it’s not the whole story. What is? If director and screenwriter McKay doesn’t win the Oscar for the best screenplay adoption, then there even less justice in Hollywood than I think.
Movies are wonderful, but a problem arises when movie critics who know little about the background write as though the screenplay were newspaper truth.
Thus Nigel Andrews, in the Financial Times: “Tom McCarthy (The Station Agent) directs and co-writes as if the film were a hot-button documentary hijacked by stars, and in a way it is.”
A.O. Scott, in The New York Times: “Before 2001 – with some exceptions, notably in work by the columnist Eileen McNamara (played by Maureen Keiller) – the paper overlooked the extent of the criminality in the local church and the evidence that the hierarchy knew what was going on.”
Anthony Lane, in The New Yorker: “…Marty Baron, of all people, shy, taut, and humorless, in Schreiber’s clever portrayal – struck me as the hero of the hour. He is mocked for being, as one insider labels him, “an unmarried man of the Jewish faith who hates baseball,” but it is precisely his status as an outsider that allows him to initiate the quest. Folks in the Church, and elsewhere in the city, know what went on, yet they don’t really want to know. It’s all too close to home. Baron wants to know.”
Ty Burr, in The Boston Globe: “’Spotlight’” makes the sharp, sobering point that it took an outsider, Baron, to notice what the locals didn’t, or couldn’t, or maybe even wouldn’t, and that the Globe had more than one chance to open an investigation years earlier than it did. The movie paints this as the regrettable bureaucratic oversight of a hectic workplace. It’s also true that people are flawed, and that institutions thrive by not making waves. Until something changes, and they do.”
And, perhaps most surprisingly, historian and journalist Garry Wills, of Northwestern University, in the New York Review of Books: “An instinctive deference to the Church had inhibited the press in this Roman Catholic city from recognizing a scandal in its own backyard. Baron was not subject to that thrall.”
As for the scene that serves as a climax, which occurs when, on the eve of the publication of the story that is to finally break the long silence, the team discusses the fact that in 1993, when Robby was metro editor, he had buried on page 43 the story of a lawyer’s claim that he had obtained settlements against twenty pedophile priests who had been retired or put on indefinite leave. It turns out it didn’t really happen like that. It was the screenwriters, not the reporters, who were tipped by lawyer Roderick MacLeish (played in the film by Billy Crudup) to the existence of that long-ago clip.
McCarthy and Singer found it and read it, then queried Robby about its significance. He promptly acknowledged he had been metro editor at the time – and they subsequently wrote a scene to buttress the story of the chasm between darkness and light. In the film Baron then pronounces benediction: When people have been in the dark for a long time, he says, they are necessarily disoriented; a light is turned on and suddenly things at last seem clear. All he knows, he says, is that the team has done a good job.
“That moment [the confession of knowledge and failure to act] was probably the one moment where we took something that was not [precisely true] and we felt that we had the right to include it,” director McCarthy told Jeff Labrecque of Entertainment Weekly for his story. “Spotlight players confront the clue that became the movie’s key twist.” The screenwriters already had “concluded from their research that the Globe was probably guilty of sins of omission, if not commission, when it came to its coverage of the Church in the early 1990s,” wrote Labrecque. Their discovery was a dramatic gift too good to pass up.
Maybe so, in the powerful logic of movie abstraction. But it’s far from newspaper truth. What really happened in that interval in 1993 was that the Globe changed editors and publishers, from Jack Driscoll and Bill Taylor to Matt Storin and Ben Taylor. The staff wrapped up the Porter and Hanlon stories, and prepared to take up the Geoghan saga when, two years later, attorney Mitchell Garabedian brought his blockbuster suit.
By the spring of 2001, a new judge, Constance M. Sweeney, had been chosen to take over the case. She was another outsider, a Springfield native, and a largely unsung hero of the story. In December she would, on the Globe’s motion, release 10,000 documents in the 84 lawsuits against Geoghan and Cardinal Law. The stage had been set for the Spotlight series – the single most important story in the 142-year-history of The Boston Globe.