The Big Short, Hollywood, and the power of the media

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Movies can be an incredibly powerful way to spread an important message. Over the holidays, my wife and I went on a theater binge and saw The Hateful Eight, Star Wars and The Big Short. I was a bit worried she wouldn’t enjoy the last of the three flicks. My wife is incredibly smart and is a talented special education teacher, but I did not expect a movie chronicling the financial meltdown to pique her interest. Then again, how can you say no to a movie stacked with the likes of Ryan Gosling, Steve Carell, Brad Pitt and Christian Bale and directed by the guy that brought you Anchorman?

By now, most people are familiar with the movie, which is based on Michael Lewis’ book following a handful of bold investors who bet against the mortgage machine during the prelude to one of the darkest times in the history of global financial markets. However, it took a star-studded cast and adept storytelling to make this narrative palpable to the everyday moviegoer.

The filmmakers must have realized it would be a tough sell to the general public. They needed to educate the semi-financially literate masses on the alphabet soup of toxic structured credit vehicles and complex financial instruments. How would they keep heads from spinning when referencing the likes of RMBS (residential mortgage-backed securities), CDOs (collateralized debt obligations – regular, squared and synthetic), CDS (credit-default swaps), and NINAs (No Income/No Asset mortgages)? Not an easy task. But, director Adam McKay expertly fuses pop culture with finance to hold the audience’s attention just long enough to explain the concept at hand. Hollywood meets Investopedia.

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As my wife and I took in each of these mini financial lessons delivered through cameos by Anthony Bourdain, Selena Gomez, Margot Robbie and more, I couldn’t help but draw parallels between what the filmmakers set out to do and what we do at Gregory FCA: educate the public on a particular issue through storytelling.

Coincidentally, we work with a client that was on the front lines of the housing crisis. Two years ago, the client introduced nonprime mortgages, also known as the new subprime, to the public and knowingly set out to undo the stigma brought about by the irresponsible lending practices detailed in The Big Short. As you can imagine, eyes roll and skeptics scoff when they hear that subprime is back with a new name, and understandably so. People like to say Wall Street has a short memory, but I am confident that investors and the rest of the world will remember the housing crisis for some time.

So here we are, set out to show the world our client’s nonprime mortgages really are different than the subprime loans that were justly vilified during the crisis. Only, instead of relying on Hollywood actors and the silver screen as a medium, we rely on news media. Do a Google search for “is subprime back?” and you will get a slew of results, many of which feature our client along with statistics and detailed information explaining how the new subprime is actually good for the housing market, the economy, investors and Americans looking to buy homes.

The key here is that the media provides an element of third-party validation and trustworthiness unachievable through traditional advertising and direct outreach. Through no other medium can you convey a message to such a large audience with conviction. Anyone coming across a “subprime is back” article willing to read past the headline will learn that the new nonprime mortgages have an average credit score of more than 100 points higher than subprime during the crisis, require a minimum 20 percent down payment and meet a bevy of regulatory requirements that make them far safer than anything originated in the past. But don’t take it from me, take it from Bloomberg, The Financial Times, The Wall Street Journal, and Barron’s.

You are always going to have the stubborn few who are unwilling to accept anything beyond their own predetermined opinion on a topic. But for the reasonable masses, the credibility given to information provided by the media is second only to anecdotal evidence. While blockbuster Hollywood movies may reach a broader audience, the educational impact of a media-based PR campaign can prove to be far more effective when executed properly.

Freddy loves to talk subprime. Engage with him on Twitter (@FreddyMartino) or send him an email at fmartino@gregoryfca.com.