1. Inside Job & Too Big to Fail AIG & Koc Holding
C.GÖKHAN ÇELEN&FAHRİ YAVUZ

2. Outline 2008 financial crisis Inside Job Too Big to Fail
AIG and Koç Group

3. 2008 Financial Crisis
the worst crisis since the Great Depression in 1929
breaking point of the change of financial markets
deregulation of financial systems
effect on all over the world

4. Inside Job 2010-made documentary film directed by Charles H. Ferguson
Academy Award for Best Documentary Feature in 2010
extensive researches and interviews

5. Inside Job changes in the finance sector consequences of the crisis
deregulation,
usage of high-risky systems
consequences of the crisis
conflicts of interest in the finance industry
pressure coming from financial sector on the political process

6. How we got there the Bubble the Crisis Accountability Where we are now
Inside Job
How we got there
the Bubble
the Crisis
Accountability
Where we are now

7. How we got there investment banks securitized insurance companies
Lehman Brothers
Morgan Stanley
Merrill Lynch
Goldman Sachs
Bear Stearns
securitized insurance companies
MBIA
AIG
AMBAC
financial conglomerates
Citigroup
JPMorgan Chase
three rating agencies
Standard & Poors (S&P)
Fitch,
Moody’s

8. Deregulation less discipline and more freedom
’the complete or partial elimination of regulation in a sector with the intent of improving economic performance’
Menard & Ghertman
less discipline and more freedom
more opportunity
more profit
more risk

9. Securitization Food Chain

10. Borrower Lender Subprime Mortgages
high amount of home-loan with high credit rates
Borrower
Lender
a chain of investors, investment banks, and AIG-the insurance company

11. Collateralized Debt Obligations (CDOs)
Invesment banks;
taking stocks and bonds based on mortgage debts
Combination of mortgages with other loans and debts
Collateralized Debt Obligations (CDOs)
AAA or AA ratings from rating agencies

12. Was everyone sleeping?
NO!

13. investment banks were insured by insurance agencies
higher credits to more people

14. The Bubble extremely higher money compared to assets
provided opportunity for everyone in the US
extremely high home prices (the bubble)
wealthier  extremely high profits

15. The Crisis decrease in home prices
no precaution from the investment banks
exponentially increasing debts of Wall Street investment banks

16. Collateralized debt obligations (CDOs)
CDO market collapsed
CDO and hundreds of billions dollars in loans
high percentage of the debts could not be repaid
by the borrowers to the lenders
by lenders to the investors in the financial sector

17. No cash… liquidity problem  high amount of foreclosures and
bankruptcies  increase in unemployment and so on

18. Big firms! Bear Stearns (R.I.P) AIG (survived) Freddie Mac and
Fannie Mae (survived)
Lehman Brothers (R.I.P)
Merrill Lynch (survived)

20. Consequences… USA crisis  global crisis Many bank collapsed
Unemployment rate tripled
Layoffs in the US and in the European Union
Even Iceland! 

21. Government ?

22. Accountability
Accountability (fourth part of the movie): Executives of these supported financial companies, which ultimately caused crisis, did not suffer from the crisis financially or legally. Even though, most of managers or leaders of these firms were questioned about their possible relation to the crisis; they mostly rejected their responsibility of the crisis. On the contrary, most of them got huge amount of severance packages and bonuses from their firms. Most likely that money was funded by the US government itself to rescue the firms.
On the other hand it is impossible to reject their strong correlation to the crisis. Top figures of such firms managed to protect their huge personal fortunes for example. That should be kept in mind.

23. Where we are now Influence of the financial collapse
Wealth gap between everybody in public and the richest people among society
Where we are now (fifth and last part of the movie): this part of this very detailed documentary on the late 2000s financial crisis is trying to point out how that crisis affected the today’s economic world. As known influence of the financial collapse of 2008 is continuing today. The gap in between the rich and the poor is getting bigger every day. The number of rich people is lessening so the rich people that is consisting less than 1 per cent of the world, has the XXX per cent of the wealth of the world.

24. New advisors for Obama: Feldstein, Tyson, and Summers*
Geithner*: Treasury Secretary
Bernanke*: Fed Chair
*who contributed to the crisis

25. Nothing helped the European Union
strict regulations about bank compensations
thousands of workers were laid off
lost of savings, and properties

26. Earth provides enough to satisfy every man's needs, but not every man's greed
Gandhi

27. Too Big to Fail based on non-fiction book of Andrew Ross Sorkin
TV drama film
directed by Curtis Hanson
written by Peter Gould
Now let’s have a look at the second movie, which is not a documentary but a highly realistic TV drama based on the non-fiction book of Andrew Ross Sorkin on 2008 financial crisis; that is Too Big to Fail. It was firstly broadcasted on HBO in Curtis Hanson directed the movie and Peter Gould wrote it.

28. Henry Paulson
telling about the financial meltdown like story from the United States Treasury Secretary Henry Paulson’s perspective
the period of August 2008 to October 2008

29. Henry Paulson & Lehman Brothers
appropriate solutions to rescue Lehman Brothers
to protect financial economy of the United States

30. Merrill Lynch  property of Bank of America
Lehman Brothers Barclays

31. AIG (American International Group)
credit default swaps (CDS)
Swap buyers
business with lenders

32. too big to fail The number of AIG customers; bankrupt collapsed
could not pay mortgage loans
hundreds of billion dollars debt
too big to fail

33. Too big to fail ???
(Of a financial organization or other business) so important to the economy of a country that a government or central bank must take measures to prevent it from ceasing to trade or going bankrupt: he caused a stir earlier this month when he said that no company was too big to fail.
Oxford Dictionaries, 2014

34. !! Too big to imagine!!
Beverly Hills Mansion

35. Buying toxic assets ???
Toxic asset
Too long to wait…

36. Direct capital injection
only possible option
dynamic credit flow
lending money out

37. 77 % of all the US banking assets are hold solely by 10 financial institutions!
fewer loans
unemployment and loosing houses
compensation that is made on Wall Street
they have been declared that they are too big to fail
markets were stabilized
the global economic depression

38. After movies…
&

39. Koc Holding … one of the biggest firms of Turkey
active in number of sectors
BAA3 rating from Moody’s
BBB- from S&P
only Turkish company in the list of Fortune Global 500 and
what Koc Holding is for Turkey is what AIG is for the States

40. Koc Holding …
leading positions in the many field

41. TURKEY…..
in the middle of energy producing countries and energy-hungry countries
developing country
one of the major destinations of foreign investors

42. Koc Holding …
is one of the leading companies that invest research and development
one of the key actors that is contributing Turkey’s global position

43. Respectable Foreign Partners;
Ford Motor Cooperation in the USA
Ford Otosan
Türk Traktör
CNH in Italy

44. Koc Group … driving force of the Turkish economy
7% of the GDP of Turkey
10% of the total exports of Turkey
the Istanbul Chamber of Industry;
annual 500 Largest Industrial Companies;
5 out of top 10 companies belong to Koç Group
the biggest company of Turkey

45. Istanbul Chamber of Industry
the most creditable company of Turkey in 2011 and 2012

46. VS world’s economic power the USA developing country
its one of the foremost companies
developing country
its biggest company

47. AIG (American International Group)
leading international insurance company
active in more than 130 countries
more than 67,000 employees
business relationship with;
90% of Fortune global 500,
96% of Fortune 1000,
98% of Fortune 500, and
40% of Forbes 400 Richest Americans

48. AIG (American International Group)
has institutional and commercial customers
one of the prominent, leading, and largest companies all over the world
for example;
AIG Property Casualty has more than 70 million consumer and commercial clients all over the world

49. Koc Group … 1st over 70 million customers within Turkey
chaotic environment for ;
defence
finance
shipping
automotive
energy sectors

50. Koc Group … 2nd Increase in number of unemployed people
90,000 workers of Koc holding
half a million people
psychological problematic
not alternative job opportunities or social security

51. Koc Group … 3rd 10 %of the total exports of Turkey
7 % of the GDP of Turkey

52. Koc Group … 4th foreign partners and investors
the reliability of Istanbul Chamber of Industry and Istanbul Chamber of Commerce
foreign direct investments and collective strategies

53. Summary: AIG for the United States

54. Summary: Koç Group for Turkey

55. Thank you for listening… Questions / Comments