[light-hearted music plays]
[protesters] Banks got bailed out! We got sold out!
Here's a question, do you trust the government?
I don't always. I've seen them bail out Wall Street
while the average American struggles. I've seen them attack peaceful protesters.
And come on, I know what the TSA is really doing
with all my confiscated weed gummies.
[protesters] Banks got bailed out! We got sold out!
But you know what I realized, there is one way
in which we all do implicitly trust the government every day.
We use money, and money is nothing but trust.
See the only reason this random piece of tree pulp is worth a buck,
is because the government says it is and because we all believe them
when they say it.
You know, it's funny the…
the bill says "In God we trust" on it, but I'm an atheist.
I don't trust God, I curse God!
Eh, it's probably a coincidence. No, we trust the government.
That's why none of us would agree to get paid in IOU's
or autographed headshots of celebrities.
-Uh, do you accept Danny DeVito's? -Cash only, Bub.
-What about Johnny Cash? -Who?
-[groans] -[defeated trumpet note plays]
But everyone accepts the good old American greenback.
A dollar? [scoffs] What do you think this is, 1990?
Five bucks a glass, grandpa.
Okay, age comes for us all kid.
You know, I used to think that the only time the government
interacted with my money is when I paid my taxes
or that one time I bribed a judge,
but it turns out that the government and our trust in it
actually impacts every moment of our financial lives.
So what happens when that trust breaks down?
[glass breaks]
[dramatic music plays]
You know, I take for granted that when I put my money in the bank,
it'll stay there. But why? [scoffs]
Why do I trust a faceless corporation with my life savings?
I mean, they don't even trust me with their pens.
Well, up until a century ago, most Americans didn't.
See, back then, it was common for banks to uh, fail.
And when that happened, your money would be gone.
Howdy handsome, the cupboards are bare and the kids are crying.
I need to dip into the kitty, or my goose is cooked.
Sorry lady,
this Depression's got our balance sheet redder than W.C. Field's nose.
Your cash has flown the coop.
Americans could become so afraid of losing their savings
that any sign of instability would cause a panic.
Hey gang! These phony four-flushers won't make good on our Mazuma!
-[indistinct chatter] -[grunts]
Depositors would bum rush the banks
trying to withdraw all of their money simultaneously.
This was called a bank run,
and it could push even healthy banks into bankruptcy
resulting in a calamitous cascade of closures.
[groans]
During the Great Depression, over 9000 banks failed.
Americans lost billions in savings. The economy ground to a halt,
and public outcry forced President Franklin Delano Roosevelt to act.
One at a time, one at a time.
I lost my life savings.
I lost the proceeds for my moonshinery.
I thought we were all wearing barrels to this, or did plans change?
Alright, alright. How about this?
To restore trust in the banking system,
we will create the Federal Deposit Insurance Corporation.
Your deposits henceforth will be guaranteed
by the full faith and credit of the United States government.
What if the bank burns down?
You'll get your money back.
What if Bonnie and Clyde get in there and mess up the joint?
You'll get your money back!
What if you got a telegram
saying everyone would be wearing barrels to the speech, but no one did it?
[shouts] It's guaranteed, okay!
[tense beat plays]
Can I withdraw one penny please? Thanks so much.
At the time, this was considered an extraordinary measure, but it worked.
The FDIC stabilized the banking system, restored trust,
and made bank runs a thing of the past.
Today, when you see that FDIC logo at your bank,
it means that up to 250,000 dollars of your money per account
is fully insured by the federal government.
And since 1933, not one penny of insured deposits has been lost.
And that is all the more impressive because bank failures still happen.
It's just that nowadays, instead of causing a panic,
the FDIC swoops in so seamlessly that almost no one even notices.
How do they do that?
Tell you what, heads we go find out, tails the show ends now.
-Oh, man, what? -[joyful music plays]
Okay, this one doesn't count.
-Let's go again. -[music ends]
-[bell dings] -Hey!
[exciting music plays]
-[Adam] Hi there. -Hello, and welcome to the FDIC, Adam.
[Adam] This is like the bankiest place I've ever been.
[woman 1] Come on, let's give a little tour. We're conducting a simulation today.
-Oh, really? -So I've told them that I was
gonna invite you to step in and observe the meeting.
Would you like to do that?
Oh, my God, that'd be incredible. We can see what happens when a bank fails.
-Let's go on up. -Let's do it.
-Adam, here they are. Good morning. -[Adam] Oh, my gosh, hello everybody.
Thank you for having us. This is very official, I'm a little nervous.
[laughs]
[man 1] Alright. So, welcome everybody to this executive briefing.
We are here for ABC Banking Company. The code name is Kodiak.
This bank was founded in 1948,
and the bank has 23 retail branches across two states.
The bank's been unprofitable for several quarters,
and we've prepared a strategic plan for resolution.
The on-site team will be working through the weekend
so that insured depositors always have access to their funds.
We wanna make sure the bank opens up Monday morning at 8:30, just like normal.
So this is a bank that's failing,
so there's 60,000 people who have accounts at this bank,
the bank is going down, they don't know that you're here talking about…
They do not. Yep, we try to do our best to fly under the radar and
make sure that the financial system stays stable
and that depositors don't have any disruption.
So if a bank fails and you don't find the acquirer,
what, FDIC just ends up owning everything the bank owns?
That can happen, yes,
but sometimes we also can own things
that an acquiring bank doesn't want to own.
Really, like, what?
Well, back in the 80s, we had a minority share in the Dallas Cowboys,
-for a very short period of time. -[Adam] Wait, really?
Did you get free tickets or what? [laughs]
-Unfortunately, no. -That's a bummer.
Uh, we've had rights to a horror movie that starred,
uh, George Clooney and Charlie Sheen.
I think it was called Grizzlies II, and, uh, yeah.
So, how often does this happen?
Recently, it's been less and less because the economy has been doing very well,
but we did have a significant period of time,
-if anybody remembers back in 2008, where -Yeah.
we had hundreds of bank closings.
Wow! That must have been a very busy time for you in 2008.
[Maureen Sweeney] The important thing to know is the cost of bank resolution
is not born by the taxpayer.
We have a Deposit Insurance Fund, that's funded by banks
who pay premiums based on their risk profile.
I love it. Yeah, make the banks pay for it.
It's the… if-- It was their fault. [laughs]
So we're going to go over to a bank branch
and simulate the bank closing speech that
we give on Friday night after the bank closes.
Let's do that, please.
Alright, first off, I've been given this honorary pin to uh…
-to pin on you. -[Adam] What? Wow. [laughs]
-I'm… I'm an FDIC official. Incredible. -You're ready to go. You look nice.
Actually, you could do the part.
You know what? I feel cool.
[dramatic music plays]
[door clangs]
[laughs]
[Adam] Alright. Yeah, we are locked out.
[Tyler Caviness laughs ] Classic.
So I thought I would set the stage with you before we go in there.
You know, as the FDIC we don't like it when banks fail, we just, we're there
just in case it does happen. This is an emotional situation,
it's something that we need to work through.
I think about being professional. I think about being compassionate,
-Yeah. -and I think about being respectful.
Professional, compassionate, respectful.
-[Tyler Caviness] Excellent. -Let's do it.
[intriguing music plays]
Hello, can you please tell me where the bank president is?
[woman 2] Yes.
-Hello, are you Jerry? -[Jerry] I am.
Hi, nice to meet you. My name is Tyler Caviness, I'm with the FDIC.
Alright, so now is the moment where I would tell the bank president
who we are and why we're here.
-Oh, do I say that? -Go for it. Please do.
Okay. Uh… Sir, I hate to tell you this,
but we're here from the FDIC to… present a formal letter that the bank has failed.
Um, once the last customer has left for the day, if you could lock the door,
uh, and gather your employees so we can make the announcement.
-Okay. -[Adam whispers] Did I do it right?
-That was pretty good. Nor-- -[gasps]
[Tyler Caviness] It's all right.
Normally, we wouldn't say that the bank has failed.
-Aah! -We don't want to bring that up until
-right at the last minute. Once the state -I see.
actually closes the the bank.
Maybe he's thinking, "Maybe it's an announcement for my birthday."
-Yeah. -[Adam] Right?
No, he's-- there's a pretty good chance he knows why we're here.
Team, can we all gather up? We've got an announcement here this evening.
Hello everyone, my name is Tyler Caviness,
and I'm with the Federal Deposit Insurance Corporation.
It's nice to meet all of you. As you've heard from the state,
your bank has failed,
and the FDIC has stepped in to help handle the resolution.
The good news is the FDIC has entered into an agreement
with an assuming institution to acquire all the deposits
and virtually all of the assets of the institution.
The bank will reopen Monday morning
for business as usual, just under a new name.
There will be a lot of work to accomplish together,
and we are thankful for your cooperation.
And now, I would like to introduce you to the acquirer,
the acquiring bank. Thank you.
[somber music plays]
-How'd I do? -That was a pretty good job.
-Thank you. -Did it feel awkward or, uh, unusual?
It did feel a little awkward
cause normally when I'm speaking to a group of people,
they laugh at the end of a sentence, but in this case,
there are a lot of worried faces.
-Yeah. -What is that like for you?
You get used to knowing that we're there
to make sure that they understand exactly what's happened
and, um, to kind of walk them through it.
We've taken care of all of this on the backend so
that it's really a non-event.
That's what we-- That's what we strive to do.
A non-event. Like if I'm a customer of this bank,
and on Friday, Saturday, Sunday, my debit card's still working.
Sometime next week, I get an email or a letter saying,
"Hey, your bank has a new name," and I'm like, "Ehh who cares,
a form letter from my-- Whatever."
And my life just goes on.
I don't experience any disruption because you're there.
-Yeah. -Yeah. Amazing.
Thank you so much Tyler.
-Alright, have a good day. -Thank you, you too.
-[soft music plays] -[chuckles]
How incredible is this?
Like, I don't know about you,
I think this is one of the most effective government programs of all time.
The people at the FDIC have neutralized the threat of bank failures so thoroughly,
not only do they not hurt our money, we don't even hear about them anymore.
And if they didn't create that level of trust,
our economy would literally cease to function.
But hold on,
bank failures are just one bad thing that can happen to our money.
What is the federal government doing
to protect us from all the other financial disasters that threaten us?
You know, this show was supposed to come out a year ago.
But can you guess what world-altering event happened
a week after we opened our writers room?
No, I'm not talking about the release of Animal Crossing: New Horizons.
Though that did also stop me from working for over a year.
No, Covid-19 hit.
And like so many businesses across the country,
we were forced to shut down. It was a frightening time.
Millions of Americans were out of work, the stock market had plummeted,
and trillions of dollars disappeared from the economy
faster than Quibi disappeared from our phones.
Was a time when everyone from gig workers to CEO's
were looking to the government for help.
So what did they do?
[thunder rumbling]
They made it rain. Trillions of dollars in unemployment,
stimulus checks, small business loans, and corporate tax breaks.
This emergency infusion of cash did stabilize the economy,
but I found myself watching CNBC wondering,
"First of all, when do my Shark Tank reruns start? This shit is boring."
But more importantly, where is all this bailout money coming from,
and who's really benefitting? We the people or the Mark Cubans of the world?
Well, the answers to those questions may astonish you.
[intriguing music plays]
[crowd cheering]
Folks, my name is Penn Jillette, that's my partner Teller.
And you may feel stunned, confused, even bamboozled by government bailouts.
But they have not fooled us.
We're here to show you how the magic works.
Teller here will be playing the part of the government,
and these stacks of good-old American greenbacks,
they're the money flowing through the economy.
Happy people buying groceries, taking out bank loans
and betting it all on the ponies. But hold those horses.
When there's an economic crash, people get scared.
All that activity stops,
and trillions of dollars literally disappear from circulation.
Oh, panic, calamity, the wheels of finance grind to a halt.
No one's buying Frappuccinos
and Ford F-150s anymore.
To save capitalism, the government needs to inject cash
into the system to get the economy flowing again.
So we need a volunteer to fork some cash over.
Don't be stingy.
You can afford to see us so we know you're rolling in it.
Oh! Oh! Me! Me! Ha-hah, me, me, take my money.
Okay, Mr. Moneybags, since you're so loaded,
why don't you be the bank?
And Teller here, is the US Treasury.
Now Uncle Sam needs 2.2 trillion dollars
to stimulate the economy.
So he does what he does anytime he needs to spend money.
He borrows it, from investors, other countries, and from you, the bank.
-[crowd gasps] -Wow! That's quite a wad you got there.
You overcompensating for something?
No, don't answer that, don't answer that.
The government takes that borrowed money and spends it on unemployment,
bailouts and other stimulus to get the economy moving again.
In return, the bank gets a treasury bond,
which is just a fancy, bullshit way to say, "I owe you."
It is the same thing with other banks and companies going deeper into debt
than a college graduate.
Who else wants to loan Uncle Sam a couple 100 billion?
Why would everyone agree to this?
[Penn Jillette] Oh, they always do.
Companies and other countries are eager to loan our government money
because we're a super power.
The biggest, baddest motherfucker in the world!
And that makes us a uh… safe bet.
The US government's kinda like the Lannisters,
we always pay our debts,
and start a lot of needless wars.
[machine gun firing]
Okay, look, I know the government borrows all the time,
but in a crisis, we're borrowing so much all at once.
I mean two trillion in debt on top of what we usually spend?
Doesn't it seem crazy?
That's why we have one more trick up our sleeve
just in case the banks get nervous.
It's called, "The Fed." Now, if you remember, we gave all of you banks
a whole bunch of Treasury bonds as IOUs, right?
Why don't you, uh, check those out now?
What?!
Yeah. The government has repaid all your IOUs.
Now you can make home loans, invest in businesses
and give your executives some big fat bonuses.
But where did all this money come from?
Ah-hah. Well, it wouldn't be a Penn and Teller show
if we didn't reveal how the trick is done.
The government's Federal Reserve Bank
simply types a couple of numbers into a computer
and adds some zeros to the bank's balance.
[crowd cheers]
What? So they create money out of nothing?
That's right. The federal government literally
controls how much money there is, which gives it alone,
the power to bail the economy out in a crisis.
And it only works because the banks trust the government
to always pay back its debts.
Okay, that's amazing. But I--
No, no, no. That's all.
My name is Penn Jillette with partner, Teller, we're Penn & Teller.
Whoever the hell you are, get off our stage. Get off our stage!
Okay, hold up. Cool magic trick, but
what happens if you're not a bank?
Like yeah, the big billionaires on Wall Street
trust that the government has their backs in a crisis, but
can the average American trust the government to bail us out
when the cash hits the fan?
[woman 3] Hey, Adam.
Hey Sandra. Hi Claudia. Thank you so much for this.
-[Sandra] No problem. -[Adam] This is so lovely back here.
-[Claudia] Aww, thank you. -[Sandra] Thanks.
[Adam] So what is all this stuff?
[Sandra] So we had a daycare that we had to close. This is
the four of us. This is my dad is here and, obvi-- me, Claudia.
And then this is our brother when we opened the school.
-[Adam] The grand opening. -[Claudia] Yeah.
Kay, wait, I have a question though, cause I've always wondered this.
For a grand opening, where do you get the big scissors?
[Sandra and Claudia giggle]
Obviously, every business had a lot of trouble during COVID.
Tell me about what your story was.
[Sandra] So we had a capacity of 55 children, ages
six weeks to five years old.
Most of our parents were ER doctors,
or they work frontlines in the supermarket.
You know, we had children of essential workers.
You're like essential to the essential people.
-Yeah, exactly. -Exactly.
[Sandra] And so we were trying to figure out,
can our employees come back? Is it safe for us to come back?
And I had staff that didn't come back. I
had maybe four or five children come back.
-It was just messy. -[Adam] Wow!
So that sounds like that's a rough situation for you financially.
[Claudia] We were trying to make a plan, to try and make it through, and…
[Sandra] It was the anniversary of our mother's passing,
-which, it's already a dark day. -[Adam] Oh wow, yeah.
And my sister called me, she's like, "Look, I reran the numbers
and it-- We can't,"
you know, and we knew that it was affecting
not just us or my chil--
-our children losing care. -Our friends, yeah.
[Sandra] This is employees that are losing their income.
But there were a bunch of big bills signed.
-[Adam chuckles] Right? -Right.
And, like, a big part of that was the PPP loans
that were the paytech... paycheck protection loans
so that businesses like yourself,
-would not have to lay off employees. -Right!
-Were you able to get one of those loans? -[Sandra] We did, but it was
six thousand dollars,
-Okay. -and that is what we got.
-Period, that's it? -[Sandra] Yeah.
If you had six employees, that's not even a month of wages.
No, but the second and third PPP loans, we were denied.
-And that was-- I don't know. -[Adam] Why were you denied?
-[Claudia] They never said! Yeah. -Nope, they never said.
Why do you think that is?
Because we're just this teeny tiny little school run by two women,
-like, we're not shouting loud enough, so. -[Claudia] Yeah.
-That's really fucked up. -[Sandra] Yeah.
-Yes! I agree. -I think so too!
[Adam] So is there any way we could go see it?
-[Sandra] Yes, of course. -[Adam] Yeah?
[Sandra] I would love to stop by and see the little yellow house again.
Alright, this is the first time I've been back.
-Is it just over this wall? -[Sandra] I haven't been-- Yeah.
I don't have access to it actually.
You know, maybe production can help us out with a ladder or something?
Awesome. Thank you, Kendall.
-[somber music plays] -[Adam] Oh my gosh, this is so cute.
Aw, it looks so sad.
Normally, my kids would be out here playing, making a ruckus.
Just had to take everything or whatever I could take and go.
The community really needs a place like this
with someone who takes care of it as much and loves it as much as we do.
[Adam] Yeah. You're providing so much support to the community,
but then when the crisis comes,
and the government's putting up this big safety net for everybody,
it's like the holes are too big and you guys are too small,
-and you fall through. -Fell right through.
[Adam] If you could build a system
that would have supported you the way you needed,
what would it have looked like?
To me, it would just be somehow having a voice.
Or hav… having someone you can call.
-Having a teeny business administration -Yes, definitely.
-that is there to serve you. -Right.
A teeny business, I would say that!
Sandra, thank you so much for telling me your story. I can't thank you enough.
Thank you for having me and letting me share my teeny tiny business.
Yeah. Can I give you a hug?
-Of course! Thank you. -Thank you so much.
-Alright. -Alright. Bye.
[somber music plays]
Sandra's story makes me so angry, and she's not alone.
How many of you know a Sandra?
Hell, how many of you were a Sandra?
Waiting for a lifeline that just never came?
How is it possible that our government can make money rain down from the heavens,
yet if it fails time and again to make sure any ends up
in the hands of the people who need it the most.
Well, we looked into it and the answer isn't going to make you less angry.
See, in this country, we have two radically different systems
for distributing federal bailout money,
one for the rich, and one for everybody else.
Banks and large corporations have a direct, efficient line to government cash.
For them, it's kind of like flying first class.
Ugh, this recession is such a downer,
I need a ticket to Money Town right away.
Of course, how will you be paying?
I just issued these bonds.
Which as you know, is a fancy, bullshit way to say, "I owe you."
Very good, sir.
We at the Federal Reserve would love to buy these from you.
One ticket to Money Town.
And please enjoy our complimentary low-interest rosé.
We hope to bail you out again soon.
Ta.
But the rest of us can't issue bonds,
so we don't have access to that kind of help.
Instead, we're stuck in economy.
My restaurant has been really struggling since the shutdown.
Can I please have a ticket to Money Town?
I don't know, can you issue any bonds?
No, I…I… What is that?
I'm afraid you'll have to wait over there.
Actually, economy's too nice. It's more like flying standby on Christmas Eve.
The federal agency that distributed COVID-19 relief funds to small businesses
is called the Small Business Administration.
But they themselves are so small,
they had to outsource their job to the banks.
[dramatic music plays]
Next!
Please, I need to get to Money Town. I have a family and ten employees.
Oh, certainly, certainly. Just get in line, I'll be happy to help.
Just as soon as I get my cut.
That's real. During the SBA's COVID-19 loan program,
banks were actually allowed to make a percentage off of each loan,
and a loophole in the bill allowed even big businesses
like restaurant chains, to qualify.
Here's a loan for you, Mr. PF Chang, and one for you, Ruth's,
and for your friend, Chris.
Hope your little steakhouse empire survives.
What the hell?!
Oh, we just realized we could make more money
by giving a few big loans to big businesses
as opposed to many small loans to smaller businesses.
So that's what we're going with. Next!
And that might explain why in most large cities,
businesses in predominantly white areas
received loans at far higher rates than those in communities of color.
But you know, for all the attention that small businesses got during the pandemic,
you know who really got screwed? Individual workers.
Because their aid was doled out through the unemployment system,
and that's more like… the worst bus trip you've ever been on.
[indistinct chatter]
If you've ever been on Unemployment in America,
you don't need me to tell you it is fucked up.
It's a rickety, patchwork program that every state manages differently.
And many of them have underfunded their unemployment systems for years.
[woman 4] Okay dearies,
I don't have a ton of help back here today,
so it's just gonna be slow, I'm gonna have to get to you one at a time.
-Now, who was here first? -[indistinct chatter]
So when an unprecedented wave of joblessness hit in 2020,
the system didn't have nearly enough capacity
to process the tsunami of claims.
Oh, dagnabit! [groans]
They don't give me a pencil sharpener, so I've got to just whittle by hand.
That's why just filing for unemployment during the pandemic
was a bureaucratic nightmare.
Americans in need were kept on hold for hours
and forced to wait months before relief came.
While the biggest businesses in America were relaxing in first-class.
[man 2 yawns] I can't believe I'm tired, I slept so much on the plane.
[relaxing music plays]
You know, when COVID-19 shut us down,
my production company got a PPP loan just like Sandra,
but even though our work is definitely not as essential, Sandra takes care of kids.
I'm up here doing pen jokes.
We got more help more quickly than she did
just because we have a fancier accountant at a bigger bank.
I had more, so I got more.
That is facedown-ass-up-backwards.
But our entire system is rigged that way.
Is it any wonder that so many Americans have stopped trusting it?
Oh, uh, Lemonade Kid, what happened?
I'm getting out of the game old-timer. Never got my PPP loan
and, nobody wants to spend their stimulus on lemonade.
Guess I'll work for Amazon and get paid in gift cards.
Lemonade Kid, no.
Our financial system and our government depend on our trust.
If we don't trust that our money is safe in the bank,
if we don't trust that the government will have our backs in a crisis,
if we don't trust that this piece of ink and paper is actually worth a dollar,
it collapses.
And that's what we risk
when our government fails to live up to its promises.
It turns out that our economy and our government
is a lot like Tinkerbell.
If we don't believe in it, it drops dead.
[ominous music plays]
But it doesn't have to. [scoffs]
A better system is possible,
and our government can create one if it tries.
I mean, these are the same people who founded the FDIC,
who predict the paths of hurricanes…
[triumphant music plays]
…who sent a man to the Moon.
You know speaking of which…
[light-hearted music plays]