Ellen Gray: 'Breaking the Bank' tracks big merger

FRONTLINE: BREAKING THE BANK

9 tonight, Channel 12.

TOM WOLFE dubbed them "Masters of the Universe," and unless you're one of them, it's hard not to feel at least a glimmer of satisfaction in seeing Wall Street hot shots humbled.

If only they hadn't taken so many down with them.

Tonight, PBS' "Frontline" follows up "Inside the Meltdown" and "The Madoff Affair" with its season finale, "Breaking the Bank," in which Michael Kirk - who also produced "Meltdown" - looks at the events surrounding the merger of Bank of America and Merrill Lynch.

Remarkable for its interviews with the principals - Bank of America CEO Ken Lewis and former Merrill CEO John Thain - "Breaking the Bank" takes viewers behind the scenes for the fall of Lehman Brothers and the subsequent decision by then-Treasury Secretary Henry Paulson to launch a massive government intervention.

Assorted other talking heads include more than a half-dozen writers from either the New York Times or Wall Street Journal (not counting Nobel Prize winner Paul Krugman, who also weighs in).

Interview by interview, Kirk shows how a Republican White House and a Democratic Congress in a few short days forged a relationship with the financial system few ever expected to see.

"We nationalized the banks in the U.S. on that day," declares Simon Johnson, former chief economist of the International Monetary Fund.

"The government got a lot of say in how they're run, a lot of constraints, a lot of responsibilities, a lot of downside risk was taken on that day."

You don't have to be a policy wonk or a banking expert to appreciate the drama in "Breaking the Bank," where Bank of America's Lewis, for instance, recalls being summoned by Paulson to a meeting in Washington, D.C., where he found other representatives of the nation's largest banks assembled.

Told to sit toward the end of the table, he wondered what it meant. "And then it hit me obviously, that was in alphabetical order," he says. "How else would you do it?"

Grown-ups, of course, faced with a crisis of epic proportions, might not worry so much about the seating plan, but then grown-ups might not have attempted the bonus grab Thain did even as it was becoming clear that his bank's losses were big enough to threaten the whole deal.

"Breaking the Bank" paints Paulson's plan as an offer neither Lewis nor his fellow bankers could refuse, with the pressure kept on Bank of America to go through with the Merrill merger even after the latter's losses became clear.

It also suggests that the previously well-regarded Thain, was, as CNBC's Maria Bartiromo puts it, "thrown under the bus" with reports about the $4 billion in company bonuses and his $1.2 million office redo meant to take the heat off Lewis.

With the Obama administration applying pressure to all the banks regarding hot-button issues like compensation, "the party's over," insists Elizabeth Warren, the Harvard Law professor who heads the congressional panel overseeing the banks' bailout.

"The financial institutions are down for the count. This is one of those pivot points in American history. That old economy, that old way of looking at things, that old way of putting on a party, it's over," she concludes. For now, maybe.

But with Thain and Lewis still casting themselves to some extent as victims, and banks eager to pay back the feds and free themselves of restrictions, nothing in "Breaking the Bank" convinced me it couldn't start up all over again. *

Send e-mail to graye@phillynews.com.