Too Small To Let Fail (Gwen Moritz Editor's Note)

We’ve had free HBO on Dish Network, so I recorded a bunch of movies, including “Too Big to Fail,” the 2011 dramatization of Andrew Ross Sorkin’s nonfiction book about the financial collapse of 2008. When I sat down to watch it, I realized that I had already seen it — William Hurt just a tad too human as Treasury Secretary Henry Paulson, Paul Giamatti dead-on as Federal Reserve Chairman Ben Bernanke. I watched it through again anyway because it seemed appropriate this month as we mark the fifth anniversaries of the collapse of Lehman Brothers, the bailout of AIG, TARP, etc.

In some ways the past five years have flown by, especially when I look at my suddenly grown kids. But economically speaking, the past five years have been very long and slow, and I can only imagine the misery of the millions who found themselves among the long-term unemployed or who lost their homes or who have been stuck with overpriced houses that they never should have bought in the first place.

Those of us who had time and nerve and diversified portfolios have seen our investments recover and even thrive, but my brother recently told me a sad story. His fishing buddy, approaching retirement age, was still grieving over the fact that the $100,000 he had in his 401(k) before the crash was worth less than $50,000. When my brother said it should have recovered by now, his friend explained that he had moved everything into cash when the market bottomed out and had left it there because he’s now scared of stocks. Yeah, putting average Americans in charge of their own retirement investing is going to work out just great.

A few weeks back, Little Rock attorney Bill Watt came by to tell me about a financial literacy program that he had helped put together for Little Rock Police Department recruits. Most of these recruits are in their 20s, and most have at least some college education, but 89 percent said they had never had any formal training in personal finance. (Arkansas now requires a semester of economics in high school, but this is only the fourth year of that requirement.)

The recruits who attended the training program were given a multiple-choice assessment, and in some areas they did reasonably well. They tend to know a lot about buying and insuring a car, for instance. When it came to borrowing money, they had mixed results: They understand that lenders share credit histories and that interest rates are lower on secured debt. But almost half thought a good reason to borrow was “when the interest on the loan is greater than the interest you get on your savings.” Sigh.

When it comes to saving and investing, a lot of these young adults just don’t know squat. The majority thought that either U.S. savings bonds or savings accounts were likely to have a higher return over an 18-year period than stocks. These young folks could easily end up in the same boat as my brother’s fishing buddy, choosing money markets for long-term investments because they just don’t know any better.


A big part of the training that Watt’s program is delivering to police recruits has to do with managing the outside income they fully expect to earn working as private security. The extra money can be the downfall of young officers, he said, because they count on that money to make payments on boats and motorcycles and other toys, never considering that they have to set aside a big chunk of it for income taxes.

Before they know it, these young officers are in a vicious cycle, having to work even more off-hours jobs to pay back taxes, current taxes and boat payments, leaving them with little time to enjoy their toys or their families.

I had never given that any thought, but when Bill Watt described it, I knew immediately that it had to be a very common story. How could it not be?


Five years ago this week, as the economy was melting down around us, my column in this space was called “The Ignorant American.” In it I wrote, “If I were a conspiracy theorist, I might conclude that keeping Americans financially ignorant was part of a plot.” Surely by now we’ve realized that it is important to at least try to keep the smallest of our economic units — the family — from failing.

Readers of Arkansas Business may cluck about the ignorance of my brother’s friend, but for all you know, he’s one of your employees. Are they all so much savvier? What are you doing to help them understand their options and make smarter, better choices? The kind of mind-expanding lessons that Bill Watt’s program is giving to police recruits would be valuable in almost any workplace.

Gwen Moritz is editor of Arkansas Business. Email her at