Hey, remember that MASSIVE financial crash ten years ago?

The first iPhone, the final Harry Potter book, Britney shaving her head, the start of the biggest global banking crisis the world has ever seen.

It’s an anniversary that you probably don’t think about much. But the fallout from the financial crisis and the impact it had on the global economy over the past 10 years has been pretty massive… and the big question left over after it all is to what extent banks have actually changed the way their work to make sure it doesn’t happen again.

So we decided to take a look at banks. Why they’re so powerful, what actually happened in 2007 and 2008, and what, if anything, has actually changed?

First up, the theory

There’s some pretty basic theory that underpins how banks work: Banking and the financial system is essentially just a resource to get money from people who have it, and want to put it away somewhere (savers), to people who need it (borrowers). When you put your money in a bank, it doesn’t just sit there.

The bank will lend it to someone else, charging them more in interest than you’ll earn on your savings – which is essentially how a bank makes its money. The financial system lets money from pension funds in Iowa be used by construction sites in Madrid.

But that basic theory leaves a lot out. Banks have a lot more power to control the amount of money in circulation than by the physical deposits people make in it.

Confused, and sick of reading? No probs - here’s a video that’ll clear it all up in three minutes:

Okay, so it looks like banking doesn’t work quite like the textbooks say. What are they getting wrong?

Laurie Santos is a professor at Yale. She’s convinced that we’re basically pulling the wool over our eyes in terms of how smart we think we are. Turns out, we’re not that smart. And sometimes we make stupid decisions. And sometimes, monkeys could make better ones, or at least equally bad ones. These are her actual words: “Like us, they’d evaluate their choices in terms of totally insignificant reference points. They paid too much attention to losses. And they overvalued the stuff they owned.”

The whole point in this, Santos argues, is to show that we need to put systems in place to help us understand where our irrational choices come from, and make the systems we use (like the banking system) “more irrational-user-friendly”.

Because last time we didn’t do that, we caused the biggest financial disaster of our lifetimes (so far at least, touch wood).

So what actually happened in 2007, other than Britney shaving her head?

In 2007, cracks started to appear in the global financial system. The long story short is that banks lent money to people who couldn’t afford it. To make the loan less of a risk for the person giving it out, they’d package it together with other less risky ones into things called “CDOs” and sell those off, ensuring the buyer that the riskier ones were totally safe because they were all wrapped up with really secure ones.

That didn’t work. In 2008, a huge investment bank called Lehman Brothers went bust. Governments ended up stepping in to bail other banks out to stop it happening to them too.

The full story of what happened is really complicated. Who exactly to blame is even more complicated. Some would say bankers shouldn’t have made loans people couldn’t afford. Bankers would say people shouldn’t have taken out loans they couldn’t afford. Economists would say governments should have set some rules to make sure banks weren’t allowed to give people loans they couldn’t afford. The Queen would say (it’s true, she did) economists should have seen all this coming.

What we do know is that the whole thing was chock a block with drama, greed, and tragedy… the perfect recipe for a Hollywood hit. Because no one actually wants to sit and read through every economist’s interpretation of events, we decided to do what we do best and take to Netflix instead, to see if movies can teach us anything about the crash.

And do you know what? They kind of can – fine, we still don’t fully understand the stuff about CDOs and bonds etc, but the films do help make sense of how people thought about money pre-2008 - how invincible banks thought they were, and how safe people thought their money would be with a bank.

So are bankers really evil, or just misunderstood?

Most people - and newspapers, and movies - blame the bankers for the crash. Michael Moore’s documentary ends with him covering the entire of Wall Street with crime scene tape. And if you’re a banker, you’re not gonna like what Urban Dictionary has to say about you.

And yet hundreds of thousands of people apply for banking jobs every year - not least because the salaries are pretty sweet. We might love to hate them, but a lot of us still want to be them.

But is it really what it looks like in the movies? We spoke to a bunch (anonymously) about their lifestyles, working hours, and what they wish people understood about finance. “People think we’re worse than scum,” one said. “But really I think it’s nothing more than envy...we’re not just sitting around plotting how to become rich.”

The financial crash & you

Although it might seem like a banker in a fancy office Wall Street has very little to do with your life, it’s not too many degrees of separation before their actions have an impact on the pay packets of everybody else.

We spoke to Alberto, who worked as a cleaner in a bank during the financial crisis. Originally, we wanted to find out what the industry looked like from someone who wasn’t sitting in the office chair. But we ended up talking about a much bigger question - how the financial crisis still affects cleaners’ working conditions, and probably a whole range of other jobs too, a decade later.

So why does all this matter? Well, banks are one of the main Big Economics Places that we all deal with pretty much every day. We’re using them constantly, whether it’s getting cash from an ATM, or buying something on card. But like Laurie Santos says, unless we try and understand them, and get the people who design them to be a little more accepting of how humans (and monkeys) think, things could all come crashing right back down… financial crisis movie marathon, anyone?