American meltdown mortgage crisis, the movie
For many people, one of the confounding things about the financial crisis has been trying to grasp exactly what happened on Wall Street — and how things could have gotten so out of hand. The financial press, in many ways, hasn’t been of much help here, throwing around terms like C.D.O.s and credit default swaps without ever putting all the pieces together and breaking down in plain English what really went on.
That’s why a new documentary “American Casino,” by famous filmmakers Andrew and Leslie Cockburn, is already getting attention. In it, a former banker from Bear Stearns, is filmed, with his identity concealed, elaborating on Wall Street’s role in packaging and selling subprime loans, and admitting that the financial world knew the whole thing was a big scam all along.
But think about that for a moment. The former banker insisted on being filmed in shadow, to feel free enough to talk about Wall Street’s role in the crisis. How telling is that? It’s reminiscent of a mob expose or a government corruption news feature. Even though none of this was technically illegal, even the arrogant high-finance players at the heart of the crisis know better. On Wall Street, apparently, you have to hide in anonymity to tell the truth about the mortgage market meltdown.
Here’s David Denby in The New Yorker, describing the former banker’s turn on the screen:
We might be watching a retired criminal or spy, a man both proud of his dexterity and ashamed of the disaster that it led to. Out of the shadows, he explains how such bizarre instruments as collateralized debt obligations (C.D.O.s) quieted the normal skepticism of investors. Here’s the drill: when the bank assembled a group of mortgage-backed bonds as an investment product, it submitted them to a ratings agency. But the agency, rather than run its own computer models on the trustworthiness of such bonds, he says, merely handed the job back to the bank, which ran its models. Having received a fee of perhaps a hundred thousand dollars for not doing anything, the agency then signed off on the phony ratings. You can read about a scam like that in a newspaper and be surprised, but when the perpetrator actually explains it to you your reaction falls somewhere between nausea and hilarity. It’s as if the Russian Mafia had paid a Colombian drug cartel to certify its integrity.
At the Wall Street Journal’s Speakeasy blog, the Cockburns were asked whether they thought any of the financial executives they talked to for the film were contrite.
I think that when some of them came to the film, they were very thoughtful about the link between what they were doing and what was actually happening. It’s a very enclosed world on Wall Street. As one of the execs says, if we’d all gotten in a car and seen for ourselves what was going on Florida, or California, or wherever, we might have viewed things differently.
That’s an especially interesting comment, given that the aftermath of the foreclosure crisis in some cities is shaping up to be as bad, or worse, than the foreclosures themselves, with trashed and vandalized bank-owned foreclosures piling up. Now would be a good time for Wall Street to take a road trip into the rest of the country. And policymakers in Washington should probably go along.
Got a tip? Freelance story pitch? Send us an e-mail. Follow The Colorado Independent on Twitter. And we’re hiring.
Like this story? Steal it! Feel free to republish it in part or in full, just please give credit to The Colorado Independent and add a link to the original.
News Literacy Project event: Concerned about online misinformation? The lack of news literacy? You can make a difference by participating in this free workshop! After […]Read More
The Home Front: Trump administration would allow drilling in Colorado ‘next to some of the nation’s most pristine wilderness and headwaters’
“From a small plane circling over secluded grassy meadows and Sangre de Cristo Mountain spires, politicians and conservationists on Friday will see the stakes as […]Read More