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"And the Envelope, Please …"
Andrew and Leslie Cockburn have produced the best movie of the year. American Casino tells the story of the financial crisis, which started with the meltdown in subprime lending and ended up triggering the deepest slump since the Great Depression. The Cockburns skillfully uncover the truth behind the headlines, shining a light on the negligent regulators, the colluding Fed, the unscrupulous ratings agencies, the mercenary banks, the venal mortgage lenders, and the long daisy-chain of opportunists and fraudsters who gorged themselves on the spoils from the biggest swindle in history. This is this generation’s big story and it is warmly conveyed by master narrators, Andrew and Leslie. Expect to see them both on Oscar night.
The movie begins in downtown Manhattan, the camera shifting lazily from one sharply silhouetted skyscraper to the next. This is Wall Street, the epicenter of the financial universe. With the edgy murmur of jazz in the background, the Cockburns fix their lens on Senator Phil Gramm and Fed chairman Alan Greenspan, the two policymakers who, more than anyone else, laid the groundwork for the impending market blowup. In testimony before a congressional committee, "Maestro" Greenspan reluctantly admits that he discovered a "flaw" in his theory of how markets work. The film contrasts Greenspan’s fumbling defense with sweeping visuals of the endless rows of boarded up homes in downtown Baltimore where the foreclosure epidemic has turned large parts of the city into a ghost-town. This is the Greenspan/Gramm legacy, the triumph of deregulation.
American Casino explains the most complex aspects of the financial collapse in terms that anyone can understand. The movie is an informal tutorial on Wall Street’s "innovations", including a brief rundown on collateralized debt obligations (CDOs), mortgage-backed securities (MBSs) and credit default swaps (CDSs). These are the notorious debt-instruments which clogged the credit markets and sent stocks into a tailspin. The Cockburns also interview a number of people who played bit-parts in the market crash. Here we see the shame of a ratings agency executive who caved in to the investment banks and gave them the triple A ratings they wanted, but didn’t deserve. There’s also a brief segment with a mortgage lender who routinely filed false income statements which allowed unqualified loan applicants to be approved. Then there’s a moment with a financial technician who loaded B-rated junk into CDOs that were sold to gullible Korean investors. One of the things that’s so disturbing about American Casino, is that it shows how normal, moral people eagerly participated in a profit-skimming operation that was based on repackaging dodgy loans and selling them to credulous investors. They knew what they were doing was wrong, but did it anyway.
American Casino transitions effortlessly from Wall Street to intercity Baltimore, and then onto the abandoned housing developments in California’s Central Valley. Here, we see the true cost of deregulation measured in terms of the lives it has ruined. The Cockburn’s allow a few articulate African Americans, who were entangled in predatory lending scams, to relay the story of an entire Baltimore community. Not surprisingly, these mortgage ripoffs were engineered by some of the most highly respected banks in the country. Wells Fargo is one name that pops up repeatedly. African Americans were four times more likely to be given subprime loans even though the vast majority of applicants met the standards for conventional mortgages. To their credit, the Cockburn’s stand alone in showing the role that racial discrimination played in the housing crisis. This is clearly the civil rights issue of our time.
American Casino is not your typical dispassionate documentary. The Cockburns’ sympathies are never in doubt as they stitch together a number of gut-wrenching stories which help to illustrate how the trading of financial exotica in an "anything goes" market, ended up destroying the lives of millions of ordinary working Americans. This is what separates the movie from the desensitized version of events we read in the mainstream press. It’s not enough to understand where the swindle originated or how it was carried off. It’s imperative that we see the faces of the victims and hear their stories first-hand. These are the people whose lives will be forever marred by the reckless, high-stakes gambling of Wall Street speculators and rapacious bankers.
American Casino deserves a special spot in the video library right next to Frank Capra’s classics "Meet John Doe" and "Mr. Smith Goes to Washington". A couple Oscars would be useful bookends.
MIKE WHITNEY lives in Washington dtate. He can be reached at firstname.lastname@example.org