Exaggerating is in the eye of the beholder. If you are out of work, and being classified as permanently unemployed as in the "New Normal," or if you are a member of one of the 14 million families losing their homes, you might think I was understating the extent of the crisis and its impact on the lives of so many Americans.
In my film, and the companion book, The Crime Of Our Time (Plunderthecrimeofourtime.com) I argue, along with Senator Ted Kauffman and former bank regulator Bill Black, that fraud and crime are at the foundation of the crisis. The reason the media doesn't see it is the same reason they miss so much: a lack of context, background, and analysis.
When they think of fraud, they only reference securities laws designed to protect investors and which demand that intent be shown when buyers are misled. But this crisis goes deeper: it involves three industries working together--finance, real estate and insurance --as a collaborative cartel and real axis of evil. They pedal mortgages designed to fail (the FBI says mortgage fraud is pervasive), securitizing those mortgages as asset-backed financial products and selling them at inflated values to banks and financial institutions with bogus ratings and then insuring and leveraging the whole witches' brew. This combo of collusion was widespread, involved major institutions and cost us TRILLIONS of dollars. That's why I call it the Crime of Our Time. To understand it, you have to dig deeper as I have tried to do.
It was not just a case of being being bought off but of buying into an ideology. Financial News became a profit center within the media attracting institutional ads, etc. even as the audience was relatively small. Yet it had an influence deifying the CEO elite and glorifying greed. Remember: media outlets did not expose Madoff; he turned himself in.
Good point. In this film, you connect the dots between activities that weren't seen as parts of an overall scheme. We'll get to that, I hope, a little later. Homeowners who took advantage of great but unrealistic mortgage offers were not evil; they didn't understand what they were getting themselves in for. You point out that this was not an accident - they were often duped by loan officers whose job it was to sign up as many borrowers as possible.
Finances are not my long suit, and this is pretty complicated. Can you take some time to deconstruct this whole mess for me, Danny? Begin, please, by explaining why the poor and minorities seemed to be particular targets by lenders. Weren't they perceived as poor risks? Why pursue them rather than the well-heeled?
Well I have taken time in a feature length documentary and 200 plus page companion book where your readers can find more detail.
We have known for years that the poor pay more, living in under-served and run-down neighborhoods. Of course, many leapt at a chance to get out of them, to move to better areas with better schools, etc. For years, the banks engaged in a predatory and a blatantly racially discriminatory practice called REDLINING, where they drew red lines around certain areas and refused to lend, no matter who you were, a business person or a welfare recipient. This practice helped ghettoize urban America.
The film talks about financialization. What is it and how is it different from capitalism?
Capitalism was about the business of providing goods and services, making money by making and selling thinks we produced. It has changed into a system that increasingly makes money from money as the financial sector grows in importance and centrality. That's why we speak of financialization. The banking sector was once 6% of the economy; now, and the numbers vary, depending on which figures you believe, it is as high as 60%. Production has been replaced by consumption as the driver, with debt a prime means of financing the system and ensnaring consumers into various traps. Not good.
Where did this predatory system come from?
It came from greed. It came from globalization, which allowed companies to outsource jobs to low-wage countries. It came from a dismantling of regulations. It came from an intentional re-engineering of the economy. It came from" well, never mind. Where did it go? Right into the mess we are caught up in.
Why is it so hard for us outsiders to understand what Wall Street has done to the American public and the global economy?
We don't teach financial literacy in our schools. Money is a mystery for most Americans. Most of us think that when you put money in a bank, it sits in a safe until you take some out. That's not the way it works. Our media is also at fault because it is increasingly reliant on advertising from the finance sector--hence, all those ads by lenders, credit card companies and the like. The big-shot elite journalists are, for the most part, boosters of the system, uncritical and compromised. When I worked at ABC News, we had a phrase called MEGO standing for "My Eyes Glaze Over," referring to audience tune-out when complicated issues are introduced. I have had some exposure to these issues in college - at Cornell's Labor Relations School and later, at the London School of Economics, where economics was treated as the "dismal science." I learned more in my working class family and its labor struggles.
What about the ubiquitous lobbyists? What's their role been in this fiasco?
At the end of the l980s, back in the last century, smile, 1500 bankers went to jail for various frauds connected to the S&L crisis. The industry set out to make sure that that would never happen again, mounting a major political push using lobbying and financial contributions to deregulate and decriminalize the environment. They also worked to limit enforcement activity and dismantle agencies and laws - like the Glass Stegal Act, that separated investment banking from regular banking and allowed the growth of behemoth banks. All of this was done, of course, in the name of "modernization" and "innovation." Of course!
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