By Ron Wilkinson
The cerebral side of the Great American Mortgage Meltdown. A classic documentary.
This is the best film to date documenting the great economic meltdown of the last part of the first decade of the new millennium. The parting gift of the Bush administration, the economic crash hurt a lot of people but it actually helped quite a few as well.
In fact it represented quite a distinct shift in wealth from the poor to the rich---a Bushian anti-Robin Hood closing act. The word went out that the bubble was going to burst and it was the last chance to bilk America. And bilk America they did.
It took some time to sort all this out. The basics were known a couple years ago. Sub-prime mortgages failed, investment fund portfolios failed and many people lost their retirement money. The housing bubble caused something akin to mass hysteria.
It appeared as though everybody believed housing prices would go up forever. Therefore, there was little risk it arranging mortgages for people who did not fit the usual qualification guidelines.
This is the real crime of the century because the fact is that many people knew it was too good to be true. They knew that statistics never lie. Many people would default.
In spite of arranging doomed mortgages, brokers went ahead with the plan. The key, to them, was that they received their commissions up front and there was no penalty to them when the borrowers defaulted.
On another front, savvy investors also realized that the housing bubble was too good to be true and when it popped it would take a lot of borrowers with it.
These financiers bought credit default swaps, essentially buying insurance, lots of it, against wide scale mortgage defaults. The fantastical part of that operation is that they were allowed to buy insurance on mortgages in which they had no stake.
The analogous procedure is buying fire insurance on the house next door. In retrospect, simply to allow such a thing is outrageous. When the default market exploded, the holders of such insurance policies collected billions through the insurance they had on mortgages they wanted to fail.
They had everything to gain and nothing to lose. Hence the failure of AIG and the subsequent bailout of the insurance giant with, you guessed it, your taxpayer dollars.
Put both of these together and what do you have? Taxpayers and mortgage holders lose, but many banks and investment firms win.
The investment bank Goldman Sachs is reported to have sold the flawed portfolios while cornering many of the default swaps as well. Those taped hearing are a part of the film and a sight to behold. But nobody is behind bars yet.
Michael Moore took the first shot at the investment market failure and subsequent worldwide recession in his “Capitalism: A Love Story” in 2009. But that film was the morning-after tabloid version of the whole story.
This film comes closer to being the whole story. It has the math, the graphs and charts and the considered opinions of people who have devoted their lives to what was once the respectable world of investment banking.
Charles Ferguson had to pull out all the stops to best his own 2008 Oscar nominated documentary block-buster “No End in Sight” but he may have done it with this cerebral and scintillating dissection of the free market gone awry.
Co-writer Chad Beck reunites with Ferguson after their collaboration in “No End.” Beck was also on the editorial team for indie cult knockouts “Half Nelson” and “Palindromes.” This is the best film yet by this team. We can only hope there are more to come.
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Documentary
Directed by: Charles Ferguson
Written by: Chad Beck and Adam Bolt
Narrated by Matt Damon
2010 New York Film Festival, screened September 29, 2010
MPAA: Rated PG-13 for some drug and sex-related material
Runtime: 120 minutes
Country: USA
Language: English
Color: Color
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