How the Banks Brought Us to Our Knees: Filmmakers Leslie and Andrew Cockburn Talk 'American Casino'
Leslie and Andrew Cockburn are no strangers to scandals. In fact, they’ve spent much of their professional lives exposing them, both in print and on the screen.
After working in NBC’s London news bureau, Leslie, who grew up in San Francisco and was among the first women to graduate from Yale, covered America’s Contra War in Nicaragua for CBS during the ’80s. Out of Control, her written account of the conflict and the arms-for-hostages controversy that followed, earned her the prestigious George Polk Award for excellence in journalism.
London-born Andrew, her longtime husband and collaborator on acclaimed PBS documentaries like 1991’s The War We Left Behind, an account of the harsh effect of economic sanctions on ordinary Iraqis after the Gulf War, is also a renowned journalist and author, most recently of Rumsfeld: His Rise, Fall and Catastrophic Legacy, a blistering assessment of the former secretary of defense’s troubled tenure.
Together, they began working on a new, feature-length documentary in January 2008, inspired – or, to be more precise, troubled – by the epidemic of subprime mortgage foreclosures and the accompanying economic collapse. The result is American Casino, a fascinating and infuriating exposé of the predatory lending schemes that spurred the financial crisis and caused millions to lose their homes while lawmakers and former Federal Reserve Chairman Alan Greenspan did nothing to discourage them.
The Cockburns recently visited San Francisco during their press tour to promote American Casino as it arrives in indie theaters across the nation. (It is currently playing at the Roxie Theater through Sept. 3; for tickets, click here.) While they remain hopeful that legislation will be introduced to break down the walls of protection that shield America's banks from legal accountability for the subprime scandal, they are less than satisfied with the type of change presently being touted in Washington.
On the subprime meltdown that provided the spark for American Casino:
AC: “The financial markets started to come apart in the summer of 2007, and at the same time these subprime foreclosures began sticking up. By January 2008, we thought this had the potential to be something huge. [Federal Reserve Chairman Ben] Bernanke was saying, ‘Everything’s OK, subprime can be contained,’ but the people on Wall Street were saying, ‘No, not at all.’”
LC: “What happened in the summer of 2007 was really shocking because you had two Bear Stearns hedge funds that went belly up – that was amazing. Plus, there was this huge drop in stock value, and what was behind that, according to the people who were involved, was that this [subprime] bubble was unsustainable. It was finally going to collapse. There were people who predicted it too soon – as early as 2005, there were some on Wall Street who said this couldn’t go on, but it went on for another couple years.”
On the Cockburns’ reaction to the lending scandal they discovered:
LC: “It was shocking that it was so blunt and so crass.”
AC: “At the same time banks were selling these bonds on the basis that housing was always going to go up and these were great investments, they set up this index so you could hedge – you could bet that it was all going to go south. That gave them the confidence, because they were hedged, to bet more the other way. You talk about a casino. That was shocking.”
LC: “Five major banks got together and set up an index so they could bet that people would default on their loans, that they’d be thrown out of their homes.”
On the devastating impact of the subprime scheme on American homeowners:
LC: “Look at the statistics right now – one in 12 people who have a mortgage is seriously delinquent. Last year it was one in 22, the year before it was one in 40. That’s incredible. I don’t think any of us is winning here.”
AC: “Actually, it’s one in eight now – 12 percent. When they sold people these subprime loans, there were even prepayment penalties. If you thought, ‘I have to get out of this,’ and you paid off your loan early, there was a penalty on that. It was so rigged. There was no way to win. If you really knew how to work the system, maybe if you were a real-estate professional, you could negotiate into a fixed rate or something more civilized, but cases like that are very few and far between.”
On the three Baltimore-based loan-scandal victims chosen to be the focus of American Casino:
LC: “We live in Washington, DC, which is close to Baltimore. There were several cities that ended up being completely ravaged by this situation, including Cleveland. We could’ve chosen another city, but if you’re making a documentary, you want to be somewhere you can go back to again and again, so we chose Baltimore. We went to a foreclosure auction there, and that’s where we met Denzel Mitchell, a very articulate high-school teacher who graciously took us into his home. So that was lucky.
“Too often, the borrowers get blamed for taking out bad loans, a point I think the film refutes very well. Just watching the news, when you see a victim, you automatically categorize them. You put them in a little box – you know, ‘They’re the victim, I’m separate from them.’ In American Casino, the idea was to introduce people for who they really are – an intelligent high-school teacher, a reverend and a smart Johns Hopkins therapist. They’re losing their homes, too.”
On the prospect of reform under the Obama administration:
AC: “Democrats were as much to blame for this situation as Republicans, and there hasn’t been much real progress yet. The banks still haven't gotten ridden of all that toxic waste on their balance sheets. In the end, they're going to have to nationalize the banks. Or the banks will just try to reconstitute the bubble. There’s not tremendous cause for optimism yet."