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Loan Rangers
By Chris Wisniewski

American Casino
Directed by Leslie Cockburn, U.S., Argot Pictures

By the end of 2008—a few months after the American economy went into free fall—an explanation had already crystallized regarding the causes of the financial crisis, one that laid the blame at the feet of bankers who constructed elaborate, unregulated mechanisms for securing profits through the repackaging of subprime mortgages. In Leslie Cockburn’s American Casino, a former mortgage bond salesman makes a familiar argument when he asserts that the country’s drive towards fiscal suicide was fueled by “greed.” American Casino describes some of the practices that precipitated the boom and the subsequent collapse of the financial services industry in some detail, but in doing so, it really just reproduces an already accepted master narrative about greedy people doing very bad things. The movie opens with a title card suggesting that American taxpayers deserve an explanation for why they have spent trillions of dollars bailing out Wall Street; American Casino offers no new answers. It doesn’t tell you anything you don’t already think you know. It simply affirms a hastily made consensus that doesn’t fully explain the crisis or trace it back to its origins.

Leslie Cockburn, who worked for many years producing and reporting for Frontline and who cowrote American Casino with her journalist husband Andrew Cockburn, has studiously assembled a group of insider talking heads, among them an anonymous former investment banker at Bear Stearns and a former executive at the ratings agency Standard and Poor's, to trace the subprime crisis from its origins to the bust. They explain how subprime mortgages were packaged into “tranched” mortgage-backed securities (investments that were divided into pools or “tranches,” each with a different level of risk and a correspondingly different return on investment) that were then sold to investors, mitigating the risk to the loan originators. They also emphasize the central role played by the ratings agencies, which assigned AAA ratings to tranches of these mortgage-backed securities that included risky subprime loans. The AAA ratings made them more attractive to investors, and in this "conspiracy theory" version of the story, gave banks (who paid the ratings agencies to issue their ratings) a cover under which they could push their risk out to the larger economy while they made money hand over fist, laughing all the way to the, uh, bank. It’s complex stuff, elaborated in about 30 or 40 minutes of monologues while some moody Moby music plays in the background.

Still, the truth is complicated. Why didn’t the ratings agencies have better models to use when assessing the risk of default on the subprime loans? Why did individual investors and banks buy into the AAA-graded tranches of the mortgage backed securities if it was so apparent that the ratings were bad and the agencies making them were beholden to the investment banks issuing the securities? And most importantly: if banks knew the subprime mortgages were risky, why did they invest so heavily in mortgage-backed securities themselves? American Casino's credits roll over the facades of failed banks, institutions like Lehman Brothers and Washington Mutual that, as one talking head notes, basically shot themselves in both feet. The movie implies that the banks knew the risks these mortgages carried and knew that mortgage-backed securities were a house of cards waiting to fall, but if they saw it coming, why didn't they do something to avert their own demise?

It may be asking too much of a film like American Casino to demand a deeper level of research and analysis than what it provides—professional economists are still grappling with these questions themselves—but the movie leaves out crucial pieces of the puzzle. At one point, a civil rights lawyer suggests that the targeting of non-white borrowers by subprime lenders was basically a form of covert racism; he labels it "the civil rights issue" of the decade. There's a disturbing truth in this, but it requires some context. Cockburn intercuts this interview with footage from a 2002 speech by President Bush in which he sets a target for increased levels of minority home ownership. The implication is that Bush was somehow complicit in facilitating racially targeted predatory lending. For at least three decades, though, the American government has had policies in place encouraging increased rates of home ownership amongst low-income (largely minority) populations, and the Clinton administration, believing that higher ownership rates would produce safer, better neighborhoods, strengthened these policies by directing HUD to issue explicit quotas for Fannie and Freddie. This led to the first spate of subprime lending, and eventually to the securitization of subprime loans. Though it seems eager to assign blame, American Casino doesn't tell that part of the story. Of course, a thorough examination of the system-wide causes of the crisis would demand more than a 90-minute movie, and the film does, at least, cover a great deal of ground efficiently.

Though American Casino begins with its evisceration of Wall Street, the Cockburns are equally concerned with the human side of the housing bubble. So they also take their movie to Main Street and, specifically, the city of Baltimore, where three people (a teacher, a minister, and a therapist) share their subprime mortgage horror stories, scored distractingly to hip hop songs literally about subprime loans performed by local artists. Cockburn's appealing, sympathetic characters—honest, good-hearted people in danger of losing their homes—put a face on the predatory lending practices that helped to precipitate the crisis. Unfortunately, after the brisk, information-heavy opening of the film, these sequences drag a bit (the shift from 30-second descriptions of the tranching process to casual tours of a backyard garden feels abrupt). Because of the focus on Baltimore, these sequences are also necessarily circumscribed. They're affecting, but they reveal only a small piece of the impact of the housing bubble, which affected diverse communities across the country in different ways (anyone interested in that subject should seek out Alyssa Katz's essential new book Our Lot).

In its closing minutes, American Casino does eventually make its way to California. A CEO of a foreclosure-tracking company drives along a road, pointing out a seemingly endless string of homes that have been foreclosed on by the banks, though the stories behind those foreclosures remain untold. Afterwards, Cockburn heads to Riverside, where abandoned homes have become meth labs, and festering swimming pools serve as breeding grounds for disease-carrying mosquitos. I don't doubt the veracity of the information presented here, but the film's inflammatory climax feels less like an examination of the subprime bubble and its consequences than a deliberate attempt at provocation: blame the greedy bankers for . . . West Nile virus? The final movement of American Casino distracts from the movie's most essential and undeniable observation: subprime lending, and the financial crisis it caused, cost people their jobs, their savings, and their homes. Isn't that enough?