'American Casino': How Our Nation's Financial Sector Became a Massive and Unregulated Gambling Operation

By Joshua Holland, AlterNet. Posted September 5, 2009.

American Casino movie trailer from Leslie and Andrew Cockburn on Vimeo.

The producers of the new documentary, American Casino, don't tell you about the causes of the economic meltdown that's caused so much pain around the world.

They don't tell you how Wall Street, having lobbied furiously to free itself from public-interest regulation, created a furious demand for mortgage-backed junk, which they had laundered into supposedly solid investments with an assist from friendly -- read "bought off" -- ratings agencies. They don't discuss how unscrupulous lenders hawked an array of gimmicky mortgage products to people who weren't qualified to take them out in order to skim off a fat stream of fees.

They let those who lived it tell the story -- from the "creative" financiers who built the house of cards, to the brokers who pushed their products, and finally, to the people living on "Main Street" USA, whose dreams of homeownership were effectively turned into weapons of mass destruction and detonated in the centers of the global economy.

And by opting to not tell a story -- by leaving behind the narrator's voice that's so common to the documentary form -- the story that gets told is incredibly powerful.

AlterNet recently caught up with producers Andrew and Leslie Cockburn to discuss how our nation's financial sector became a massive and unregulated gambling operation and how its ultimate return to reality is causing so many such pain.

Joshua Holland: First, I want to know what inspired the film in terms of your understanding of what was lacking in the mainstream coverage of the housing meltdown? I mean, something made you decide to go out and make this documentary.

Leslie Cockburn: Well, we started shooting this documentary in January 2008. So there wasn't a lot of coverage of the crisis, so to speak. There was some coverage over here of foreclosures going on in different states, and a little coverage of the kind of problems that had been happening on Wall Street, starting with a little crash that happened in August of 2007. And then the market was going up and down -- in these wild swings.

And what struck us was, we looked at it and decided that it was not a crisis that was going to be over in three months or four months, but that it was going to be severe.

We made a judgment about that and decided to kind of just jump into a film. We'd been looking at some very sort of obscure stuff like bond insurers, who were re-insuring with companies that were broke.

There were signs that there was no money backing up a lot of what was going on on Wall Street. There was enormous amounts of leverage that were borrowed. You know, just incredible amounts of leverage in these investment banks. So we decided that it could be a very serious collapse, and that's why we did it.

JH: So you did this when ... I guess there were people like Robert Shiller, Karl Case and Dean Baker and a few others saying that this was a very serious collapse, but a lot of economists were writing books and monographs about why the housing market would continue to rise.

Andrew Cockburn: Well, that's right. I mean, Ben Bernanke was saying the subprime problem could be contained. That was the mantra that the people who were long on the market were telling each other.

You know, we also were talking to people on Wall Street, smart people -- of which there are not a lot -- who were thinking and actually talking in rather apocalyptic terms. So that was one of the things that influenced us.

JH: Now you call the film American Casino, and it starts where the crisis begins -- with then-Sen. Phil Gramm, R-Texas, leading the charge for financial deregulation. Tell me about this idea of the American casino, of Wall Street being a gambling emporium as much as a staid haven for the investor class. We use that term a lot figuratively, but what you're saying is it's quite literal.

AC: It is. I mean, it really struck us when we started frequenting Wall Street financial houses, how people talk routinely -- and not with any apparent irony -- about bets. You know, about the fact that Morgan Stanley had bet on this and the Citadel Hedge Fund had bet on that, or their bet had gone wrong. And the more we understood, the more we realized that much of it is a bet.

And I'll give you a literal example, which is the Commodity Futures Modernization Act of December 2000 that you referred to. It involved the legalization, basically, of credit default swaps. Which are a form of gambling.

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Joshua Holland is an editor and senior writer at AlterNet.