Every single registered voter in America should be duckwalked into a theater to see "Inside Job," the new documentary on what and who contributed to the collapse of our financial system.
It's one thing to have read articles and books outlining what people knew and when they knew it, but most of what we learned was piecemeal -- death by a thousand cuts. This movie packs it all into a two-hour blast, and the medium becomes the message. The story is compelling and easy to follow thanks to charts, graphs, visual tools and a narrative that reads like a novel.
Key participants -- household names by now -- are captured on screen as they sit there and incriminate themselves.
Truth is stranger than fiction. No combination of screenwriters and actors could have created a more compelling story of greed and hubris. We have more than 3,000 financial industry lobbyists in Washington, D.C., who have dispensed more than $5 billion in campaign contributions. There are more than five lobbyists for every congressperson. A stated objective of the Republican leadership is to roll back this year's attempts at financial regulation. That's not surprising to hear as they slosh around in that $5 billion like so many Scrooge McDucks.
Meanwhile, the Democrats have done nothing to seek convictions. Unlike the days of Enron and WorldCom, not one banking official has been indicted on a charge of criminal activities yet, and there have been plenty to go around. If securities-related
convictions and white collar crime is too difficult to prosecute, let's start with tax evasion. That's how we managed to finally put Al Capone away. The movie lays out plenty of these missed opportunities.
Floyd Norris, in an Oct. 30 New York Times column, talks about the extent to which the federal government is relatively useless when it comes to protecting the financial affairs of American citizens. We learned that New York Governor Elliot Spitzer sued Goldman Sachs while the SEC sat on their hands. Norris lays out the extent to which the 50 state attorneys general have stepped up to the plate to stop the banks from foreclosing on properties that they can't prove that they own.
It's clear to me that federal regulators are too close to that $5 billion in campaign contributions. Sitting inside the Beltway, their efforts to protect the public get subverted by powerful political pressure. The state attorneys general, on the other hand, are right there where the rubber hits to road. They know illegal activity when they see it, and they are reacting to the pain it causes in their communities.
Elizabeth Warren, the new consumer rights czar whom the banks are quickly growing to hate, is viewed as an attorney general's friend in Washington. While federal regulators have seen their role as one of protecting banks from consumers, Warren and the new Consumer Financial Protection Bureau have the firepower to turn the tables and enhance what is happening at the state level.
The newfound ammunition discovered may be enough to coerce the banks to do what they should have been doing all along -- modify these mortgages in most cases instead of foreclosing. What complicates the matter is that the banks have sold the mortgages so they no longer collect the interest. Instead, the mortgage has value to the banks because of servicing fees which are tied to the size of the mortgage. Foreclosure proceedings add an additional feeding trough of fee revenue, so banks are not inclined to modify anything.
The root cause of our financial trauma has been the failure of campaign finance reform. Movies like "Inside Job" help to shine a light on elected officials essentially on the take -- graft and corruption in other societies is simply called "lobbying" in this country.
If politicians choose to align themselves with an industry that has behaved in ways that are repugnant if not illegal, they should know that they can be duckwalked right out of office. Newly elected Gov. Jerry Brown just showed us that money doesn't buy everything when it comes to politics, so we can always hope.