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.
Click here to read the rest of Chris Wisniewski's review of American Casino.