Capitalism: A Love Story Page #10

Some of these loans

have legitimate uses,

when made to sophisticated

borrowers

with higher incomes.

l had done a number

of loans for him

in which he got discounts

and all the things

that go with being

a friend of Angelo's

and all the good stuff.

Moore:
The Senate Banking

and Housing Committee

is supposed to be the watchdog

of the mortgage industry.

Senator Dodd is the chairman

of this committee

and has served on it

for over 28 years.

As a friend of Angelo

he received

over $1 million worth

of discounted loans

from Countrywide.

Someone next door here

is selling a toxic

piece of crap

loan to somebody.

l was required to give the most

suitable loan to that VlP.

Moore:

Did you ever feel that

what you were doing

might be bribery?

Bob:
l didn't feel like l was

bribing anybody, no.

l was just doing my job.

l was the VlP guy.

Everyone in the company

knew who l was.

You know, everyone.

So it was kind of

a flattering situation.

But no, l don't feel like l did

anything wrong at all.

And if l didn't do it, somebody else

would have been doing it.

Moore:

That's why we need people like Bill Black,

one of the bank regulators

who uncovered

the Savings & Loan scandal

in the 1980s.

Something improper happened

and l bet you

the regulators know.

Moore:
One of the leading figures of

that scandal, Charles Keating,

had an idea on what to do

with Bill Black

and sent a memo out

with these instructions.

l asked him who was

looking out for us today.

Where was the FBl

in all of this?

The FBl began

publicly warning

in September 2004

that there was an epidemic

of mortgage fraud

perpetrated by the banks.

Epidemic was their word.

But when 9/11 hit,

the Bush administration

transferred

at least 500 white-collar

FBl specialists

out of dealing

with white-collar crime,

even though we were entering

during the entire

Bush administration

the greatest wave

of white-collar crime

in the nation's history,

in fact, in the world's history.

The FBl says that 80%/%

of the mortgage

fraud losses

are induced

by lender personnel.

Meaning what?

Meaning not the borrower

coming off the street trying

to defraud the savings and loan.

These are frauds led by whoever

controls the organization.

- Right.

- lt's typically the CEO in other words.

So did these CEOs

think they were gonna get away with it?

They have gotten

away with it.

Moore:

Yes, apparently they did.

And with the presidential

election just around the corner...

- Define rich.

- 5 million.

...the elites were worried that their crime

spree might come to an end.

After bilking trillions

from the American public

by repossessing their homes,

bankrupting them

when they got sick

and convincing them

to invest their earnings

and pensions in the casino

known as the stock market,

the rich decided to make

one last heist

and as their 30-year long

party came to an end,

take as much of the silverware

with them as they could.

But first they needed

a distraction.

And as they learned

after 9/11,

nothing works better

in the home of the brave

than some good old

fashioned fear.

And who better to wheel out

for one last scary performance

than Chicken Little himself?

Oscar voters,

for your consideration.

Good evening.

This is an extraordinary period

for America's economy.

The government's

top economic experts

warn that without immediate

action by Congress,

America could slip into

a financial panic

and a distressing scenario

would unfold.

More banks could fail,

including some in your community.

- ( thunder rumbling )

- The stock market would drop even more,

which would reduce the value

of your retirement account.

The value of your home

could plummet.

Foreclosures would

rise dramatically.

And if you own

a business or a farm,

you would find it harder

and more expensive to get credit.

More businesses

would close their doors

and millions of Americans

could lose their jobs.

- ( screams )

- Even if you have good credit history,

it would be more difficult for

you to get the loans you need

to buy a car or send

your children to college.

And ultimately our country

could experience

- a long and painful recession.

- ( people screaming )

Fellow citizens,

we must not let this happen.

Moore:
ln reality there was no

need for this speech,

because the mainstream media

had already drunk

the Kool-Aid.

Meltdown.

The American financial system

is rocked to its foundation.

The giant bank crumbles,

stocks plummet.

- Nightmare on Wall Street.

- AlG fights for its life.

- Blood on the floor.

- Armageddon.

A category-five test

of our financial levies.

What the f*** happened?

Have you ever seen

a dam fail?

lt starts with a little crack,

a little seepage.

Reporter:

With overwhelming support,

Congress struck down

the restrictions.

Big banking

is barreling back.

Black:

And it starts eroding

and it destroys all

the internal strength of the dam.

Reporter:

Poison from the housing mess

seeped deeper and deeper

into the banking system.

Black:

And soon the dam works against itself.

The weight of the dam

and the weight of the water

conspire against it.

Reporter:

lnvestors were dumping Bear shares

leading a huge selloff...

Reporter #2:

The stocks of Fannie Mae and Freddie Mac

were in freefall

this morning...

Black:

Then there's kind of a significant flow.

Reporter:
Wall Street's losing

streak stretched into its seventh day.

Black:
And then suddenly you've

got 60-70 foot sections.

A dam exploding.

Reporter:

Lehman Brothers, bankrupt.

Merrill Lynch,

sold in haste.

- Now AlG.

- Black:
Just crashing.

Reporter:

The market's year long slide

has brought down

some of the biggest blue chips.

Black:

The water starts rushing through.

Reporter:
This morning,

Washington Mutual has gone under,

the largest failure

in US banking history.

Reporter #2:

Stocks fell off a cliff.

The largest single point drop in history.

Black:

lt destroys the rest of the dam.

And the whole failure

looks like it only takes

two minutes.

But of course,

it's that little hole

that's been there

for several years

that really destroyed it.

You have this fundamentally

unsound system

built on

a foundation of sand

instead of bedrock.

And it was rotted

from the core.

lt seems like capitalism

is just collapsing on itself.

Who got rich here?

Lots of people got rich

during this time,

primarily the officers

and directors

of the large banks

and savings and loans

and the specialty

non-prime lenders.

These people became

unbelievably rich.

And members of Congress got rich,

especially once

they left Congress.

A number of them go and work

in the financial institutions.

Sure, and as do

Rubin and Summers.

Moore:

Robert Rubin, a one-time top executive

at both Citigroup

and Goldman Sachs

champion a change in the law

that allowed commercial banks

to get into new areas

like investment banking

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