Deciphering the Mortgage Crisis: Five DVDs

By Lawrence R. Maxted, Gannon University Library, Erie, PA Below are five new documentaries that further explain the mortgage crisis, inform about how finance works, and shed light on our spiraling national debt.

Lawrence R. Maxted -- Library Journal, 6/18/2009

First, low U.S. interest rates combined with favorable government policies made home ownership available to more Americans. Then Wall Street figured out how to combine thousands of individual mortgages into attractive investment instruments that found a ready but uninformed market. With an abundance of cash to invest and mortgage securitization transferring risk from loan originators to investors, the climate was ripe for the financial industry to ignore time-honored lending standards. The whole housing and mortgage bubble rested on the premise that home prices could only rise. When home prices began to decline in 2006–07, the bubble burst, and the contagion of investor fear froze world financial markets.

The Ascent of Money: Boom and Bust. color. 2 hrs. Niall Ferguson, Chimerica Media Ltd. & WNET.org, dist. by PBS Home Video, 800-531-4727; shoppbs.org/education. 2009. DVD ISBN 978-0-7936-7051-2. $24.99. Closed-captioned. ECON
Harvard economic historian Ferguson’s The Ascent of Money offers a general history of finance but focuses on how financial innovation led to the subprime debacle. Ferguson illuminates the origins of financial instruments like stocks, bonds, and derivatives and shows how a wash of foreign currency, low U.S. interest rates, and Americans’ penchant for home ownership set the stage for the American housing bubble. The production is fast paced and sumptuously filmed in places as diverse as London, China, and Memphis. Ferguson, with his Scottish brogue, is erudite, personable, and insightful as he lays out the lynchpins of finance. The program is based on Ferguson’s book of the same name (Penguin Pr., 2008) and a six-part, 300-minute version of the film distributed by BBC Worldwide ($1,019.70). The bargain PBS version is superbly entertaining and will greatly inform viewers as to the beginnings of our modern financial system and how that system led to the subprime mess. Enthusiastically recommended for all viewers. Ferguson rocks!

House of Cards. color. 2 hrs. James Jacoby, CNBC, dist. by CNBC, www.nbcuniversalstore.com. 2009. DVD $19.99.
We All Fall Down: The American Mortgage Crisis. color. 66 min. Gary Gasgarth in assoc. with Second Act Films, dist. by Icarus Films, 800-876-1710; www.icarusfilms.com. 2009. DVD $150; acad. libs. $398. Public performance; closed-captioned. ECON
We All Fall Down and House of Cards both demonstrate how unregulated mortgage brokers did whatever was necessary to create a large volume of mortgages that could then be securitized by vast financial firms and sold to unsuspecting investors. Both include interviews with unwary homeowners who took on mortgages and homes they could not possibly afford, and both are damning in their criticism of the financial industry and the lack of government regulation, showing scene after scene of the carnage wrought by defaults and evictions on once-proud neighborhoods. Off-screen narration furthers the story in We All Fall Down. House of Cards reporter David Faber is the on-camera face of the investigation as he questions industry insiders and former Federal Reserve chair Alan Greenspan. While both documentaries are timely and excellent in unraveling events, House of Cards has the edge with its deeper explication of the workings of mortgage-backed securities and the unsavory role of ratings agencies. Faber’s interview with Greenspan lays out a wrenching summation of the crisis as the Fed chief says that even he could not fully comprehend the financial engineering at work. Both documentaries are accessible to wide audiences and are highly recommended for all libraries. House of Cards, with its lower price and superior insights, is the top choice.

I.O.U.S.A.: One Nation. Under Stress. In Debt. color. 85 min. Patrick Creadon, Agora Entertainment in assoc. with O’Malley Creadon Prods., dist. by PBS Home Video, 800-531-4727; shoppbs.org/education. 2009. DVD ISBN 978-0-7936-7047-5. $24.99. Closed-captioned. Rated: PG. ECON
I.O.U.S.A. takes on the problem of America’s burgeoning national debt, now exacerbated by federal deficits resulting from the mortgage crisis. The documentary’s striking opening shows presidents from Eisenhower to George W. Bush repetitiously calling for an end to deficit spending—it didn’t happen. The documentary reveals its story through news clips, graphics, off-screen narration, and interviews with luminaries like Warren Buffett, Alan Greenspan, Paul Volcker, and Robert Rubin. I.O.U.S.A. powerfully warns of a national financial calamity that is even now only in the nation’s peripheral vision. Aside from the $11 trillion national debt, it calculates that the government will in the coming decades have to deal with another $40 trillion in unfunded Social Security and Medicare entitlements. The film was completed in July 2008 and shortlisted for an Academy Award; a January 2009 update is included. Frightening but persuasive in its assessment, I.O.U.S.A. should be viewed by every American; essential for every academic and public library.

Inside the Meltdown: What Happened to the Economy? color. 60 min. Michael Kirk, Kirk Documentary Group, dist. by WGBH c/o PBS Home Video, 800-531-4727; shoppbs.org/education. 2009. DVD ISBN 978-0-7936-7065-9. $24.99. Closed-captioned. ECON
Inside the Meltdown, originally broadcast on Frontline in February 2009, examines how Federal Reserve chair Ben Bernanke and Treasury Secretary Henry Paulson coped with the mortgage-backed securities crisis of 2008. It dissects their quandary over whether to let the market sort itself out versus the need for government intervention. Seeing systemic danger, they orchestrated takeovers of broker Bear Stearns and later of mortgage giants Fannie Mae and Freddie Mac. To avoid the moral hazard of the government appearing to guarantee all risky behavior, in September they allowed Lehman Brothers to declare bankruptcy. This put other institutions at risk and effectively froze global lending. Paulson and Bernanke then moved with Congress to institute the controversial $700 billion banking intervention plan. Through off-camera narration and dozens of interviews with academics, government officials, reporters, and financial industry insiders, the documentary dramatically describes the dangers of the mounting crisis and the harrowing efforts to contain it. Supporting materials are available at PBS.org. Highly recommended for academic or financially savvy audiences.