Andrew Cockburn co-producer of the documentary “American Casino” talks about the sub-prime crash
COCKBURN: No, Clinton didn’t start it. I mean, as I said, it’s been going on since the 1980s at least. Well, no, since the—you could—I like to date it from, actually, 1978, when the Supreme Court basically abolished the usury laws, which, you know, for a while had stopped banks charging, you know, 30 percent for credit cards and things like that. No, Clinton joined in, I have to agree. Clinton was certainly part of it. But that was in the—you know, because Clinton was going along with the Republican Congress. So when the Republican Congress wanted, for example, to repeal the Glass-Steagall Act, which was a very important law from the 1930s from the New Deal that said, basically, that banks that took your money and mine, I mean commercial banks that took our deposits, couldn’t use that money for speculating on Wall Street like investment banks do. You know, they couldn’t do that. They couldn’t be both investment banks and commercial banks. That got repealed in 1999, thanks to the efforts of, well, a lot of people, particularly that Republican senator, Phil Gramm. And Clinton signed it. So Clinton was an enabler, if you like, but, you know, this was business and Wall Street and the Republicans leading the charge on this one.
COCKBURN: They didn’t care, but the market, you know, that they at a certain point—they didn’t regard it as a good thing if house prices went down. But as you say, they had devised this mechanism—it was called the ABX Index—as a way to bet both sides, to bet that the house prices could go down. Well, it made it easier to bet. They were—already found ways to bet, but this made it easier for them to bet and made the—enabled—made it easier for them to bet more.
JAY: And, in fact, there’s actually quite a few people that made a lot of money betting on the crash and betting short on this issue.
COCKBURN: Oh, yeah. I mean, there’s—well, in our film, in American Casino, we have a chap, Jeff Green, who has made at least—much more now, but when we filmed him, he’d made $500 million from betting that the housing market would go down. I mean, I don’t think we should condemn him. He was betting against Wall Street. He got some banks on Wall Street—Morgan Stanley and Merrill Lynch, I think it was—to take his bet that people would default on their mortgages.
JAY: Well, all of this comes back to the fundamental idea, which Greenspan articulated—or in the next segment of our interview we’ll show this piece, exchange with Greenspan. But it’s essentially that greed is good—Michael Douglas’s line in the Wall Street film. Ideologically, at least, they justified all this with the idea that the more speculation, the better for the economy. So in the next segment of our interview, let’s delve into that. And has anything changed? Has philosophically, really, that sunk in in the halls of power? Please join us for the next segment of our interview with Andrew Cockburn.
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