FedUpUSA

Archive for April 14th, 2010

Anti-Wall Street Film Isn’t Just for Michael Moore Fans

By Michael Corkery

Independent filmmaker Danny Schecter would like to remind Wall Street that the disdain for bankers “is not coming from a bunch of lefties in some basement in the East Village. It is coming from mainstream America.”

Schecter hopes such mainstream angst can propel his latest film, “Plunder: The Crime Story of Our Time,” into the big leagues. Filmed on a budget of less than $50,000 and based on his book of the same title, the movie traces the roots of the financial crisis from the home owners who defaulted on their mortgages to the Wall Street banks loading up on mortgage investments.

Watch the movie trailer here.

The film sounds like the many books and made-for-television movies about the crisis. But Schecter, who has worked at ABC News and CNN, promises that his narrative is different because it approaches the subject like a crime story, not a mere financial story.

“This financial crisis is not only a shame, it is a crime,” Schecter said when Deal Journal reached him by phone. “But this is not about one individual, like Bernie Madoff. It is about a set of institutions committing a crime.”

The crimes, according to Schecter, are the home mortgages that were extended to people that the banks knew couldn’t afford them or the pools of mortgage securities that were sold to investors for more than the banks knew they were worth.

But if these were crimes, why have so few people been successfully prosecuted? The Bear Stearns hedge-fund managers were acquitted, and prosecutors have indicated they aren’t likely to press charges against executives in American International Group’s financial-products division responsible for a chunk of the losses that laid low the New York insurer.

“If there was more public heat, suddenly the people who can’t prosecute would find ways to prosecute,’’ Schecter said. “There would be more energy to get something done.”

Schecter says that heat certainly isn’t coming from the Financial Crisis Inquiry Commission that has been holding hearings this week on the causes of the subprime mortgage debacle. He said the FCIC hearings don’t stand up to Watergate hearings or the Pecoria hearings following the Great Depression, which were run more in prosecutorial style. “It’s not an investigation,’’ says Schecter of the FCIC. “It’s a Harvard seminar.”

If nothing else, the movie promises to serve up some interesting footage: The film begins with protestors outside Morgan Stanley Chairman John Mack’s Connecticut house. Schecter also has interviews with former Bear Stearns bankers and one of the executives indicted in the Crazy Eddie accounting fraud case from the 1980s.

Schecter insists he is no Michael Moore. For one, Moore has backing from Hollywood and Schecter is on a shoe-string budget. Also, Schecter says he isn’t indicting capitalism, as Moore did in his most recent film. “It is the system we live under,’’ Schecter said. “The question is: is it working? No, it is not. Why? Because people are scamming the system.”

“Plunder” can be downloaded from iTunes and is being sold on Amazon.com. The movie also has been shown at college campuses in the New York City area.

“When plunder becomes a way of life for a group of men,
they create for themselves,
in the course of time,
a legal system that authorizes it,
and a moral code that glorifies it.”
– Political economist Frederic Bastiat, The Law [1850]

“I used to think of Wall Street as a financial center.
I now think of it as a crime scene.”
– Filmmaker Danny Schecter, Plunder (2009)

DANNY SCHECHTER, “The News Dissector,” has spent decades as a truth teller in the media. He has worked in print, radio, local news, cable news (CNN and CNBC), network news magazines (ABC) and as an independent filmmaker and TV producer with the award-winning independent company, Globalvision.

His film “IN DEBT WE TRUST” (2006) was the first to expose Wall Street’s connection to subprime loans, predicting the economic crisis that this book investigates.

Plunder: The Crime Of Our Time

The Benefits Of Contract Abrogation According To Mark Zandi: 6 Million People Not Making Mortgage Payments Frees Up $8 Billion Each Month

Submitted by Tyler Durden

We have disclosed on numerous occasions how excess refunds by the Federal Government despite subpar withholdings is goosing up consumer spending. Now we hear from none other than Mark Zandi of Moody’s Economy that the government’s tacit encouragement for “homeowners” to not pay their mortgage dues is freeing up $8 billion each month that is artificially increasing consumer spending and iPad preorders. And with banks not marking anything to market, all these houses that generate no cash flow are still marked at 100 cents on the books. If you ever needed a justification to not pay your credit card, your mortgage, or anyone else you owe money, now you know – contract law in America no longer exists. Just stop paying everything. And please dont save. Saving is for non-banana republics. Remember – the market is never wrong. And nobody can remember when was the last time we had a downday. So all must be well.

From Diana Olick’s blog:

I opened up a big can of debate Monday, when I repeated some chatter around that consumer spending might be juiced by all those folks not paying their mortgage. 

They have a little extra cash, so they’re spending it at the mall.

Some of you thought the premise had some validity, others, as is often the case, told me I was an idiot.

Well after the blog went up Erin Burnett put the question to Economist Robert Shiller, of the S&P/Case Shiller Home Price Index, during an interview on Street Signs.

He didn’t deny the possibility, and added:

“In some sense there might be a silver lining in that.”

Then I decided to ask Mark Zandi, of Moody’s Economy.com, who will often shoot down my more ridiculous theories.

I asked him if this was a crazy idea:

No, not crazy. With some 6 million homeowners not making mortgage payments (some loans are in trial mod programs and paying something but still in delinquency or default status), this is probably freeing up roughly $8 billion in cash each month. Assuming this cash is spent (not too bad an assumption), it amounts to nearly one percent of consumer spending. The saving rate is also much lower as a result. The impact on spending growth is less significant as that is a function of the change in the number of homeowners not making payments.

I’m not sure I would say this is juicing up spending, but resulting in more spending than would be the case otherwise.

Many of these stressed homeowners (due to unemployment) are reducing their spending, just not as much as they would have if they were still making their mortgage payment.

Well, as we posted here on FedUpUSA, Congress was absolutely WRONG in their attempt to call CEOs of various companies, which announced taking charges in response to the passage of the Health Care Reform bill, to testify about WHY they were taking the charges.  Now Congress has had to suck it up and admit they were not only wrong, but that they unjustly accused these companies of taking the write downs for political reasons.   How exactly can it be that Congress was unaware of the SEC laws that require firms to disclose material changes when they are realized?  We are truly ruled by idiots.

Canceled: Hearing That Would Have Grilled CEOs on Health Care

Energy and Commerce Committee Chairman Henry Waxman, D-Calif., has cancelled a hearing intended to grill CEOs who took a charge against profits because of the health care reform bill.

The cancellation came after they realized what everyone already knew – that the companies were required to do what they did because of accounting rules. Waxman and others had reacted with outrage and accused the companies of doing it – in essence, to make health care reform look bad.

AT&T took a $1 billion charge and other companies including Caterpillar, John Deere, and Valero Energy, and 3M took hundreds of millions in charges because of the health care reforms.

The new bill ended a tax break intended to make it attractive for the companies to keep their retirees on company drug benefit plans instead of ending those plans and pushing them into Medicare which would have cost the government much more money.

The Democratic memo cancelling the hearing notes, “These one-time charges were required by applicable accounting rules. Under Generally Accepted Accounting Principles as determined by the FASB, companies are required to take a noncash charge against current earnings to recognize a tax liability for the estimated future tax effects of a new law.”

It goes on to read, “This noncash charge must reflect the entire present value of the loss of future tax deductions on the subsidy, and it must be taken in the period in which the law is enacted. Moreover, if the level of the impact is deemed “material” under SEC regulations, the company must file the report promptly following the triggering event, in this case the enactment of the law.”

Some 3,500 companies are likely to be affected. But on the hearing – a big “never mind” from Chairman Waxman.

Dimon Fumbles For His Protective Plate

Posted by Karl Denninger