As Woodstock Institute has reported, foreclosure filings are continuing at high levels, cases are taking longer to process to completion, and the growing inventory of vacant, foreclosed homes is causing blight and depressing property values. Despite the evidence all around us to the contrary, there are some in Congress who continue to believe that the free market can adequately regulate itself and that we do not need to implement the Dodd-Frank Wall Street Reform and Consumer Protection Act and the new Consumer Financial Protection Bureau, which are designed to rein in the abuses that led to this crisis. Among other things, Dodd-Frank codifies the basic principle that lenders must make loans based on the borrower’s ability to repay. The Bureau is charged with creating new mortgage disclosure forms and rules for implementing Dodd-Frank provisions.
Speaking of abuses that led to the crisis, I saw the new movie Margin Call over the weekend. It is a fictional story set in a Lehman Bros.-type investment firm just before the market crash in 2008. The story revolves around the firm’s discovery that the formula that the firm based its Wall Street trading on was seriously flawed and how those in power reacted in the hours before the house of cards built on over-leveraged mortgage backed securities came tumbling down.
Along the way, we get to know some of the major and minor players at the firm and see how the tremendous wealth and greed corrupts even those who seem to have a bit of conscience. The conversations in the movie between the traders and analysts at the bottom of the totem pole making “only” $250,000 and those nearer the top making $2.5 million vividly illustrate how different we 99.5 percent are from the masters of the universe in the top 0.5 percent. The movie shows how a small number of extremely wealthy and powerful individuals on Wall Street have the power to make decisions that affect the rest of us.
I recommend that you see this movie and think about how important it is to implement the Dodd-Frank Act provisions that will eliminate some of the abuses described in the movie that led to the foreclosure and financial crises. And give a smile and a thank you to the protesters who are making the voices of the 99.5 percent heard.