Reprinted from Robert Reich Blog
Not only is the movie an enjoyable (if that's the right word) way to understand how the big banks screwed millions of Americans out of their homes, savings, and jobs -- and then got bailed out by taxpayers. It's also a lesson in why they're on the way to doing all this again -- and how their political power continues to erode laws designed to prevent another crisis and to shield their executives from any accountability.
Most importantly, the movie shows why Bernie Sanders's plan to break up the biggest banks and reinstate the Glass-Steagall Act (separating investment from commercial banking) is necessary -- and why Hillary Clinton's more modest plan is inadequate.
I'll get back to Bernie and Hillary in a moment, but first you need to know why Wall Street wants us to forget what really happened.
The movie gets the story essentially right: Traders on the Street pushed highly-risky mortgage loans, bundled them together into investments that hid the risks, got the major credit-rating agencies to give the bundles Triple-A ratings, and then sold them to unwary investors. It was a fraudulent Ponzi scheme that had to end badly -- and it did.
Yet since then, Wall Street and its hired guns (including most current Republican candidates for president) have tried to rewrite this history.
They want us to believe the banks and investment houses were innocent victims of misguided government policies that gave mortgages to poor people who shouldn't have got them.
That's pure baloney. The boom in subprime mortgages was concentrated in the private market, not in government. Wall Street itself created the risky mortgage market. It sliced and diced junk mortgages into bundles that hid how bad they were. And it invented the derivatives and CDOs that financed them