Paying the $20 Trillion Bill

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Representational Pictures/Sony Pictures Classics
Too little, too late? Feds Paulson, Bernanke, and Geithner (L-R) wouldn' t be interviewed.
The Dinner: stuffed peppers and roasted trout at Cicchetti (121 E. Boston St.).

The Movie: Inside Job at Guild 45 (2115 N. 45th St.).

The Screenplate: Between Wallingford and Eastlake, you'll see plenty of vacant storefronts, stalled construction projects, and even a few houses in foreclosure. Seattle wasn't as hard-hit by the subprime mortgage meltdown as, say, Phoenix and Miami, but the subsequent recession is with us still. The local economy continues to lag, and plenty of restaurants have succumbed to consumers' new austerity. One response is the prix fixe special, and Cicchetti was part of the just-concluded Seattle Restaurant Week, offering three courses for $25. (You can spend a lot more, of course, on wine and extra items; but Cicchetti is generally more affordable than its sibling, Serafina, just across the courtyard.) In a sense, Seattle Restaurant Week is like the federal reserve cutting interest rates to boost consumer spending and business activity. Only here the stakes are more modest, as compared to the economic debacle outlined in Charles Ferguson's lucid but outraged explanatory documentary...

Only a certain class of brave (or foolish) individuals consents to be interviewed in Inside Job. The most high-ranking bankers and feds (e.g., Ben Bernanke, Charles Ferguson, and Henry Paulson) do not. The doc consists mostly of talking heads, Matt Damon's narration, and some use of graphics--though not quite enough--to explain the intricacies of mortgage-backed securities, collateralized debt obligations (CDOs), and credit default swaps that even their inventors didn't thoroughly understand. It's an educational film that, one hopes, will be required viewing for MBA students or college kids contemplating jobs in finance. (And, yes, Wall Street is hiring again.)

"This crisis was not an accident," we're told. And Ferguson takes us back to the '80s wave of deregulation, the subsequent decision not to regulate derivatives, and the 1999 repeal of the Glass-Steagall Act, which freed banks to embrace more risk and leverage. The once separate realms of mortgages and lending (the piggy bank) and investment banking (the casino) became one, and superbanks like Citigroup resulted. Here in Seattle, we had WaMu, which grew explosively by issuing ever more dubious mortgages whose underlying debt was sold off in bundles, sliced into differing levels of risk--assessed by credit rating agencies who profited from the increased volume--then resold on Wall Street as supposedly safe investments. We all know how that turned out.

Two years later, on a crowded Friday night at Cicchetti, one of my tablemates is an attorney who lost her job when WaMu collapsed. Though the events and players in Inside Job can seem far off, there are traces all around us. (On screen, local company Infospace is cited as an example of corrupt practices; and look, there's local son Franklin Raines, who rose to lead Fannie Mae into some very questionable lending behavior.) Even with a reservation, we wait longer than I'd like for a table, but a crowded restaurant is a sign of a healthy economy, right? (Serafina was no less packed.) Maybe Seattle's economy hasn't suffered so much, compared to other parts of the country; or maybe the prix fixe menu was drawing customers in.

Either way, from my three courses, I selected the Turkish stuffed peppers with beef and rice (ordinarily $7) to start. They're small and oven-roasted--you can see the fiery maw in the open kitchen--and quite tasty. Main course: the wood-fired oven-roasted trout with skordalia and sautéed greens (nominally $19). It's a much bigger dish, with a crisp, flaky texture. Probably farm-raised, since you don't get wild fish at such prices, but not many bargains taste as good. A glass of Sangiovese ($9) matched better with the peppers than the trout. But, after the fish, I was able to trade away my dessert (the third serving from the prix fixe menu) to a friend in exchange for her wine, and she reported the tart was excellent. Hey--just like Wall Street; we're trading assets, right?

Meanwhile on Wall Street, Ferguson notes in Inside Job, there have been no prosecutions, nothing more than congressional hearings to attempt to shame the lenders and bankers and insurers (notably AIG) who created and rode the subprime bubble until it burst. And we know that, for all the talk of financial reform in Washington, DC, there's been little done to re-regulate that industry. And we know, too, that since the Supreme Court's Citizens United decision, groups like Karl Rove's nonprofit American Crossroads have been able to funnel anonymous corporate donations--from Wall Street and elsewhere--to support candidates who oppose the sort of "big government" that gave us Glass-Steagall back in 1933.

As a result, even after a good meal with good wine and good friends, Inside Job leaves you in a profoundly pessimistic mood. (Equally bleak, Ferguson's last documentary, about the causes of the Iraq War, was called No End in Sight.) Here, Ferguson concludes, "The financial industry turned its back on society and corrupted the industry." In essence, Wall Street is setting its own rules. And now, thanks to TARP--begun under Bush but now being blamed on Obama--banks are bigger and more powerful than ever. And despite some foreclosures, those toxic assets are still out there: bonds being sold and resold at ever greater discounts, their risk still attached. Students of disaster will attain a grim kind of satisfaction watching Inside Job, whose DVD will eventually join a bookshelf of similar accounts. (Those notably include Michael Lewis' The Big Short, Charles Morris' The Trillion Dollar Meltdown, and, from England, John Lanchester's excellent I.O.U.) You're left with the feeling that Ferguson could simply have reused the title from his last documentary for this one. Again, when it comes to human folly and greed, there's no end in sight.

 
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