Gary Dretzka
Noah Forrest
Leonard Klady
David Poland
Douglas Pratt
Ray Pride

When, on Oscar night, Jerry Seinfeld managed to unhinge the entire AMPAS Documentary Branch by dismissing its nominees as "incredibly depressing," the comedian probably wasn’t aware of the imminent release of a film that could give Pollyanna the blues. James D. Scurlock’s Maxed Out teaches us, among other things, that before global warming turns Long Island into Short Atoll, every man, woman and child in America very well could be buried in an avalanche of debt.

By comparison to our rapidly expanding debt crisis, the threat posed in the Oscar-winning An Inconvenient Truth, is remote and survivable. Talk about depressing.

"Yeah, I’ve heard that a lot," allowed Scurlock, who also wrote of a companion book, Maxed Out: Hard Times, Easy Credit and the Era of Predatory Lenders. "Everyone who’s seen the movie says I could have been thinking of them when I made it."

It is Scurlock’s contention that a cancerous tumor of debt elevated from benign to malignant when credit-card companies discovered there were easier ways to make obscene profits than encouraging responsible borrowing habits.

"When the first universal credit cards began showing up, in the late-’50s and early-’60s, they were a pretty hard sell … not to customers, who loved them, but to the old-school bankers," Scurlock said, during a publicity session at the Beverly Wilshire. "In their minds, it was like giving their customers the noose with which they could hang themselves."

Taking a cue from the tobacco industry, Bank of America had already gotten the ball rolling by sending BankAmericards to its customers to sample. The bank might as well have been handing out of dime-bags of heroin at a schoolyard. It made usually compliant federal regulators queasy enough to ban the practice.

In the ’60s, as the practice of using plastic for purchases took hold, banks only issued them to their best customers, upon request. They were encouraged to pay off balances every month, and on time. Compared to department-store plastic, bank-issued cards were a bargain.

"This all started to change in the ’70s, when Walter Wriston became CEO of CitiBank," added Scurlock, who studied at the University of Pennsylvania’s Wharton School of Business, before catching the movie bug. "He was one of the first to realize you could make a whole lot more money getting people to spend, rather than save, and that information was the primary product.

"The ’70s weren’t a great time for credit cards, because the prime was so high, it was hard to make money on the spread, when the prime rate was in the teens and they only could charge customers 18 percent. In the mid-’80s, when the prime rate really began to come down -- and the interest charged card-holders stayed high -- the banks got a glimpse of how profitable credit cards could be."

The banks, Scurlock adds, "realized this business was a cash cow, and the mad scramble was on."

By now, Wriston and lobbyists for the banking industry had gained a sure foothold in the U.S. Congress. The Reagan and Bush administrations had made the deregulation of key industries a priority, and lending institutions jumped at the opportunity to line the pockets of politicians with campaign donations.

Suddenly, brand-name savings institutions were free to cherry-pick independent banks and thrifts, betting on the come they would soon be allowed to expand operations across state lines. Mergers would turn chains into conglomerates, and conglomerates into faceless behemoths.

Instead of worrying about the ability of individual customers to keep debt under control, the behemoths began soliciting business from anyone with a pulse. Colleges were paid handsomely to allow sales reps on campus, knowing full well that students were among the least likely customers to toe the line on spending.

Automobile manufacturers and airlines joined the rush to issue credit cards, as did theme parks and sports teams. Behind all of these organizations, though, stood a small handful of lending institutions, offering all manner of incentives to encourage spending … as if American consumers needed any prodding.

Besides encouraging their customers to spend money to their hearts’ content, the companies also made it easy for them to borrow cash. And, why not? Not only do regulators allow them to charge interest rates that turn loan sharks green with envy, but they also have given a green light to charging exorbitant fees for late payments and spending limits breeches.

Victims of predatory lending in Macon, Mississippi Lynn Stavert started selling many of her possessions after credit card companies threatened to foreclose on her house.

The fees are the gravy poured over interest rates that now tickle the half-century mark. (President Bush was successful in capping rates charged soldiers fighting in Iraq at a mere 36 percent.) That’s where the real money is made, not in collecting transaction fees from retail outlets.

"I would love for someone at one of these companies to define loan-sharking, but no one will return my calls and e-mails," Scurlock said. "Not only are credit cards charging these astronomical rates -- and encouraging people to use them to pay for groceries, school, medical bills -- but financial institutions like Washington Mutual, Citigroup, HSBC also have bought sub-prime financing companies. The line between trustworthy ivory tower banks and companies that will rip you off has completely blurred."

Any pretense of preserving the anonymity and security of card holders has been shattered by revelations that the federal government is using the Patriot Act to scour spending records, and the ease with which companies and potential employers can glean the same data. Wriston’s understanding of the value of information couldn’t have been more prescient.

The message in Maxed Out is most clear when average Americans are allowed to relate horror stories. We meet men and women from all walks of life who’ve struggled with financial problems of their own, or have grieved for relatives who committed suicide over seemingly insurmountable debts. One Minnesota woman has spent years trying to convince three credit-card companies that she, in fact, is not dead.

Scurlock also introduces us to several concerned scholars, lawyers, talk-show hosts, journalists, activists and the granddaughter of the New York real-estate developer who invented the debt clock. For balance, he talked to bankers, debt collectors and a pawn-shop owner, all of whom are beneficiaries of such irresponsible spending.

Saving Americans from themselves has never been an easy task, though. Scurlock includes testimony from Robin Leach -- an expert on things rich, famous and expensive, as well as a professional glutton -- who offers his opinions on conspicuous consumption from a posh restaurant overlooking the Venetian Hotel‘s Grand Canal.

Even with the Democratic Party in control of the House and Senate, Scurlock isn’t terribly optimistic that Washington will become the epicenter of the responsible-borrowing movement. Indeed, after the tragic events of 9/11, President George W. Bush and other legislators equated increased spending with patriotism. Survivors of Hurricane Katrina, too, have been encourage to use easy credit to fight back against Mother Nature.

"We’ve scheduled a congressional screening of Maxed Out, sponsored by Sen. Christopher Dodd," said the 35-year-old filmmaker, whose first two films focused on immigration and a trio of unlikely candidates for Arnold Schwarzenegger’s job. "We had a request from one of Obama’s big contributors to show him the film, and one from John Edwards’ camp. But, the New York Democrats seem to be in control now, and, because that’s where the big banks are, they don’t seem to be interested in our film.

"So, it’s a mixed bag."

And, what about Hillary Clinton, who’s been known to say one thing and do another if it helps her political aspirations.

"After talking to Elizabeth Warren, the Harvard professor in our film, Hillary convinced her husband to veto bankruptcy-reform legislation, because it would only benefit the lending institutions (making it more difficult to declare bankruptcy)," Scurlock continued. "Now, however, she appears to have warmed to the idea. She was able abstain from voting on the bill, when it was re-introduced, because her husband was undergoing bypass surgery that day.

"But, banking interests are big contributors, and she seems to have changed her mind."

The movie also shows documents the unwillingness of members of the Senate Banking Committee to ask tough questions of credit-card executives, after they were summoned for a rare appearance on Capitol Hill, in 2005. In fact, they found a convenient excuse for not asking any questions at all.

The answer to the question of what’s at stake for America was answered, in part, by Al Qaeda leader Osama Bin Laden, who, in one of his video pronouncements, "came out and said the whole purpose of his terrorist war was to bankrupt the United States, just as the war in Afghanistan had bankrupted Russia."

Neither are the courts ready to provide a remedy to America’s most-common addiction.

"They’ve ruled you can’t restrict the freedom of banks to charge and do whatever they want, and this has stifled any consumer activism," Scurlock said. "As far as I know, these are the only companies that are allowed to change the terms and conditions of a contract, at will, and restrict their customers from going to court on their grievances. Congress does nothing about it.

"They seem to be concerned that, without all this credit and spending, the country will grind to a halt. But, Japan seems to do well using debit cards."

Does Scurlock practice what he preaches? Stories of filmmakers financing their maiden projects on credit-card debt have reached folkloric proportions in Hollywood.

"Variety reported I maxed out my credit card, just because my distributor didn’t get back to them on the deal," he recalls. "But, that isn’t true."

March 8, 2007

- Gary Dretzka

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