'Maxed Out' Man James Scurlock, Right on the Money

James Scurlock, whose film forecast a credit crisis.
James Scurlock, whose film forecast a credit crisis. (Courtesy Of James Scurlock - Courtesy Of James Scurlock)
Thursday, August 16, 2007

When the film "Maxed Out" arrived in theaters in March, it met with a modest reception: James Scurlock's documentary about America's debt crisis featured crisp editing, engaging stories, a poppy music score and an urgent message about Americans' addiction to credit, our alarming level of personal debt, and the financial services industry's cynical attempts to exploit both. The film stayed in town for only three weeks -- who wanted to see a movie about the subtle inner workings of subprime mortgages?

What a difference a few months make. With subprime loans suddenly in the headlines and a looming financial crisis erupting over the summer -- in other words, with the film's Cassandra-like warnings largely coming true -- it seemed an opportune time to catch up with Scurlock, whose "Maxed Out" is now available on DVD and will appear on television early next year .

-- Ann Hornaday

So, are you a genius, or what?

It's funny, it really wasn't that difficult to understand. In some ways, it's just mathematics. Yet there are regulators and analysts and investment bankers who do this day in and day out for years and years, who were saying the opposite of what I was saying. But for someone like me to come in and spend six months snooping around this industry and come to a pretty clear conclusion about where it was headed, it just tells you it wasn't all that difficult. And it's going to get a lot worse, by the way.


What has happened in the mortgage business and in the credit business in this country is very similar to what happened at Enron. . . . People forget that what brought Enron down at the end of the day, the first domino that caused everything to collapse, was a downgrade from a credit agency, and that set in motion a series of events that no one really could have anticipated in their scope, or the precise sequence of events. I think that's exactly what we're looking at now. When the credit agencies have to downgrade a lot of this debt, and they will, and you have hundreds of billions of these adjustable-rate mortgages resetting at higher rates before the end of the year, suddenly all these investment funds have to sell them. And that's a very scary scenario. When everyone's selling and you don't have any buyers, that's when you have a crash.

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