Abacus Federal Savings Bank, a family-owned community bank, suffers the full wrath of regulatory authorities as it (curiously) becomes the only financial institution to face criminal charges related to the subprime mortgage crisis. [ Abacus: Small Enough to Jail credits: Dir: Steve James/ 88 min/ Documentary/ Anti-Regulation, Creator-As-Hero/ 2017]
“Part lucid documentary, part libertarian tearjerker, Abacus: Small Enough to Jail is an engaging film that touches the heart.”
Out of nearly 7,000 banks in the US, only one was prosecuted for mortgage fraud related to the 2008 financial crisis: Abacus Federal Savings Bank, a small family-owned bank serving the Chinese community in New York City. Such a prosecution, however unusual, might seem rather dry material for a documentary, but this case is high drama.
The bank’s founder and the main subject of the film, Thomas Sung, a highly sympathetic — one might even say heroic — entrepreneur, was inspired by Frank Capra’s George Bailey character to start a small bank to help his community, and indeed he succeeded, becoming a key financial pillar for local Chinese immigrants and their families. In a remarkable Capra-esque parallel, he even once stopped a bank run by sheer force of personality, appealing with a megaphone to a crowd of panicked depositors to leave their funds in place and return home. And just as George Bailey was falsely accused, so too was Thomas Sung.
Of course, in 2008 there were many big well-known banks that had plenty of fraudulent loans. Why weren’t they prosecuted instead of this one small bank no one had heard of? As interviewees in this documentary reveal, the big banks were considered “too big to fail.” They simply paid fines (that is, their shareholders did), and such matters were settled quietly. Still, politicians wanted a public prosecution to show that the system was “working.”
At about that time, management at Abacus discovered one of their loan officers had committed fraud. They fired the culprit, and reported the situation to regulators, the right way to handle it, you would think. It was, unfortunately, just what the authorities were looking for, a simple case of mortgage fraud with all the evidence neatly handed to them. All the regulators needed to do was implicate the owners as complicit.
Enter District Attorney Cyrus Vance, Jr. (D). He and his team of lawyers had the bank’s management handcuffed and paraded them in the street in an organized photo-op, charged them with dozens of crimes, and waited for the surrender. We are shown that humiliating moment, the fifteen executives chained together, heads hung low, as cameras all around click and flash. It has the feel of a clip from Stalin’s USSR, as indeed do the reports of 6AM knocks on the door of still-sleeping witnesses, many of them recent immigrants from communist China. Cyrus Vance must have thought this would be an easy case. How could a small bank and a community of penniless immigrants fight back against a full-scale prosecution? What he didn’t know was that Thomas Sung had an ace in his back pocket: his three fiercely loyal daughters, who just happened to be lawyers.
This story of Thomas Sung and his family vs. the state and federal Goliath effectively dramatizes the inevitable inequity that regulation entails — whereby large, influential companies are able co-opt regulators (what economists call “regulatory capture”) but smaller players are caught in the net and, lacking the financial resources to defend themselves, are often ruined. The “smaller players” are real people, good and decent people whose lives are put in jeopardy by complicated and conflicting rules inconsistently applied and by politicians cavalierly seeking to advance their careers.
Part lucid documentary, part libertarian tearjerker, Abacus: Small Enough to Jail is an engaging film that touches the heart.
“The central figure in James’ Abacus: Small Enough to Jail, Thomas Sung, decided he wanted to be a banker when he saw It’s a Wonderful Life. [That vision of being] a leader of a community by virtue of his support to it, both financial and emotional, inspired Sung, and James’ brilliantly uses the film as a thematic through line for his story of a George Bailey who stands up to a corrupt, flawed system.”
“As James follows their case through the courts, his movie turns into a crackling family drama.”
“In its intimate, well-observed way, the film is deeply moving and subtly shaming.”
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