Innovations and Payment Systems

Smile! You’re MAXED OUT…


This review of the documentary film Maxed Out” gives readers an idea of what to expect from the movie’s critical look at the U.S. credit card industry.”

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The moment James Scurlock’s documentary “Maxed Out” opens with a frosty-haired fortysomething gushing from the innards of her lanky Mercedes about the utopia of Seven Hills, Nev.\u2014where stuccoed McMansions are rigged with wine rooms, home theaters and multilevel laundry rooms\u2014you sense things are on the verge of implosion. And what do you know: Before Frank Sinatra can finish bellowing “Volare, oh oh, cantareeee!” in the background, the woman proudly admits that she never would have been able to afford her very own Italian McMansion if the bank hadn’t been generous enough to grant her a loan in value. Then Scurlock informs the viewer: “This is the same accounting technique used by Enron.”

Maxed OutIn this “Fast Food Nation” meets Michael Moore expos\xe9\u2014with the credit card industry under the microscope\u2014the airy opening scene is a decoy for the very dark excavation ahead. Scurlock takes a coast-to-coast investigative journey into how the credit card industry makes its money, who its beneficiaries and victims are, and how the U.S. government is a guilty accomplice. Scurlock pads the film with countless tragic stories of the industry preying on the weak and the poor\u2014and middle class folks who are suddenly eaten alive by debt. Among them: a college honors student who, in his sophomore year, hung himself after being saddled with 12 credit cards and $12,000 in unpaid bills. The daughter whose mother fatally drove her car into a river to escape the $47,000 of debt she racked up in interest and penalties. The recently widowed California woman who is funding her $4,000 monthly house payments with 29 percent interest cash advances, knows her house is about to be foreclosed, and is selling off her life’s possessions at weekly garage sales. “You never think you’re going to be in this situation,” she whispers through the tears. “I’m 57 years old; I’m going to lose everything. What do you do?”

Amid all the Kleenex, Scurlock pieces together an argument that doesn’t implicate the indebted, but rather the system that feeds off them like vultures on a carcass. In one chilling scene, Harvard law professor Elizabeth Warren reveals that after she counseled Citigroup that the company could reduce its bankruptcy losses by 50 percent by screening out the weakest customers, one exec retorted, “But if you cut out the most marginal borrowers who are deepest in trouble, then you’re cutting out the heart of our profits, because that’s where we make most of our money.” Scurlock’s message: Credit card companies purposely lure the groups who can’t pay off their debt precisely because that’s how they make the big bucks. So for every dollar you charge on your card, on average, you’re paying two additional dollars in interest and fees. And those fees have increased a startling 160 percent in the past five years.

He also plunges inside the $75 billion debt-buying industry\u2014one of Wall Street’s fastest growing, and greasiest\u2014in which telemarketing-style collections businesses are built solely around profiting off of bad debt portfolios. And then there’s that cozy George W. Bush relationship with MBNA, the country’s second-largest credit card issuer, which also happens to be Bush’s top campaign contributor\u2014and which, according to Scurlock, penned the bill that makes it harder for average Americans to declare bankruptcy and easier for the credit card companies to hold the indebted hostage. Add all this up, says Harvard’s Warren grimly, and the average American family making their monthly minimum payments will never be able to pay off their bills in their lifetime. “Death will be the only form of debt discharge that they will ever see.”

Where the film succeeds most is in painting a sobering portrait of how thin the line is between having a Beamer in your driveway and having that Beamer towed away by the banks in a system that is designed to seduce its customers into a downward spiral. Scurlock paces the film with lighter moments, like cameos by Robin Leach, Jerry Falwell (“spiritual mathematics!”), and “Chris and Luke,” two high school buddies who convinced FirstUSA to sponsor their university tuition. Where Scurlock sometimes falls short, though, are with his college-filmmaking-style tics, like splicing 1950s black-and-white TV clips and trigger-happy sound bites at the expense of exploring provocative moments. For example, he shows personal finance goddess Suze Orman propagating the importance of FICO scores, and then notes, “She has a deal with FICO’s parent company,” but never digs deeper to explain the scope of the relationship. And while he doesn’t offer much optimism or advice on how to dodge the debt mess, he will arm you with enough distrust to know that the next time you get some love letter from your credit card company buttering you up with low interest rates, you’ll be better off walking directly to the paper shredder.

You can find “Maxed Out” in theaters and, starting this week, on DVD.

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