In Maxed Out, documentarian James Scurlock peels the cover back from one of the least talked-about scandals in American culture: the fact that citizens of the richest nation the earth has ever seen are being slowly strangled by out-of-control predatory lending practices. It’s not just that people aren’t smart about how they spend their money. That’s pretty much a universal problem. What’s unique about the situation in America is that corporations—from banks and credit firms to companies whose primary commodity is bad debt—actively seek out high-risk potential debtors in order to guarantee a perpetual income stream from late fees and default status interest rates, while the government stands by and does nothing.

Courtesy of a local publicist, Greg spent twenty-five minutes on the phone with Scurlock.

GW: The first question I have for you is about your own personal experience with debt. What has that been like for you—particularly, coming out of high school and into college?

I got my first credit card in college, like a lot of people, and I’ve been in trouble with debt once in my life. I started a company while I was in college and got into a bind—sort of a classic entrepreneurial bind, just not managing the timing very well. Everything turned out fine, but there was a period of about a year that was pretty dicey.

GW: Was it bank debt or credit card debt?

Yeah, it was bank debt. But it spilled over onto my American Express card for a period of a few months. But at the end of the day, everyone got paid and my investors made money. I guess that was kind of eye-opening in terms of how trapped you can really feel when you’re in debt.

GW: How deep were you in debt at the worst point?

This is really going back, but I think I had about $150,000 in bank loans—those were corporate loans at pretty decent interest rates, about 8%.

GW: Still, for a college kid, that’s a pretty significant debt load.

Yeah. And then my American Express bill… I can’t really remember, but I think it was up around $6000. But to be honest, I can’t really remember. It was all paid off.

GW: So what kind of help did you get coming out of that bind?

Well, basically I sold the company. The moment the company was sold, the bank was paid off.

GW: So you had assets to provide as security for the loans.

Exactly. I had an investor who ended up having an IRS situation, and rather than honor his obligations to me, he paid off the IRS. Which was understandable, but it left me in quite a lurch for a while.

GW: I don’t know if your experience has been anything like mine, but learning the ins and outs of personal finance management has been an enormous headache for me over the years.

Right.

GW: Has your experience in working on Maxed Out changed your own personal habits in managing your finances and credit card debt?

Yes. I cancelled a credit card a few months ago, actually. And it’s made me much more aware. I think we all kind of know that we’re being manipulated; but I didn’t realize the extent to which that’s true until I really got into this. For example, I didn’t realize that universities are being paid millions of dollars for access to our personal information.

GW: That’s really scandalous, given that they’re supposed to be educational institutions, and here they are sneaking that stuff in under the radar.

Absolutely. These kids are going to class and trying to do their homework, and they’re getting phone calls from credit card companies that won’t leave them alone. I agree; that’s scandalous.

GW: At the University of Washington, I was very grateful that they brought in the corporate job recruiters as I was getting close to graduation, but also I got socked with American Express debt before I’d even graduated.

Yes, there are some kids who are getting out of college with the debt equivalent of a mortgage before they even have their first job.

GW: And that brings up a good question. How do you view the difference between the financial expectation that heavy mortgage debt is a good thing, while heavy unsecured debt—as with credit cards—is a bad thing? Isn’t there a mixed message that we send our kids?

Oh, yes. There are a lot of money gurus who will tell you that a mortgage is a “good debt.” Like Suze Orman. “Oh, don’t worry about the mortgage debt; that’s fine.” Well, look at what’s happening on Wall Street right now.

GW: Yes. News just today on that.

The New York Stock Exchange is down another hundred points today on that news. The bottom line is, if you can’t pay the debt—if the terms are too onerous—then it’s a bad debt. If it’s loaded with all sorts of time bombs that go off, terms and conditions that you don’t understand and devastate you, that’s bad debt. Yet people are told, “If it’s for education, it’s good debt. If it’s for a home, it’s good debt.” That’s just not true. There are plenty of people who borrowed money for a wonderful education who find themselves still not being able to pay back the debt, and that debt never goes away. It’s not like there’s a statute of limitations, like we have with murder; it doesn’t go away after ten years. It’s not good debt.

GW: It’s speculative debt.

Absolutely. A lot of people are speculating on the value of their education and home. And people don’t understand… A mortgage used to be a simple thing, a fixed monthly payment that you just made. But now there’s these exotic so-called “affordability products,” which is another irony. Most people just aren’t entrepreneurs or finance experts and don’t realize what they’re getting themselves into.

GW: There’s in fact a whole body of myth about speculative debt. In the film industry itself, there are the legends of Townsend’s Hollywood Shuffle and Rodriguez’ El Mariachi, which were both financed on credit cards. I was pleased to see in the interview you did with Indiewire that you avoided that whole credit card financing scheme with your own work.

Yes. But the standard legend is so powerful that when Variety announced the acquisition of Maxed Out, they reported that I had maxed out my own credits cards to make it.

GW: They just made that up out of whole cloth?

Yeah. Because my distributor didn’t want to give them an exclusive. It turned into this huge drama over a weekend, and the guy said, “Well, I’m going to print that story anyway, unless I get an exclusive.” And my distributor said, “Go ahead. But no one’s going to talk to you. We won’t make anyone available.” But the story that Variety printed sounds great. Fits right into the standard “indie” legend, I guess.

GW: Fascinating. Wow. I was listening to one of the financial network radio programs over this last weekend, and one of the callers was complaining about the amount of our national debt that’s held by China, saying that makes the U.S. slaves to China. And the host says, “No, no. You’ve got it all backwards. Because the U.S.’s solvency is now in China’s interest, being in debt to China actually works in America’s favor. China now has a stake in America’s success.”

He’s an idiot.

GW: So you don’t buy that argument.

I’m sorry. I normally try not to say things like that, but anyone who’s read China’s 100-year plan—which calls for the destruction of this country—and can say such things is ill-informed. The truth is that China is saving. They’ve got huge cash reserves, and we don’t. There’s a certain line you cross in a co-dependent relationship where one party needs the other one more; and I think we’re getting to the point where China would do fine without us. But we really need China to keep injecting money into our economy. You don’t want to be the debtor in the equation. I just don’t know why people can’t understand that.

GW: Getting into another topic a little prematurely, there’s a passage in the biblical book of Proverbs which says “the borrower becomes the lender’s slave.”

Right.

GW: It’s a very direct statement, no equivocation about it. So it’s very puzzling that, at the international level, we seem to be preaching one message about debt while not applying the same logic at the personal level.

I agree. Warren Buffett, who’s a pretty smart guy and not exactly what you could call a bleeding-heart liberal, has called it a sharecropper’s economy. Because that’s exactly what we’ve got. It’s enslavement. Countries and people who are never going to be out of debt. We’re all sharecroppers to the banks and financiers. And I’ve talked to people who say, “It’s the government’s fault, because they’re teaching financial irresponsibility,” while others say, “No, the government just reflects the values of the people.” And I guess I can see it both ways. In any event, it ends up being a self-reinforcing principle.

GW: In the film’s production notes, you say, “My goal was to paint the story of our debt-fueled culture in broad strokes.” As with every story, I imagine that you couldn’t capture every broad stroke you might have wanted to. Which angles of the story did you deliberately leave out?

What did I…

GW: Well, that wasn’t really phrased correctly. In the Indiewire interview, you said, “Some reporters ask me, ‘What about personal responsibility?’ My question is, ‘What about corporate responsibility?’” So the topic of personal responsibility is one, it seems, that you kind of deliberately didn’t bother to explicitly address because it was just too obvious.

But I still think it’s very much in there. I’m not Michael Moore; I’m not Morgan Spurlock. I don’t jump into the frame and hug people or banter with them. Now, I love Supersize Me, Fahrenheit and Columbine and everything, but this is not that kind of movie. So when people say that to me, I reply, “The film begins with this woman building a 100,000 square-foot mansion she says she can’t afford, and this guy who’s getting his Jaguar foreclosed, this guy who orders his Abtronic, this woman getting cash advances on her Citi card so she can stay in the house she can’t afford, four Presidents stealing from Social Security to pretend the deficit is smaller than it really is.” So there’s a lot of personal irresponsibility in the film—situations where, if these people had the chance to do it over again, they’d do it differently. I just thought what was more interesting— I wanted to include that dimension, and if you watch the film you see that these people certainly made those choices. But I think you also get that these people weren’t responsible just for what they borrowed. They were held responsible for sometimes up to four or five times what they borrowed. That’s a lot more shocking. There was this guy who testified before Congress last week who had borrowed $3200 on his Chase credit card. And Chase is a big, blue-chip bank that likes to brag about their higher-tiered customers, that they’re not as sleazy as the other companies. And this guy paid $6000 on his $3200 debt, and the company still wanted another $6000, over a period of four or five years. That is what I really find interesting about the subject—that you can suddenly be responsible for a multiple of what you really owe.

GW: Particularly when the companies are trolling for high-risk clients so that they can get a high return on the lending, simply because they can—because it’s legal to.

Right. I was on the Steve Scher show yesterday, and they also had someone from the banking industry on the show. And I asked, “What is loan-sharking? What do you consider a usurious rate of interest? What’s predatory lending?” And the guy wouldn’t answer. Banks don’t have an answer for that question any more. Bush got this law passed last month, I think, where servicemen and their families can’t be charged interest rates any higher than 36%. And the banks are trying to get an exception from that, and are lobbying pretty hard for that. I find that shocking. I don’t find it shocking that someone watches an infomercial and buys a Thighmaster or an Abtronic. But I do find it shocking that something priced at $100 could end up costing $700. Or that a woman who owed $12,000 because of a gambling addiction—and shame on her—could, without making another purchase, end up owing $50,000 three years later. That’s what I found to be compelling and angering.

GW: Well, by and large, my wife and I enjoyed the movie tremendously. But one scene which bothered us—and seemed like a very broad stroke that could have used more detail behind it—was one where you included the televangelist who was preaching about giving money to the church.

Jerry Falwell.

GW: Right. Admittedly, I am an ordained minister and my wife and I have spent a lot of time on the inside of churches—and we know from first hand experience that there are plenty of people in the Church who are in it for the money and who are gold-digging. But did you do more investigation into the breadth of financial counseling within the Church?

Yes, and more of that information is in the book. I talked to a lot of ministers, and there are a lot of debt reduction ministries out there now. There’s Steve Diggs and “No Debt, No Sweat,” Dave Ramsey has a very religion-infused message; I’ve gotten a lot of emails from a lot of priests. And we filmed this guy from West Angeles Church, the largest Church of Christ in Los Angeles, who has a debt ministry. And yeah, it’s a real problem for their members. I sympathize with that. With the Falwell thing, I wanted to show that sequence starting with the Harvard law professor who actually went and did the numbers and said, “This is why people are having these problems,” a very empirical perspective; and then you have the perspective from the pawn broker, who doesn’t have any empirical data—he’s just in the shop day after day after day talking to people—and we ask him what’s going on; and then you have Falwell giving this perspective that I thought was humorous—and interesting, because he’s very influential, politically more than religiously. It wasn’t meant as an indictment of ministry. It’s a big issue for churches.

GW: From the churches that I’ve been involved with, the advice that people get who are in financial trouble is not as glib as Falwell came off: you know, that the problem is you’re not giving enough money to the Church.

Right.

GW: The line of reasoning is more: You need to get out of debt, and in order to do that, you need to get your priorities straight. Part of that re-prioritization is putting God first instead of people—and particularly, self—and at the same time doing what you need to do to eliminate debt and stay out of debt. Still, there are just huge sections of the Church that advocate materialism and consumerism.

And it’s impossible to encapsulate all of that with Jerry Falwell.

GW: It’s impossible to do with any one person. The last question I have for you… Your previous documentary, you couldn’t find distribution for at all. With this one, you have really hit a hot and relevant topic.

Right.

GW: How gratifying is it to you to be a part of shaping that discussion, as a result of really tapping into something that people are really paying attention to right now?

Well, it’s the best. I was talking to a person working on the non-profit side of the film, a couple of weeks before the film came out— To back up, Chase has promised to stop double-cycle billing, which is a really egregious practice; Citigroup has agreed to stop universal default, which is another really unfair practice. They’ve also agreed to stop the “any time for any reason” policy, which allowed them to unilaterally change the terms of your contact for any reason or no reason. Anyway, this person was telling me that this was happening because of the film coming out. They were very very concerned. So if this can get that kind of attention, can get their attention, can help spark debate about these issues, that’ll be the best. That’s what this is all about. If people love the film or hate it, if they feel that there’s a message in the film that they agree with or disagree with—you know, it’s scattershot and glosses on personal responsibility, or it hits the nail on the head—I don’t really care. But if it can start this debate, or be a part of this debate, then it will have succeeded. So far it’s gotten a lot of attention. We’re going to be on Nightline tonight, we’ve got a lot more media events to come, the Senate is holding hearings on predatory lending next week, Hillary Clinton just came out talking about predatory lending… If we can help get exposure for that debate, and actually have that debate— You know one of the shocking things that came out in the film in that scene with the Congress was that there hasn’t been that debate. Last week was the first time in ten years that credit card executives had actually had to answer to Congress. So some of the criticism of the film has been that we don’t have the industry’s side of the story. Well, they don’t talk to us. They don’t talk to anyone. You know, even the tobacco and oil executives have had to talk to Congress. These guys haven’t.

GW: Once they go on record, they’re accountable for something—and you know how lawyers feel about that.

And they need to be accountable, in my humble opinion. If they’re going to accept trillions of dollars in profit guarantees from the government—if they expect the government to bail them out like they did the S & Ls ten or fifteen years ago—they can’t turn around and say, “You can’t regulate us. We’re a private industry…” Sorry. That’s a really long-winded answer; but I would love to think that the film is part of that debate.

Please also see Jenn Wright’s review of Maxed Out.