Abacus: Small Enough to Jail (2016)

Director: Steve James
Cinematographer: Tom Bergmann
Producer:  Mark Mitten and Julie Goldman

by Jon Cvack

Working my way through the 2017 Best Documentary Oscar nominees, I was excited to see Frontline get a nomination, which is by far the greatest docu-series and one of the most underrated television programs in existence. This story is about the one banker from the ‘08 crash that actually went to jail - an elderly Chinese man from a small community bank in New York City’s Chinatown. 

What Frontline does so well is shed fairly objective light onto complex topics; interviewing a range of legitimate participants and experts in order to best explain the story. While a few episodes are two-parters and others no longer than twenty minutes, most are around 55 minutes in length, which as HBO helped demonstrate, is the perfect length for a show. Abacus isn’t at all a bad movie, but its hour and a half runtime does make you appreciate the briefer format; making you wish that maybe other episodes were awarded the longer run time. 

The story focuses on the owner and main character of the story Thomas Sung who was so inspired by Frank Capra’s It’s a Wonderful Life (1946) that he decided to pursue banking. Sung was educated at an Ivy League school, received his law degree, and while able to choose whatever lucrative Wall Street career he wanted, decided to go back to Chinatown to open up a bank and help his community. The place is co-run by his two executive daughters Vera and Jill, while the third younger daughter Chanterelle Sung has been clerking at the District Attorney’s office, who would soon be the ones to press charges.

What we see is that the family is like any other, with the sisters arguing over one another, drowning out the youngest while Thomas tries to moderate the discussion. His wife Hwei Lin is uninterested in any of the operations, often serving as the one rational voice (or two, if anyone listened to Chanterelle). 

The exact accusation is a bit confusing, but essentially, like the mega banks, there were employees at Abacus Federal Savings Bank that were approving loans for under qualified individuals. My dad was also a community banker (now retired) and so I’m confident in explaining the situation in which there were two versions of the stories. The Federal National Mortgage Association (aka Fannie Mae) is a government sponsored, publicly traded company that allows bank mortgages to be rolled up into securities, purchased by other larger banks and insurance companies and be traded on the market while providing profit and limited risk to the bank. During the Clinton era, the qualifications were lowered in order to stimulate housing purchases by the lower-middle to lower class citizens. Thus there are two arguments to be made 1) that these standards shouldn’t have been pushed by the government, and therefore indirectly forced banks to make bad loans (reason being, if banks didn’t extend loans to less qualified individuals they couldn’t remain competitive in the market), or 2) that the banks themselves shouldn’t have granted these loans to people they knew couldn’t pay them back. My view is that it’s a combination of two - the qualifications were lowered, but greed also played in a role in officers turning a blind eye toward grossly unqualified applicants. Of course, I recommend The Big Short (2015) for a far better breakdown. 

As an example, Thomas Sung mentions how many in the community (i.e., street vendors) might not have the income to qualify, but given the culture of Chinese People, per tradition others would help out - such as family and friends; entities that can’t be directly reflected on the paper. Thus, some of Thomas Sung’s employees might have been willing to overlooked members of the community who failed to qualify for loans, and therefore were granting federally backed loans to individuals they knew wouldn’t pay back the money, getting them the benefits of rolling these mortgages into securities even with poor financial health.

It poses a great question as to why New York City government decided to pick on the Sungs rather than the megabanks down the street, but what I think the filmmakers also suggest is that it doesn’t necessarily mean that Thomas Sung is innocent. It’s here that the film gets lost in the details, as we hear the court transcripts while looking at the courtroom drawings. What I enjoy about the film is that the filmmakers (of Hoop Dreams (1994) fame) don’t necessarily let the Sungs off the hook. Personally, I think that much of the defense sounded suspicious (there are, after all, 180 criminal counts), especially when the defense showed silly diagrams about where the nefarious employees sat and why it would have precluded Thomas or any of his daughters from ever knowing about the loan approvals. I couldn’t help but think if I heard or saw a similar defense from JP Morgan or Chase. 

By the very nature of being in charge, especially in such a relatively small place, I find it hard to believe that they could not have known about it; as I would use the same logic extended at the large institutions would fail the smell test. Whoever’s in charge should be at fault and to simply blame the lower employees is wrong. It creates a fascinating dilemma - on the one hand it seems the government was going after some low hanging fruit with at least borderline racist intent, and on the other, if you believe that the bankers responsible for the 2008 financial crisis should have gone to jail, then this institution deserves to be investigated. Abacus granted loans to get the liquidity from Fannie Mae to remain competitive, essentially aiding in creating junk bonds. They should not have been who the government went after, but for the same reason I don’t think any bank should be too big to jail, I don’t think any other should be too small. 

To defend otherwise is to say there are exceptions and that it’s a bit more complicated, it’s this exact defense that allowed the big banks to walk away unscathed. Difference being that they could afford the lawyers and the small banks couldn’t. Doesn’t necessarily mean any of them should go free.

​BELOW:  Decent overview of the characters
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