SASKIA DE MELKER: The documentary “Abacus: Small Enough to Jail” tells the story of Abacus Federal Savings Bank, a small family-run bank in New York City’s Chinatown. In the wake of the 2008 financial crisis, Abacus became the only American bank to face criminal charges for mortgage fraud.
Filmmaker Steve James followed the Abacus case when it went to trial. He’s best known for his gritty Chicago documentaries including “Hoop Dreams” and “The Interrupters”. And “Life Itself,” about film critic Roger Ebert.
In the context of the mortgage crisis and all the banks that were involved in that crisis, why did you want to tell this particular story about this bank?
STEVE JAMES: I think to some extent we wanted to tell this story, because it wasn’t really being told at all, unless you read the Chinese-American press in New York City. They are in every respect sort of the mirror opposite of the big banks in 2008. They were the 2,651st largest bank in the United States. I think because they were a small bank that it wasn’t considered important. And for me, that makes it highly important to tell the story.
SASKIA DE MELKER: At the heart of the film is bank founder Thomas Sung and his two daughters, Vera and Jill, who ran Abacus with him. The case against abacus began after the sung family discovered some loan officers had altered mortgage applications to fraudulently qualify some borrowers. The Sung family itself alerted financial regulators.
STEVE JAMES: They discovered the fraud that was going on among some loan officers and took action immediately to try to root it out. Initiated their own internal investigation and got rid of some more employees. And then were fully cooperating with the DA’s office because they thought the DA’s office was going to actually help them to root out any additional fraud that might be going on. So for them to then turn around and be indicted and be accused of endorsing and maybe even directing the fraud at the highest levels of the bank was just astounding to them. But I made it very clear to the Sungs, if we’re doing this film, we’re doing this film, and we will make every effort to present the case that’s against you.
SASKIA DE MELKER: The film interviews several jurors from the bank’s trial and lays out the prosecution’s case against Abacus and 19 former employees.
CYRUS VANCE JR. In Abacus’s loan department mortgages were based upon false documentation. We have evidence of conspiracy, larceny, and systemic fraud.
SASKIA DE MELKER: Manhattan District Attorney Cyrus Vance Jr., did not give the Sung family the option to reach a civil settlement and just pay a fine…the type of deal offered to big banks who sold toxic home loan portfolios to investors.
CYRUS VANCE JR.: I think every American was upset at the crisis that we went through.There was behavior that was less than ethical, and I think Americans were upset that the security against which loans were made were often fictitious. And at Abacus there was some truth to that, too. It’s clearly not a big bank, and clearly it’s not representative of the entire financial community, but I think the principle was the same.
SASKIA DE MELKER: Vance prosecuted Abacus even though it had one of the lowest default rates in the country. Only nine of three-thousand loans Abacus granted were not paid back during the five-year period covered by the film.
HWEI LIN SUNG: Cyrus Vance just felt this is easier to attack, especially it’s a family bank. But he doesn’t realize that Tom is not easy to be pushed around. And my girls, they’re tough, smart capable women. So courageous.
SASKIA DE MELKER: Central to the film is the city’s Chinese-American community that was the bank’s customer base, as Jill Sung explains.
JILL SUNG: We serve people who have never even dealt with the banking system before and you try to bring them into the banking system. An example of that is the safe deposit boxes.
THOMAS SUNG: There are 8,000 plus boxes in this vault. 8,000. The Chinese people, particularly the immigrants, they rent houses in very tight quarters, with no place for them to put their valuables except in a bank vault.
SASKIA DE MELKER: Abacus Bank serves mainly the Chinese community in New York City, largely first-and second-generation immigrants. How critical was that to this story that you tell about their indictment?
STEVE JAMES: I think that was key. There was a kind of profound insensitivity to the ways in which banking happens in immigrant communities, not just Chinese-American, but even historically, are usually living in a cash economy, especially in those early generations. This is the reality of life in America for these communities. And in order for them to climb their way up the ladder, so to speak, and get mortgages and start businesses, it’s done differently. And that’s one of the things that Abacus understood as a banking institution.
SASKIA DE MELKER: The Sung family spent 10 million dollars on its defense. The film shows not only the legal struggle but also the personal toll of going to trial.
KEVIN PUVALOWSKI: They made a decision that they were not going to plead guilty to something, that they did not feel the bank was not guilty of. That is a courageous choice and it’s an expensive choice. It is a daunting task to fight the government.
STEVE JAMES: If they’re found guilty, it surely would have been the end of the bank. Personally though, the stakes were even, I think, higher for the family this bank really represented them. It was their legacy. We are with the Sungs during this ordeal. And you get an up close and very personal look at the stress and strain and the closeness and the bickering that goes on as they face this. The Sungs are just this sort of wonderfully close and very funny family in a lot of ways. And they never kind of lost their sense of humor even at times in the midst of this.
SASKIA DE MELKER: What do you hope that people take away from this film?
STEVE JAMES: I think it’s a film about a community that is not known to stand up for themselves in this country. That historically, perhaps because of having come from mainland China and more of a police state, they have done everything they can to avoid any scrutiny or any involvement or engagement with the powers that be. And this is a case where this family said, ‘ No, we are going to fight back.’ for their community and their bank that is a pillar within that community.