tv Book Discussion on The Divide CSPAN September 1, 2014 12:45pm-2:06pm EDT
lakefront. there were photos. people packed entire lakefront. the megaphone man goes up and down, tells everyone, lincoln beachy will try the altitude record. he goes up. sure enough he gets to 11,641 feet and they know this because they had a thing called a baro graph, that they mounted on the plane, used air pressure to everybody altitude which i don't completely understand but it seemed to work. he is a dot in the sky. half a million people are watching. all of sudden the dot starts to circle and gets larger and larger, people see that the propeller isn't moving because he used all his fuel on the way up. he is out over the lake, where if he crashes he will certainly die. he circles down. in front of half a million people he lands his airplane in front of the grandstand, not 200 feet where he took off. now that is flying. >> you can watch this and other programs online at booktv.org.
>> matt taibbi talks about the divide between the rich and the poor in the united states and the problems that grow from the level of wealth inequality that exists now. that's next on booktv. [applause] >> wow, thank you. it is a big crowd. i was actually at a, i did a speech for a law firm in new york about a month ago and, the crowd was way bigger than i expected and, i was about to take, go up to the podium and i asked the partner at the firm, i said, how did you get so many
people to come to this thing? he said, that was easy. we told them you were ben bernanke. [laughing] so i don't know who they told you was coming to night but my name is matt taibbi. i'm a reporter formerly of "rolling stone" magazine. now with first look media. i will explain i guess, myself. what that is later but first i obviously want to thank all the folks who brought me here. kay and burt and her husband and craig from the library and everybody who had a hand helping me come here today. >> [inaudible] >> okay. is that better? all right. so i have a new speech for you all tonight. i actually had my speech that i had written for this book tour. i actually used it a few times
and i, i threw it out this morning. i was dissatisfied with it. i thought it turned out to be not entirely honest and so i'm kind of try to tell you all a little bit of a different story about the backstory for this book. because there is sort of an interesting backstory to this book. what happened with the writing of "the divide." it was classic example, it began classic example what can happen when journalists get lazy and i was a classic example of that phenomenon and this book very nearly turned out to be a lot worse than it is because of some things that had happened in my life leading up to the writing of this book. so i should really go all the way back to the beginning and because six or seven years ago i had no knowledge about anything in the financial services
sector, about which this book is significantly concerned. i didn't know anything about wall street and i candidate practically to the day the moment when my career, kind of took this bizarre turn from being somebody who essentially, just made fun of politicians for a living. that is really what i did. i was like a humorist, who would go on the campaign trail and make jokes about people, from being that, to being this internationally-recognized expert on white-collar crime, which is to this day still funny to me. but this all really goes back, and i remember the day, and i know the date because it was, it was an important day in american history. it was september third of 2008. i was in minnesota. i guess st. paul at the xcel
energy send covering the republican convention. everybody remember sarah palin's speech here? i was there at the convention and i was covering that speech and i remember sitting as people were going nuts for this speech thinking, well this is amazing. this is going, this person is going to be an important phenomenon in american politics and i was trying to formulate what thing i was going to say about this and trying to come up with some funny angle on it and i went back after the speech to the filing room, how many people are journalists in this room? do we have any? a couple? so the filing room is always like this windowless hole that they find in any event, in any location where they stick all the journalists and you're supposed to write your story after the event in basically this little cage where they keep the journalists. so i went back there and i was with all the other campaign reporters and i logged on to the internet and i was sitting down
to write my sarah palin story when i look on the internet and i see all these news stories how the international economy is melting down and i was completely mystified by it. and i was reading, i was trying to figure out what was going on and all i could get was it had something to do with mortgages and who knows what it was and there were all these venerable companies that would go out of business tomorrow unless we gave them $100 trillion or something like that. i remember looking to my write and -- right, there was seated there a very prominent, i will call him reporter for a prominent east coast news publication and i said to him, dude, are you reading the news? like the world is ending and do you know anything about this? do you know what a subprime mortgage is? i remember he was typing already, and goes like that,
whatever. that was his response. he didn't care at all. he gave me the whole, everyone seen the movie, "clueless"? like, whatever. so i was, i was deeply disturbed by this moment because obviously journalists, our job is to pretend to be experts about things we know absolutely nothing about but this was going far beyond that. here we were in the middle after presidential election was becoming more and more about the economy and the economy was melting down and not one of us had even the faintest clue about the causes of it. and the more i read in the newspapers, the less i understood. all the news stories about the causes of the 2008 financial crisis were written in this totally impenetrable camouflaging jargon where, it was impossible for an ordinary person to make head or tail of what was actually going on.
and i, i got some word ahead of time from my, midtores that as soon as the election was over i was going to be assigned to cover this phenomenon and to write a story about what the causes of the crash were which of course sent me into this terminal panic basically pause i could not understand the story for the life of me and now i was going to have become an expert at length in "rolling stone." because we don't do anything at 300 words. it is always 5,000 words. so i was imagining 5,000 words of ignorance. and, so i started, journalists are basically professional test crammers. we don't know anything. we try to learn it all by the next morning, by studying up. so i got all of these books. i started at the very beginning, wealth of nations. [laughter] you know, milton friedman,
hayak, all the econ books and i was calling up wall street analysts, sort of at random like cold calling them, saying things like, just tell me something about something you know. that was how i knew so little, that i didn't know what questions to ask. so i just sort of made general inquiryies hoping that somebody would help me figure out what was going on and nobody could. it was all the same stuff. nobody could make any sense of the whole subprime mortgage thing for me. then finally i got very lucky and i found this guy who was a former trader for credit suisse who had an interesting sideline hob which, which he made these very mean and funny cartoons about the banks on the internet in his spare time. so i figured if this buy can do cartoons then he can probably help me. he took me to lunch. and i started manai actually
explaining to him my problem. i'm three weeks away from a deadline and i don't know anything. he says to me, your problem is you're looking at this all the wrong way. you're thinking about this as an economic story and it is not. it is a crime story. and everything from that moment, everything started to become crystal clear to me. he started to explain to me what the mortgage scam really was. and essentially, what it was, was a much huger, two-scale version of the trademark counter fitting scam. we were actually in chinatown having this discussion. he pointed out the window at some people who were selling phony prada bags out of a trunk on the streets of chinatown. you see that? i said, yes. well, it is the same thing instead of fake handbags it is fake aaa mortgages. and he starts telling me this
whole thing about how, what the banks were essentially doing what they were lending billions of dollars to these fly-by-night subprime companies like countrywide, which in turn were fanning out into middle class and lower income neighborhoods, giving mortgages to anyone with a pulse. i remember, i remember talking to one mortgage broker who worked for a countrywide-like company let's say, and he told me that he, his strategy was to go to the 7-eleven at night and hang around the beer cooler. that is how he found customers for his subprime mortgages. and they would hand out these mortgages to anybody and everybody. of course they didn't mind doing that because they weren't going to hold on to them more than ten minutes. a as soon as ink was dry on the mortgages they sold them back to the banks. the banks in turn took all the mortgages, through them in a big vat, chopped them up into securities and bullied the ratings agencies, who are financially independent on the
banks, they bullied them giving high aaa ratings for securities and they would turn around and sell the securities to institutional investors like pension fund, foreign trade unions, foreign hedge fund. so if you boil the whole thing down to its essence what they were really doing, they were creating huge masses of highly risky, essentially worthless debt and, using bogus math to turn them into aaa rated securities and then selling them to, say, state pension funds. so they were robbing old ladies. that is all it was. it was the same, same thing as selling phony handbags or phony rolex watches except it was in this case phony mortgages. so i was fascinated by this i was completely hooked. and this new approach to looking at the subject, i thought gave me an approach to covering the topic that nobody else had. and i did a couple of stories.
the first story that i did was about aig and the causes of the aig bailout because one of the interesting sidelights of all this was that while many of these companies were creating all these bad loans, a lot of them got smart and realized that all of this unsustainable. so as they're selling all these bad loans out into the world, they started to bet against them at the same time. and where did they bet against them? they went to companies like aig, where they essentially bought insurance policies against their own product and what they didn't know, they would ultimately blow up their own bookie by doing this and that's the backstory to the aig bailout which is that aig was crushed under the weight of its own portfolio and its financial products portfolio which involved a number of these, sort of credit default swap bets against the subprime
market. so essentially these guys bet against their own product. they blew up their bookie. when their bookie was going to go under and they went to the federal government said, this is intolerable. we need a federal bailout so we can be paid off on the bets we made against our own product. which is great, and brilliant when you think about it. i was write about all these things. and i became completely fascinated by the subject and over the course of about a year, year-and-a-half, i became more literate and in the jargon and i learned to be able to read "the wall street journal" and not, you know, be completely mystified by the language they were using and to sort of read between the lines of a lot of things that were going on in the business, understand the bailouts, all of that. and i, i occupied this kind of strange space in the media because there really, if you think about it, there was no
place in the american media where anybody was explaining anything that was going on in the financial services sector for the rest of america, like the financial press is written for people in finance. if you pick up "the financial times" or "the wall street journal," and you're somebody who lives, not in lower manhattan and has a job unconnected to finance, you will find it very hard to read most of the material. . .
energized my career. i had a chum and this intellectual challenge the work was in a way x. essentially kind of disturbing to me just going out on the campaign trail and making comments about politicians because was i a really adding anything really adding anything by doing that? probably not. it's much more important. so i started to write one book about it which did fairly well and i started to get more offers to write another book.
whether it was the signing and whether it was a situation like jefferson county alabama where a bunch of banks sold these toxic swamp deals to mystify the locals who didn't know what they were getting into and they might have bribed the officials into taking videos. that's an easy subject i will write about that. these people have done tremendously destructive things against prosecutors and lawyers and they are assuring me a large percentage of the behavior is criminal and that it could easily be prosecuted but it's
not being prosecuted and i started hearing things like while after the snl crisis in 800 people in jail and what are we doing now we are not putting anybody in jail so this was interesting to me. i thought this will be easy. it will take me six months to write the story. i will take a bunch of chapters and write one story after another people will read it and they will be upset and the book will sell and it can be easy for me to do. this is where i want to talk about laziness because i had gotten lazy. the whole experience of having gone through that stage of my career where i was doing the same this it was intellectually challenging and interesting i
had really stopped asking questions about a lot of things. when you start doing things because they are easy, you can get into trouble really quickly. and so just to do my due diligence at the time, i decided it was important to cover the bases rhetorically as i covered this infuriating story of people who kept fraud in the billions that i should find out a little bit about who does go to jail in america and why and how the criminal justice system works and that i would have to re- educate myself about another thing where i was not an expert. and so i started traveling around the country and spending a lot of time and words and police stations talking to people who had been in prisons, talking to immigrant lawyers and
i was completely overwhelmed by how much i didn't know about what ordinary people went through when they have to had to go through the criminal justice system. i was sort of happily living through this whole period of my life in a twisted financial crisis had been a huge boon to me personally and i hadn't spent paying attention to this other thing that simply had been going on for decades in this country that i didn't know anything about and just to give you an example one of the first stories i learned about when i was in new york i went to a public offender's office and i found out about a mentally disabled 13-year-old african-american boy who had been picked up by the police, thrown in the back of a squad car and told he couldn't go home that night until he helped the officers find an illegal gun.
basically this young person didn't know you could just get out of the car at any time create the officers told them that there'll attend was going to get them in trouble with this little boy didn't help them and him and the little boy finally tells the policeman there is a gun at his grandmother's house and you can all guess the ending of the police descendent from the grandmother's house. they arrest everybody and their grandmother, the kids brother they are dragged to the police station and i start to hear that this is not an uncommon circumstance people are swept up all the time. there is a crime squad in new york that is dedicated solely to finding guns and they did extraordinary things to try to get people to it than information including this. i started to contrast this for
instance how we pursue the higher-level offender who might have defrauded people out of billions of dollars to go to this other part of the population and i started to get a little bit more emotionally involved. the stories in the book actually she went to the car and the supermarket to buy groceries for her kids and she gets rear-ended on the way home and she begs and pleads with the person she's involved in the accident with him to be undocumented immigrant i will be discarded and i won't see my kids ever again.
and the woman that hit her is an immigrant herself from india and she didn't listen and she was taken away and thrown into jail and despite over the practices of the local ministry who had known this woman from church because she had been in the country for ten years and this one went to the through the whole process of the deportation proceedings. she ultimately prevailed in the case that took quite a lot of time she was separated from her kids for a long time and is similarly a woman in los angeles this story is also in the book her husband was involved in a fight with some gang members in his neighborhood she was actually a working man and was mad about this guy selling drugs on the corner and he told them to move up the corner away from his kids and he got in a fight into the police that everybody in and deported everybody and the woman never saw her husband against her now she's left with
six kids all by herself with the means of taking care of them and they all get evicted and they are living in a car but it turns out you can't have a car in the state of los angeles if you are undocumented because you are not allowed to have a drivers license and she gets arrested for that. to find she she has to pay initially as $1,700 they are always incredibly high compared to the ability of people to pay. she tells the judge that she can't pay that much money so he sends 270 hours of community service and starts talking about how she would have to bring each of her kids to school on the public bus system every day she would go to her job cleaning houses and at the end of the day she would pick up her kids by bus again and go to a soup kitchen where she would do her
immunity service until past made night with her kids running around. she talked about crying in result to sleep at night and i met another guy named andrew brown and his story is also in the book. i was in a law office on another story waiting to hear another one this 35-year-old african-american bus driver comes in and tells me that he had been arrested for what he called obstructive pedestrian traffic and i didn't know what that was. i asked him to show me the summons and people so they sprinkled piece of paper and shows it to me and they are in the obstructed pedestrian traffic it turns out he had come
home after driving a shuttle bus she works for a casino company and shuttles people all over the new york area and he comes home and the police see them standing in front of his own apartment building with his friend and they are listening to music sharing headphones and the whole purpose of the statistics policing strategies of new yorkers to stop people and what they are looking for again are it in our guns or warnings or fugitive space at the. and they stopped these two and the ostensible reason was that they were quote unquote obstructing pedestrian traffic even though it was one in the morning and there was nobody else on the street and they were just standing there in front of their own apartment. of course neither of them had guns or warnings, so theoretically what they did is they throw all of the innocent people back after they kind of throat this big match over these communities.
but they don't always do that. instead what we found out is that in practice they proceed with whatever these ridiculous little pieces are and force people to go through the process of either pleading to these ridiculous offenses or fighting them out and so andrew have to go through months and months of court appearances where he was continually unable to convince his own lawyer that he was innocent of the offense of standing in front of his own house. they kept asking him will you take a 50-dollar fine it's only $50 he would say no. okay. fine how about 25? and he would say no i'm not guilty. i'm not going to pay this fine. and i watched the whole process from beginning to end and it took months. it wasn't until the very end of the process and the judge finally asked the policemen on duty was there anybody on the street at night clicks the
policemen sheepishly admitted that there was not coming around her in that case case dismissed i guess. i do live to new york for ten years and they i've never asked enough questions about what was going on. and it turns out that for other people is a completely different experience and so i realized this reflected back on a person and as a reporter. and it occurred to me that this had to be -- there was no way to
write a story about people going to jail on wall street without actually talking about the other side of the coin about the gigantic mindless punishments that we had. it became a gigantic juxtaposition where people go through the same processing discovery that i did. if we can see the stories side-by-side and over again i wouldn't even have to make an argument about how unfair it was you could just see it for your self and that's why if you read this book from the quote on quote later point of view isn't the tightest narrative in the world there are long stretches in the book that you can see that i have kind of gotten
caught up in just saying can you delete this happened and there would be a long passage about it to somebody that's been through this incredible experience and then i will finally have a downshift from that back into something that happened on wall street, and it's not the most structured levelheaded argument in the world. he became a very emotional exercise for me to try to do the stories together. we have a woman who loses custody of her kids she may
suffer a small jail sentence in fact there was an amazing case in ohio and a woman who have told him who had lied about where she lived and she claimed she and her kids with her father in a neighboring town where they had a better school district because she wanted her kids to go to a better school when this came to the attention of the authorities, the judge who was the one ruling on the case said that it would outrage justice if this woman didn't get a jail sentence. so she was sentenced to 15 days in jail and she ultimately got off. that is the sideline to the story but this is all juxtaposed against people like angela mozilla with countrywide.
nobody considered taking his kids away from him. but the civil case they finally did bring against him ended up finding something in the order of $49 million. most was covered by the insurance policy by bank of america but then had acquired countrywide and mozilla had earned its time a time as the head of countrywide somewhere in the order of 450 to $500 million. so come he got to keep a 400 plus million dollar fortune and walk away without giving a day in jail and sort of ride off into the sunset.
so this is a justification if you do the movie crimes and misdemeanors if you create a very small crying the consequences would be extremely severe and if you commit an unbelievably massive crying like the people of countrywide did there were no consequences at all. and i just can't underscore how completely the activity at countrywide really was in the classic sense of criminal fraud and i talked to a whistleblower that worked for that company who ironically was brought into the equal of the control officer at the firm. we worked other major american corporations before and she tells the story about going to the office for the first day driving it to the parking lot and he sees the number two or something like that but he had a personalized license and when he asked what that meant, he was
told we get mortgages to everybody and that's what that means. in other words, this is a company whose stated policy to the point they put it under the anti-plates on the luxury cars was not to do any due diligence on their home loans and to crank out as many as they could and felt him back to the banks that would again chop them up and sell them to the rest of us with the securities. so these are the kind of things that are in this book with lots of sort of side-by-side stories like this and there are a lot of things that i learned about very basic inequities in the system that people don't think about a lot. for example here are a couple of stories about the very important phenomena on in this country that people don't think about much which is the bail. it's critically important old
question of whether or not you're going to get away from the crime in america. lawyers in court rooms at least in new york new york city new york city had a saying if you go in you stay in and if you get out you stay out. in other words if you survive the hearing without getting -- you have enough to get out on bail he will be able to fight the case and you'll probably win. if you don't come if they find a number that is high enough that you can't pay it they even have a term for this where the judges and the prosecutors actually analyze the assets and find out just how much it would take to keep you in jail and they named the amount beyond your ability to pay. if you go when you're not going to be up to fight it and why can't you fight it? they have for instance in new york city and other places a speedy trial rule that
ostensibly means they either have to bring you to trial and into court or dismiss the case within 90 days but they have a trick they use to get around it and i detailed in the book. what they do is on the first court date, the prosecutors show up in court and i watched the sun over and over again. they would say to the judge we are not able to proceed today. and the judge who always has an overstuffed pack calendar with so many crimes going through the court rooms it's not like you can reschedule for tomorrow it looks like the calendar and says okay let's meet again and in a tweaks or nine weeks or ten weeks and the defendant is rolling his eyes because he knows he or she knows they are going to be in jail for again that's period of time at least and the prosecutor agrees and they go away and then what happens the next day the prosecutor quietly files in
document called a certificate of readiness. the court doesn't charge 60 or 70 days of the 90 days, doesn't charge the prosecutors that amount of time it only charges them for one day towards the period so even though technically you are supposed to either be convicted or out of jail within 90 days they can actually keep you in jail more or less infinitely by reusing the process over and over again so if you don't have enough money to get out on bail you're going to be in there a while and this is sort of the four corner offense of the misdemeanor prosecution in some big cities and what happens as many defendants realized they could spend a lot more time waiting to go to court than they would if they were convinced that in
sentenced of whatever kind it is especially if it is in the misdemeanor like petty theft or something like that if it's not a crime that involves a weapon or some kind of violent assault. sobering overview of the people in the court and either plead or taken off her and they end up getting out the zero plus ten days because that is the things that happen is as soon as possible that they can keep you in jail they start coming to you with offers just like andrew brown started getting offers for $50 then $25 or whatever it was. they start coming to people saying how about the time served plus ten days or plus five days or time served plus two hours and a snickers bar or whatever
it was. you got kids at home waiting for you and you might be losing your job or you have already lost your job. you're going to take video of 90 times out of 100 so people plead out to the cases and now they've got a record so now they are swept up for whatever it is and the bail is going to be high here. they were stopped in the south bronx basically for driving a nice car. they said in order of set in order of marijuana that was emanating from the vehicle of
course this was the middle of winter when the windows were rolled up and how the police detected the odor is the sweep them up on the idea that a small marijuana. they don't find any in the car but they charged him with possession any way and they are in the system for a year and a half before the case goes away the next time period one of them come and, and then he had been applying for a job as the driver for the mta system and you can proceed for an application in a state job if you have a drug taking over your head so he lost the chance at the job. i learned a lot of things about why they would. the way the policeman gets
promoted in the cities of new york is the number of guns they retrieve and the number they catch on bloglines in some districts in some precincts. they've been told they have to empty the pet of the summons every month or they will be told if they have a squad of eight that goes out in the morning they have to pick up eight people before they come up to the station house they will be told over and over again about how the system works. they would be put into the squad car and they would be put into a van somewhere in the neighborhood where all of the people that have been swept up in that operation were sitting
they get them to go on the higher ups on the aig especially first of all none of these guys had the bail and post upon them to keep them in jail. they had huge crowds of people come to their avail hearings and they would tell the judge your honor this is somebody that wouldn't even jaywalk. after they were convicted the judges didn't even force them to go to jail bailout of them to
stay out and sleep in their own beds pending the appeal. they would be the more serious targets at aig. so again this is just a contrast where you see ordinary people who are just sort of tossed in jail by the buck and there is a formula that they are used to calculate how much bail you get that is based upon how many times you've been arrested and how you show up in court to support you that they, whether you have strong community ties and a job or telephone in your house. there is literally a formula so this is sort of a long combo line of defendants that come in for street crimes and the judge doesn't even look up half the time. he simply announces an amount to send away the ones who can't afford it get sent away and they end up pleading and you contrast
that with the situation of the high-level targets that are at the time the most significant targets in all of wall street prosecution. and that is the difference in how it is. the bail isn't a factor for people involved in white collar crimes. but it's an enormous factor for everybody else. another situation that's important to talk about is the repeat offenders. there are no second chances for people who commit things like welfare fraud. once you've are called humor out of the system forever. you lose the ability to obtain professional licenses, members of your family may even be thrown out of their homes if they have section eight housing. there is a bizarre anomaly in the states where they teach you how to cut hair but when they
find out of they get the convicted criminals cannot get a burger's license. meanwhile on wall street the repeat offenders there's absolutely there is absolutely no consequence to being a repeat offender. have you heard of the hsbc case? this was the case a few years ago which the largest bank in europe admitted to laundering among other things $850 million of drug money for the central american drug cartels and the behavior was so brazen that they actually had specially fitted holes in the windows for drug dealers to slide boxes of cash through. hsbc had been warned that they violated agreements not to longer money over 30 times in the ten years prior to that agreement. and in that agreement, it was a
d. for prosecution agreement. they paid the fine. not one person that one day in jail and the only individual consequence for any individual in the company was that some of the executives have to be further bonuses for five years. "the new york times" a few years ago did a story they found. an example would be citigroup in 2011 which paid a 285 million-dollar fine to the civil fraud charges, and again the economic damage is higher than $285 million they paid that much. but they had been sanctioned for breaking exactly the same anti-fraud statute in the year 2,000 in 2005 and 2006 and in 2010 and each time they were led
off with a fine and once again they were about to promise that they would never do that again. and this is a common circumstance in wall street enforcement. one liquor store is one thing that if you hope to, you know you can imagine the consequent desire. fraud to talk about the two cases i already mentioned the single mom on welfare versus angela brazil zero are both fraud cases with different outcomes but there's also the question of how do you make the fraud case. i found found out for instance when you apply for the states like california one of the things you have to do is to show show up every quarter and sign a document where the penalty of
perjury that test two -- and then you list these other things about your life and you basically have to write a mini biography every three months and what they are looking for is are you cohabiting with somebody, do you have assets that you're not telling about him how monday you have cited work you're not telling us about? do you own a car that you're not telling us about? so you have to write down all these things and they know what you have to give to get welfare. as soon as you sign a document it goes into this big computer and starts checking it against all these different databases so if you don't have a car and suddenly apply for a drivers driver's license, the case is automatically generated. or it could be even more primitive than that. you could check the box saying i
am living alone i don't have anybody in my house and the neighbor may get a reward for calling the tip line saying my next-door neighbor had a man staying in her house two out of seven days last week and that can become a fraud case. if you show up at your welfare office to talk to your officer and he or she sees you getting out of a car driven by a man that can become the genesis of the fraud case so basically what you're doing is on a semi regular basis you are saying i promise all these things about my life are true and if you find any holes in my story anywhere then you can catch me for fraud and i could lose custody of my kids etc.. meanwhile on the other side of the coin, banks that were recipients of major federal bailouts which of course are another kind of welfare recipient we don't even have the right to go into those companies
through it is a starkly different situation where the state claims the ability and the right to claim at 12 that you are a major bailout recipients use used to maintain the protections of the corporations and other individual you will never see any kind of retribution for committing any kind of fraud. you think about assigning cases -- i know i've been going on and on. i will wrap it up quickly. but the robo assigning cases are all flawed. you could walk into any courthouse. you could go in this city -- all you have to do is google famous robo signers include for any for closure documents in the city
and public courthouse and cuba find cases of fraud. there will be a situation where some person that purports to be the vice president of j.p. morgan chase wells fargo in fact it's always like a 23-year-old kid that they just hired who was given this title and he says i have personal knowledge of this home loan from the beginning. they filed it to the court when they wanted for close up on someone and in reality, that kid is assigned 1,000 of the documents that day. that's fraud but nobody ever does anything about that. it's kind of like the movie the untouchables where sean connery says it's not like we don't know where the liquor is. it's a question of whether or not we are going to arrest the people for bringing it in or not. he goes into the post office and
you wrestle all of those books for bringing liquor in chicago and it's the same thing here. the last thing i want to talk about is the restitution and quickly restitution in the cases is always at least 100%. again off to go on about the welfare thing of thing that if you get caught for welfare fraud and it's an 800 u. would be $800 minimum. that's how much the restitution is going to be. i interviewed one man who actually under the california three strikes provision he was sentenced to life in jail for stealing a $2.50 per tube socks and his restitution is north of $11,000. he had two until the sentence was finally committed last year and at the time of the release
he hadn't paid off the restitution. if you look at the thorns in the wall street companies if you see a billion-dollar settlement you can see that profit is $30 billion would use each case said settling for $20 billion which needed for a variety of offenses you can bet bet they made an awful lot more money than that. in fact that turned out to be about half of the banks last year so even though it gave them that last year it wasn't enough to puncture the bottom line for a single year. so this sort of speaks to a wider problem we look at the two different kind of offenders differently. i remember early on in the process.
he says to me have you been to the jail they are dangerous. i'm not disagreeing with you 2.2 million people in jail in this country. and it's the mentality that jail just isn't the right resolution for this kind of offender but it is the right resolution for another kind of offender. and that is a dangerous situation for us to be in. and just lastly the last thing i want to talk about is political consequences which is the doctrine that was invented by doctor and attorney general eric
holder back when he was the deputy attorney general and the clinton administration he wrote the same that came to be known as affectionately as the holder memo and the collateral consequences. all collateral consequences says that if you are a prosecutor and you are worried about the innocent victims of the prosecution of a major company like for instance the shareholders or media executives who were not guilty of wrongdoing like for instance hsbc those that were not laundering for the drug dealers if you are worried about them and worried about the community and where they have their headquarters you may seek other remedies like fines and nonprosecution agreements. and this is a sensible policy you don't always want to wreck the company because a few bad apples might have been
laundering money for not terrorists or whatever it is. but what they've done now is they have completed the policy with another policy which is not even to proceed against the individuals of the firms. so why don't you may understand not filing a criminal account against of a criminal account against the company because that could have devastating consequences for any company even one as big as hsbc but they've decided apparently you can see it by their actions they are not going to move against the individuals of the firms into so to me this speaks to a moment in our history where it isn't are the companies too big to put in jail, but the executives are increasingly viewed by the people in the justice department and in our law-enforcement structure as being not the right kind of
people that go to jail. there are certain kind of people who will pay fines and other people that can handle going to those dirty dangerous jails where people get stabbed and that is just a dangerous place for us to be and that's what this book is about. i hope it has some kind of impact and i'm happy to take any questions from you. [applause] >> when you started you said you had been giving another version
and then you said you threw that out this morning. then he started to give us the honest version. so i want to know what the dishonest version is. [laughter] >> i just left out the part about how the fact that there is an undercurrent of it is kind of ridiculous if you are paying close attention this is the story about a middle-aged white man who just didn't know that poor people could go to jail really easily and that is kind of the banking. and all i was really trying to say is that i should have talked about it more in the text and database is the reason it's it's written in this scattershot fashion. there are a lot of these kind of bursts of outrage mixed with
analysis. i should have been more open about this. i am trying the best i can to try to tell that story a little bit more because that's definitely in the background of the story. >> i worked with you on a pension story and i just want to ask you about what can people do about it? i was disappointed the media in general hasn't picked up a lot of stories i've been trying to talk about and you have and others have but what can the people in this room do to get the local media and politicians more involved to start to get engaged in looking at these issues and the solutions i am
not great at it. i know for instance on the question of too big to fail and what are we going to do about these companies that are so big we can't prosecute them? the obvious answer that even the chiefs of most of the federal reserve branches in this country have come to that we have to break up these companies. now how do we -- right? ' few are too big to fail you are too big to exist and there's no way around that. they basically a implicit federal backing and the funny thing about this for me is i'm probably thought of as a politically very left person, very progressive person that actually the experience of doing this story has pushed me in the
other direction with the fastest way for all this stuff to resolve itself is to get us back to a situation where these companies are small enough where if they are corrupt and if they are stupid if they do wrong things we can just let them go down in history which is what we did in two and 2,008 at there's a sentiment in making this happen somehow there are those that are being sponsored by sherrod brown in ohio. honestly it is going to take another cataclysm for us to get there. there are a lot of people in congress that will tell you privately that intellectually they are there already. they agree. but it's a huge step for the member of congress to take to decide to cut himself off from all the money from chase and goldman and bank of america and so on and that's what it would
take, a sacrifice and asking politicians to make a sacrifice is generally a fruitless endeavor. but i have some hope that that will happen. and i think that is one important thing people should be lobbying for and they should be pressuring the elected representatives to think about and so on. >> thank you. a few years ago, ron paul introduced to the legislation to either abolish the federal reserve board to audit and how the subcommittee had a hearing about the federal reserve and they have somebody in the witness stand who is responsible for watching the federal reserve federal reserve and she testified that there were several trillion dollars missing. and i saw the videotape on youtube and i haven't heard anything else about that.
>> it doesn't matter if they can just create money anyway. so, but i completely supported ron paul's efforts to audit the bed. i had the time i knew a lot about it because he worked with bernie sanders on that though. the audit of the fed revealed extraordinary information about the bailout because most people may know about the 700 billion-dollar bailout and that is what we hear about when they talk about the sub bailout but it turns out that in addition to the $700 billion, there were also $16 trillion essentially zero interest emergency emergency loans that were handed out to all these companies at the time. now we are in another situation where the fed is propping up the economy for the quantitative easing program which is pumping
$45 billion of money into the financial sector every month which is having all kinds of strange consequences because without getting too long key about this advisable to save the safe side and enforces investors to seek the yield elsewhere so rather than simply collecting savings and interest as you might have in the past now you have to emerge in the brazilian mergers or you have to invest in the stock market or something riskier so it's creating all this risk taking behavior and the banks are making a fortune because all this investment money that's pouring into these different places now as a result of that you're having mergers and brazil and india and places like that who do you think is doing the mergers? it's a welfare program for the firms. >> said they are using the
trillions of dollars to buy up other companies? >> dutch williams of dollars let's just say are artificially propping up a lot of things including the bottom line of a lot of the firms and everybody is deeply concerned about what is going to happen when they turn the spigot off and we worry about what they call the paper when they taper off this ongoing welfare program and they are worried another bubble might burst. >> it's something the fed has to learn about more in the role. it's a strange kind of extra democratic force in all of our lives. i think people on both the left and on the right have a common interest in understanding what's going on there so it's a good question and as auditing the fed at 100 years or 80 years to even get that little sliver.
i wouldn't hope my breath waiting to see what happened to that money. >> matt. i am a young journalist i'm doing my best to bring awareness. i'm currently a news correspondent for a non- for profit and i'm trying to do my best but to be honest, i feel extremely powerless and i'm doing my best to try to bring awareness and try to inform people. and i've done my research and the only thing i can think of doing, because i know like you said on the daily show my mom and i watched it last night that it's a fixture the system is almost not necessarily in
possible that you have to work from the ground up and to basically we are trying to get the power back to the common man even though that kind of sounds like -- you have accused me of communist and stuff like that and you start talking about that and people get edgy about it but what are your thoughts on the workplace democracy because it's kind of -- i think it is an organization that has basically open transparency to the profit sharing for their employees and they allow themselves to have different models of the elected employers in the sense that they feel like they can be a part of the system and i just want to know what your thoughts are. >> i am all for that. hopefully that's what my new company is all about. i don't know exactly yet but it's always good when people take ownership in what they do. i think it is actually -- again this gets back to the thing of
being more of the capitalists and i used to be and it's also good business. when people care about and have a stake in what you're doing they tend to be better job and stay later and part put one of their creative energies into things so i'm all for that and as despairing about being a journalist and worrying about whether or not you're having an impact just don't worry about that. it's not your job to worry about changing the world. i grew up around journalism my whole life. your job is just to do what you do and make sure you are not lying when you do it and make sure you catch people and that's an important public service already if you're just doing that. it's more than most journalists do. so don't get down on your self. [applause]
we have all been reading about issues like this since 2008 and it's almost as if the wall street tycoon and the poor black kid in new york with a joint in his pocket are almost like caricatures. everybody in between them sitting like louisville or jacksonville florida what do we look for to see if that's happening? >> i get that question all the time. i am in the i'm in the middle class, so this doesn't matter to me. that's actually does a couple things. first here in the middle class you are definitely likely to have been a victim of white collar crime by the financial services sector if you own a pension -- how many people here have a pension? anybody lose money after 2008? okay so that was very likely
fraud played a huge role in what happened to the pension funds after 2008. if you have a credit card and you have a mortgage, if you have any kind of a floating-rate investment and you were affected when the bank started monkeying around with the offered rate photos basically a gigantic antitrust case where they were playing around with world interest to suit their needs if you bought a can of beer or soda in the last four or five years, you were affected because there has been a manipulation in the middle market and aluminum, zinc, copper. there's been manipulation of the currency rates. so if you have the savings in dollars and other currency you might have been affected. if you have just a savings account you've been affected by the bailout and the federal
policy because you are no longer earning as much interest. there are people who are elderly that used to live off of their cd income who can't do that anymore because there is no income to be had anymore because the interest rates have/to nothing and people in the middle are affected by all these things and then on the justified i would argue that i interviewed people in this book who became victims because like anything else stop and frisk ran out of its normal cache of the victims and started standing on the other neighborhoods and types of targets. i'm not saying that is likely to happen to anybody in this room, that it's important that we all learn about what's going on. and 2.2 million people in the prison system in america that is a major national crisis whether you have a relative in prison or
not it is the biggest prison population in the history of human civilization. something weird is going on some crying crime is declining and we all need to learn about it. >> i was wondering if when you speak of restitution i was wondering if there is a difference on how often that money is collected. >> that is a good question. unlike in the case of the settlements. from what i understand when they collect settlements like the hsbc settlement it basically ends up in the budget of the regulatory agencies. so good for them. but again this is part of the argument they always give you that says while we could fight them for ten years in criminal court and lose and not get anything if they can give $2 billion tomorrow and think of all the good we can do with that
money and i'm like m.i. going to get any of that money because why do we put people in jail first of all? disrespect to that question because i had to ask that question for the buck and, you know one law professor told me it's for three reasons. one is it stops the individual from doing it again. and of course that would be very true with this community of offenders and the deterrence to the group and also again it would be effective in this kind of a vendor into the third thing is the justice for victims if you have been the victim of fraud and of a financial crime of the reasons to put somebody in prison is the victim should get justice. are the victims getting justice when they collect fines? i'm not seeing that. in the case of the foreclosure fraud settlement of some of that money did end up going towards helping people and for closures.
but that isn't typical. that isn't a typical resolution. typically it disappears into the ether of the enforcement budget and it's not really clear who gains from it other than the people who had the settlement. in fact many times the class-action 12 complained the government rushing in making the settlement prevents them from also getting settlements out of the same group of actors in the private claimants and victims who bring the private suit there is less october for them. less left over for them. ..
>> oh, yeah. >> and -- okay. [laughter] if it is true, what are the chances of people like us in a suit against the corporation, for example, in product liability or credit card manipulation or monopolistic practices that, you know, they don't enforce the antitrust laws anymore. >> well, there have been a lot of successful private class
action lawsuits. it's a good question, and, for instance, with the subprime mortgage fraud stuff while there have been no criminal cases really on any of that, there have been a lot of private class action suits that have been filed by, say, you know, state pension funds or city funds or foreign hedge funds, and they've won some money back. i mean, a lot of these companies have been seriously dinged by that. and so if you are a victim of that kind of thing, then you have a decent chance, especially since one of the features of this whole era is that nobody communicates anymore without texting or im-ing, so they're all committing, like, grotesque conspiracies in writing anywhere. so when it comes out to actually sue these people, it turns out to be pretty easy sport for a lot of them.
and just quickly, i know where this is going to go. but to answer your tax question, i mean, come on. when mitt romney pays a maximum 15% rate on his private equity work, and, you know, a fireman pays, whatever, 20, 25% for his income, something is seriously wrong. i mean, and most of these people are not paying anywhere close. they have a tiny amount of what you would call income, and everything else is either capital gains or carried interest, and that's just a scam. and so it has to be fixed. >> thank you. >> thank you. thank you very much. [applause] >> it seems to me that the local police forces whether in new york city or even here don't seem to be doing their job mentally in terms of protecting and serving. it just seems like they're being
used as pawns also -- >> the police? >> yeah. to spread nets that just cap which are up -- capture up people. i'm wondering, what do you perceive? is there that sort of mentality that we're working with now in the united states? >> i think there are a lot -- and i know everybody's got to go -- there are a lot of frustrated policemen by the statistics system. it's a numbingly inefficient way to do things. cops don't have the leeway that they want, they have the make quality cases anymore. they've got to write tickets. they hate it. for the most part. and the people who tend to rise in the system are the few who enjoy it, and they tend to be the sadistic, dumb ones -- [laughter] and that's the problem. i think, you know, there's been a -- like in many professions, there's been a de-emphasis of appreciation for the person who actually knows how to do the job
and more of an emphasis on the person who's able to deliver the stats, and i think that's a huge problem. i think we've got to stop now, right? is that correct? okay. thanks very much. [applause] >> booktv is on twitter. follow us to get publishing news, scheduling updates, author information and to talk directly with authors during our live programs. twitter.com/booktv. >> this is booktv. and now clay risen recounts the civil rights act of 1964. the author recalls the arduous work involved in passing the legislation which was marked by one of the longest filibusters in american history by to appointments -- by opponents who sought to defeat the measure. this is about an hour, ten minutes. >> all right.