S2:E13 – Ferdinand Pecora Where Are You Now?

The New Untouchables: The Pecora Files
S2:E13 – Ferdinand Pecora Where Are You Now?
October 3, 2021

 

[00:00:04.810] – Michael Perino [intro/music]

Pecora didn’t know much about Wall Street, but he was a fantastic lawyer, probably one of the best cross examiners of his day. He knew his way around the courtroom. He had this incredible memory. I mean, he could remember every little detail and scrap of information that his investigation had uncovered.

[00:00:28.040] – Michael Perino [intro/music]

The stock market declines from its peak in 2008 to its trough, which is early 2009, about 50%. That’s pretty big decline. If you go back to the peak of the stock market in 1929 to its trough in 1932, it’s 90%.

[00:00:51.900] – Eric Vaughan [intro/music]

In a world of elite criminals, only people of elite character can protect our system. This is The New Untouchables.

[00:01:03.100] – Patrick Lovell

Welcome back to The New Untouchables season two. If you’ve made it this far on the journey, you obviously are probably dumbfounded and gobsmacked by the revelations that this podcast continues to bring forth. And it’s really a great honor to introduce our next guest. Michael Perino is the author of a terrific book that was released in 2010 called “The Hellhound of Wall Street,” which is about Ferdinand Pecora, the inspiration for this entire broadcast.

And Mr. Perino, again, thank you for joining our broadcast. But more importantly, thank you for writing the book. Ferdinand Pecora was quite an extraordinary human being in context to the extraordinary damage that happened to this nation and the world in the aftermath of the Great Depression. Can you start off and give us a sense of the man – who he was and what made him?

[00:01:57.360] – Michael Perino

Let me talk first about what he did because maybe not everybody knows that first. And if we talk about what he did, who he is turns out to be even more remarkable for what he accomplished at the end of the day. You got to turn the page back to when he took over these moribund Senate investigation of Wall Street. He took it over in the waning days of the Hoover Administration.

This is late January, early February 1933. Hoover is on his way out. He’s been soundly defeated at the polls by Franklin Roosevelt. Franklin Roosevelt back then, Inauguration Day wasn’t until March 4th. So there’s this long interregnum where the country is in crisis and really nobody’s in charge. Pecora takes over these hearings, and he creates a sensation.

And it’s his hearing that creates the momentum for Roosevelt’s First 100 days in office. So in that hundred days, the Roosevelt administration and Congress pass the Banking Act of 1933, better known for its cosponsors, Carter Glass and Henry Steagall. Glass- Steagall separated commercial banking from investment banking, a reform that only went away in 1999.

More importantly than that, the Banking Act of 1933 created the FDIC and Federal Deposit Insurance, probably the most important structural change to banking really ever to come out of Washington from my point of view. Then they create the Securities Act of 1933, the very first regulation of Wall Street that Washington ever had. And a year later, it’s the Securities Exchange Act of 1934 and the creation of the SEC.

All of that flows directly out of what Pecora had uncovered in these hearings. And for my view, and I’m slightly biased, obviously, since I wrote this particular book, but if you look at the long and sorry history of congressional investigations, most of them are pathetic, and we’ve seen some of that recently. At least in terms of real lasting legislative impact, there is absolutely nothing that compares to the Pecora Hearings.

[00:04:21.710] – Eric Vaughan

Absolutely. So what do you think are some of the most important lessons from the Pecora Hearings that have the greatest amount of relevance for where we are today.

[00:04:35.200] – Perino

So I guess the way to reframe that question is, how did he succeed? How did it work? Patrick, to go back to your earlier question. This is a guy who should not have succeeded. He was brought in at the very last minute. These hearings were winding down. No one’s expecting them to go anywhere. The authorization for them is going to run out when the new Congress comes in on March 4.

Pecora, quite frankly, doesn’t know the first thing about Wall Street. He immigrated to the United States when he was five years old from Sicily. He had that classic immigrant upbringing. He lived in a basement in Chelsea when he first came to the country in back of his father’s shoe repair shop. It was one hardship after another after another.

He didn’t become a lawyer well into his thirties. And he was a prosecutor. He didn’t really know the first thing about how Wall Street operated. By all rights, the whole thing should have collapsed and failed. But as Eric points out, it didn’t and the reason it didn’t I think in my mind, it falls down to three things. First of all, he didn’t know much about Wall Street, but he was a fantastic lawyer, probably one of the best cross examiners of his day.

He knew his way around the courtroom. He had this incredible memory. I mean, he can remember every little detail and scrap of information that his investigation had uncovered. And his investigation was remarkably speedy. He put together his case against – we’ll talk about in a few minutes I’m sure – Citibank in a matter of weeks. But he knew how to ask a question.

So if you look at those hearings today, think about what we always see. Right. We see some opening statements from either the congressman or the senators. And then we see this back and forth questioning. Right. We get five minutes on one side, and we get five minutes on the other side. And it’s always the members who are asking the questions.

Very, very rarely do you ever see a real lawyer asking the questions. Now, some of these are experienced lawyers. I understand that. But the way they’re structured, they’re not structured to succeed, right? There’s no way you can build up any momentum with that back and forth, each side jockeying to get out whatever it wants to get out.

Pecora had the luxury of actually developing a narrative – that was really the key to what he was able to do. He knew the power of telling a good story and really taking something that was this obtuse, complex financial matter nobody understands how Wall Street works and breaking it down into its component parts, really turning it into a very simple morality tale that everybody could understand.

And by doing that, he was really able to take a lot of diffuse anger at Wall Street – there was plenty of anger at Wall Street when he showed up – but really to crystallize it into a real program for legislative reforms. So that’s I think the key difference between what Pecora was able to do and what we normally see when we see these congressional hearings.

[00:08:03.680] – Steve Grumbine

Let me ask you a question, Michael. Given everything that you learned in studying Pecora, and given the fact that we have lived through two or three acts, as Bill Black would say, of this savings and loan debacle, watching as it’s gone through the Glass-Steagall repeal with Sandy Weill and Clinton handing him the pen and all the other stuff that has been going on nonstop since they started really focusing on dismantling the firewall between savings and speculation.

What do you think it would take to bring about another Ferdinand Pecora given the craziness of what you described as the way they hold hearings today? I find it fascinating that we do the political jockeying back and forth. It really doesn’t amount to much. How would we even bring that about?

[00:09:01.620] – Perino

To be honest, I have no idea. We can’t even investigate an insurrection at the capital. We’re going to investigate Wall Street? It seems crazy. We’re in a period of obviously enormous gridlock in Washington. There’s no doubt about that. And so in that kind of environment, it’s very unlikely we’re ever going to be able to get a real Pecora kind of investigation.

If you look more broadly and you look at how Washington regulates Wall Street, it is almost invariably episodic and always driven by scandal. There’s some crisis that has occurred, whether it’s the great crash in 1929, even earlier than that, they call them panics back then – the panic of 1907 – that led eventually to other investigations that created the Federal Reserve Bank. You look at the 1990s, right?

When the dot com bubble burst in the late 1990s, early 2000s, and you had Enron and WorldCom and all those accounting scandals. That’s when we got the Sarbanes-Oxley Act. And then, of course, in 2008, we got Dodd-Frank. And we can debate whether Dodd-Frank accomplished a lot of what it needed to accomplish, but that’s the pattern.

The pattern is always this. Well, let me step back. There’s so much money lobbying efforts to repeal regulation, right? That’s the way that everything pushes in Washington all the time. And that’s where everything goes. And quite frankly, on either side of the aisle, there’s lots of money going towards, if not keeping the status quo the way it is, making it less regulatory.

And that’s the way that everything always pushes. And it’s only when you have that kind of existential crisis out there, the 2008 financial crisis, the great crash in 1929, that you get enough public anger and you get enough political will to overcome the normal course of things. So the short answer to your question, Steve, is I guess we’ll have to wait for the next crisis.

[00:11:30.220] – Grumbine

I was going to say, let me follow up on that. We just got out of a pandemic. We’re still not technically out of it, but we watch the payments, not to the people once again, but to the banks. We watched corruption. We can’t even trace where that money went. In fact, there’s money sitting there that should be spent at the state level that’s just sitting there, never been spent.

This to me, with so many people that are going to lose their homes in the coming months as the mortgage and rent tsunami hits, this might very well be that come to Jesus moment, so to speak, that brings about that. I hate to say it, but if there’s anything good that can come out of this, let it be that.

[00:12:13.720] – Perino

Yeah, I hear what you’re saying, but if we’re talking about financial reform, it really has to be a financial crisis. That’s the difficulty. And we have lots of crises all the time. And in many ways, this phenomenon isn’t unique to financial regulation. Right?

We get all sorts of big, broad legislation in the wake of a crisis. Some of it not very good, quite frankly. In the wake of 911, we got the USA Patriot Act. So Congress responds to big crises often not in a very good way, but they certainly respond. But if they’re going to respond with financial regulation, new financial regulation, it’s really got to be a financial crisis.

[00:12:59.820] – Lovell

Well, or the financial truth. And that’s the whole purpose of this journey. And that’s what led us to you. And that’s what led us to Pecora, and that’s who has inspired us and I was dumbstruck Mr. Perino, when I read your book, not once, not twice, but six times in a very short amount of time, because . . .

[00:13:14.360] – Perino

I think you’ve read it more than I have.

[00:13:17.210] – Lovell

I was so enamored with the process, especially given the time period. Right? And I want our audience members to really get this from the source, right? He didn’t have time. Ferdinand didn’t have resources. He got inside at City, for example, to start to unpack some of the things that Charlie Mitchell and some of the other characters at this time period, not to mention some of the other big financial behemoths that were involved with time period into again make it a morality tale.

And I want to go into some details about that. But particularly as it related to when I learned that there was shorts. There was insider trading. There was all sorts of variables of stuff that I didn’t come into contact with in terms of my knowledge base until like the late 90s and through this whole process with The Con, particularly as it relates to derivatives. This has been a lifelong journey for me that Mr. Pecora seemed to figure out in a matter of weeks. Can you try to put that into perspective?

[00:14:18.180] – Perino

It is remarkable what he did. And before I get to that, I do want to say there are all sorts of parallels between 2008 and what was going on and what Pecora was investigating back in 1933. And as you said, the book came out in 2010. I actually started writing it about a month before Lehman Brothers collapsed. So it was 2008.

So I’m reading in these hearing transcripts from 1933 and reading the morning paper, and it’s like this weird historical whiplash that’s going on because the same thing I’m reading from 80 years ago is happening today. And it seems, what did Twain say? History doesn’t repeat, but sometimes it rhymes that’s kind of where I was when I was writing this book.

But to your point, Patrick, it really was quite remarkable what he was able to do. So just a little background on the story here. So these hearings had gotten underway in the early part of 1932, and they started from the most unlikely of circumstances. Herbert Hoover was convinced that shorts on Wall Street were driving down securities prices.

That is, it wasn’t from the Great Depression that was raging across the country, it was shorts were deliberately manipulating Wall Street so that he would not get reelected. It seems a little conspiratorial. But okay, that was the genesis for these hearings. And he got a friend of his, a Connecticut Senator to basically start this investigation of short selling on Wall Street.

And pretty much the investigation dithered on for a couple of months. Congress went home. They all went and tried to get reelected. And when the Banking Committee returns after the elections in the latter part of 1932, pretty much everybody on the committee wanted this investigation to just wither away and die.

No one had any real interest in continuing forward, except for one man. And that one man was a Senator from South Dakota named Peter Norbeck. Now Peter Norbeck knows less about banking than Ferdinand Pecora does, but in the way Congress works, he’s the most senior Senator on the Banking Committee so he is now the Chairman of the Banking Committee.

He drilled artesian wells in South Dakota before he became governor and senator. He doesn’t know how banks work. When all this reform legislation was becoming for his committee in 1932, he writes a letter back home to a buddy of his, and he says, “We’re getting all this legislation, and it’s a good thing most of it goes over my head because otherwise I might not sleep at night.”

So that’s the Chairman of the Senate Banking Committee. But he had promised his constituents he was going to continue his investigation of Wall Street. And so he tries to continue his investigation of Wall Street. He’s not quite sure what he’s investigating, but he wants to continue. And he tries to find a new lawyer for the committee.

He tries four different people and four different people turn him down. And now we’re into January, 1933. The authorization for this investigation is going to run out in March. The last person Norbeck reaches out to this Banbridge Colby, who was actually Secretary of State under Woodrow Wilson, says, “No, I’m not interested. But I know this guy from New York. He might be good.”

And the guy from New York is Ferdinand Pecora. And so what always struck me is so remarkable about the Pecora Hearings was not only that this Italian immigrant was taking on the white, anglo saxon elite of Wall Street, that in and of itself was amazing, but it was that it was so serendipitous that the whole thing happened. By all accounts, it never should have happened at all.

And it all could have gone off the rails so many different times. But in those contingencies of history, it just happened to work. So Pecora comes in. It’s January, 1933. He’s got six weeks, basically, to do something. And even Norbeck, at this point, has given up. Norbeck is even saying, “Look, just write a report on what we found already.”

And Pecora says, “Let me take one more set of hearings.” And he decides he’s going to put on the stand one of the most famous bankers of the day from one of the largest banks in the world. It’s Charlie Mitchell, who is the Chairman and CEO of the National City Bank of New York, which a few name changes later, we would know as Citibank. Now you’re right. He’s got no time, right?

He’s got subpoena power, but he’s got no time. The bank, of course, does what defendants always have done, technically, a defendant, but what targets always do in this investigations, they get very high-powered lawyers to stall and stall and stall. And then finally, a week or two before Charlie Mitchell’s scheduled to show up in Washington, Pecora gets access to the documents.

He’s brought into this wood paneled library at one of the firms. And there’s a whole stack of documents and board meeting minutes and other things on a table in the library. And he sits down and he starts taking notes. And I’ve seen the notes. They’re in the National Archives in Washington, along with some other amazing documents, which I’ll talk about in a second. And I’m looking at the notes.

They’re A – hard to decipher. His writing wasn’t that clear. But B – they seem really skimpy like there was nothing there. But apparently, they were enough to spark this amazing memory he had. So he’d look down at these cryptic notes and then peel off these long examinations, and whenever any banker tried to lead him astray he remembered the document and bring him right back to where he was.

It was just this incredible performance. As a lawyer myself, I’m just stunned that anybody could manage to get through the intricacies of the banking operation at Citibank in the time period it had in the way he was able to do. And it was just a remarkable performance for a lawyer.

[00:20:57.120] – Vaughan

So is there a particular moment where certainly what you just described that Charlie Mitchell, I’m sure was sensational, but was that the moment that the public really started to pay attention to this? Or was there a moment later on where it was the moment where all of a sudden the public engagement increased and just the public rage reached a point to where the political scales got tipped?

[00:21:25.940] – Perino

So I think that in terms of the first moment where the public really paid attention, it was Charlie Mitchell. It was City Bank in the stand. And part of that was fueled by Pecora was an amazing lawyer, and there was this anger in the country. But his timing was impeccable because at the moment that Mitchell is taking the stand in Washington in February, 1933, the banking crisis of 1933 is unfolding.

So a week earlier, Detroit had declared a euphemistic bank holiday where they closed every bank in the state for a week. And we think, ah, Detroit, Michigan, not that big a deal, but that was the industrial heartland of the country at the time. Right? And that was the signal to an American populace that said, “Hey, if they can close the banks in Detroit, they can close the banks in Michigan, they can close the banks anywhere.”

There’s no federal deposit insurance, right? Whether you think your bank is safe or not safe, what are you going to do? I don’t want to be the one left holding the bag here. I’m gonna go get my money out of the bank, and so the runs started, and then the contagion spreads, right? We shut down the banks in Michigan, and then we’re shutting down banks in state after state after state.

Now, as most people know, when Roosevelt comes into office in March, the first thing he does is declare a nationwide bank holiday. But at that point, it was almost a done deal. Virtually every state had already shut down their banks by that point. So you have this moment where one of the most prominent bankers from the largest bank in the country is in the dock in Washington at the precise moment when the entire banking system seems to be collapsing and Pecora then reveals all of the wrongdoing that City Bank had engaged in.

And it’s that confluence of events that really sparks the public outrage. Now you’re absolutely right. There was a moment when it got even hotter than that. And that was in May when JP Morgan Jr. took the stand in Washington. At that point, Carter Glass who’s one of the more senior members of the banking committee and whose name is associated with Glass-Steagall did not like Pecora, and he did not like the Pecora Hearings.

He had had these dry as toast hearings back in 1932 trying to push through banking reform. And of course, they went nowhere because they didn’t capture the political moment. It was just so much dry testimony that wasn’t going to do anything. Pecora was able to crystallize that moment as we talked about before, and he did it by telling those stories.

Carter Glass hated the stories. He wanted to get rid of the stories and just focus on experts presenting statistics. And that’s not a way to get public support for anything. That’s what Pecora was able to do. So anyway, JP Morgan shows up in Washington in May. They’ve moved out of one smaller hearing room where they had started into the giant caucus room, the same room where they would later have the Watergate investigation.

It was the circus. There were reporters everywhere. They put in new telegraph lines into the capital so that reporters could get out their stories. And Carter Glass is complaining vehemently about what’s going on. And at one point, he says, “All we need is, I think cotton candy and peanuts and we’ll have a circus.” So a promoter for one of the circuses learns about this, and he brings in this is not the politically correct term, but I’m going to use it anyway, this woman, her name is (Lya) Graf, who is the circus midget.

And during a break in the hearings, he has her sit on JP Morgan’s lap. He said, “We want to have the world’s shortest woman, whether she was or not, I don’t know, but that’s what they were going with cause he was a promoter, sit on the world’s richest man’s lap.” And he wasn’t the world’s richest man either, but it made a great story and a great picture in the paper. It has a horrible ending because she was German, returned to Germany, and it was the 1930s.

[00:26:00.524] – Vaughan

Right.

[00:26:01.440] – Perino

She was sent to one of the camps where she died. It was really amazingly sad. That was probably the highlight for most people of the investigation of JP Morgan. And there were lots of things that Pecora showed about JP Morgan. There were lots of prominent people who got privileged access to high-quality securities offerings.

They called it a preferred list, which looks a lot like bribes if you want to put that kind of term on it. And in many ways, it’s that investigation, that part of the investigation that to the extent that anybody remembers the Pecora Hearings they remember that. And JP Morgan was very unhappy with the treatment he got from Pecora.

In the casual discrimination of the day, he called him a dirty little wop and a second-rate criminal lawyer. But that was part of the story, right? Pecora wrote his memoirs of the investigation he called it “Wall Street Under Oath.” And he said these were men who were supposed to be of unimpeachable integrity, and they were not used to being treated like witnesses in a trial.

They were used to being treated with kid gloves and Pecora wouldn’t do that. And to me, that was so much of what captured public attention about these hearings, right? You had one of these new Americans, this guy named Ferdinand Pecora leading an investigation against these leaders on Wall Street and showing that they’d engaged in all the tawdry wrongdoing that common con men engaged in and it was that juxtaposition, I think, that really just captured public imagination.

[00:28:03.360] – Intermission

You are listening to The New Untouchables, a podcast brought to you by a collaboration of the creators of the docuseries, The Con and Real Progressives, a nonprofit organization dedicated to teaching the masses about MMT or Modern Monetary Theory. Please help our efforts and become a monthly donor at PayPal or Patreon, like and follow our pages on Facebook and YouTube and follow us on Periscope, Twitter, and Instagram.

[00:28:57.300] – Grumbine

Michael, one of the things that jumps out at me in what you just said was that Pecora was a master of timing, and each of these things had this great opportunity to impact public opinion. And one of the things we see right now today with both billionaires offshoring their money and the Panama Papers and all the other stuff that’s going on in society to date being so incredibly unequal.

Going back to 1972, when Nixon took us out of the Bretton Woods Accord, we have seen the hockey stick of inequality in America rise like you wouldn’t believe. With that in mind, tax evasion from these wealthy people, all of the things that you’re watching them do, the ways that they manipulate the system for their advantage while regular Jane and Joe Q Public suffer and struggle and in many ways die – suicides.

I’m curious, what are your thoughts going back to the Pecora time and tax evasion and the extreme privilege that maybe brought on some of the rage from the outside with today? Can you parallel the two? Inequality is insane today at a level that we’ve never seen.

[00:30:13.760] – Perino

And I don’t know what the comparative levels were. I would imagine they’re very similar in terms of income inequality, certainly by the time ’33 rolls around, we were in the depths of the Great Depression, and all of us were here for 2008. We know how bad 2008 was. To give a little context here, so the stock market declines from its peak in 2008 to its trough, which is early 2009 about 50%.

That’s a pretty big decline. If you go back to the peak of the stock market in 1929 to its trough in 1932, it’s 90%. Yeah, it’s just amazing to contemplate, and it’s not just the stock market, right? Because we’ve got the Great Depression and we don’t have anywhere near the social safety net that we have now, as torn and frayed as it is now, there was none.

There was no net. And so when we hit 25% unemployment in the early days of the Great Depression, people were literally thrown out of their homes. They were living in shacks. Hoovervilles actually existed. If you Google Hooverville, Central Park, you’re going to see this huge encampment of these tin and wood shacks right there in Central Park.

[00:31:48.420] – Grumbine

Wow!

[00:31:48.420] – Perino

But a lot of the leaders on Wall Street were untouched. You know, they lost money, but they were just fine. And it was this huge disparity between the average person or the below-average person and the hardships that they took on as a result of this calamity on Wall Street and the elite. And I think again, that anger was already there.

There were plenty of people before the Pecora Hearings who were mad at Wall Street, who were blaming Wall Street for the Great Depression. Now economists are going to debate until there are no more economists whether the great crash actually caused the Great Depression, but let’s put that aside for a second.

At least back in 1933, everybody was making that causal link, and they didn’t seem to bear any harm from it, right? They had brought this great calamity on the country, but they just kept going along. And so there was a lot of anger at Wall Street. But it was this diffuse anger at Wall Street. People knew they were angry but didn’t know what they were angry about because who understands what goes on on Wall Street? It’s all so hard to figure out.

And we’re told time and again, “Don’t worry about it. Leave it to the experts. You can’t figure it out. It would take us too long to explain to you. But if you trust us, we’ll make sure that it all runs smoothly.” And one of the things you guys did with The Con, I think, was one of the things that Pecora did in those hearings, which was to take something really complex and just show that at its most basic level, anybody could understand exactly what was going on and understand the wrongdoing that had occurred.

And so to go back to an earlier question you asked, how do you get reform? You get reform by having a crisis and then using that crisis as a means to tell a compelling story about how we got that crisis and how we can fix it.

[00:34:04.580] – Grumbine

To quote Rahm Emanuel:  “Never let a good crisis go to waste.” [crosstalk 00:34:07]

[00:34:11.580] – Lovell

I’m so honored, we are collectively by that correlation between our efforts, because I’ll never forget when we started this off, and Eric has been by my side through this country at least 12 times, picking up all of the monumental pieces of this puzzle. And I remember he would kind of scoff at me at the beginning and claim I was Captain Ahab in search of the white whale.

And the first thing we discovered along these lines is when we discovered Bill Black and he taught us about the three D’s – deregulation, desupervision, and decriminalization, and from that point forward things started to make sense. And so we were able to pick up on all the aspects that constituted what we call the crime of the great financial crisis.

But it was remarkable to me when we started investigating and speaking with some of the most prescient whistleblowers of our time, people like Gary Aguirre from the SEC, people like Dick Bowen, who stood not just in front of the board and Robert Rubin and tried to make them aware of the illegal reps and warranties that they were unleashing upon the world.

And then later, he goes in front of the Financial Crisis Inquiry Commission, and of course, the Securities and Exchange Commission. And it just seems like he’s still trying to make people aware of what happened. And they all said:  “Look to Pecora. Look to Ferdinand Pecora to understand what has to happen.” I had never heard about Ferdinand Pecora. I had no idea about this process in our history.

[00:35:42.900] – Vaughan

Gary said that’s why he became a lawyer.

[00:35:43.470] – Lovell

And I’m College educated. Right? So the context of this question really is in the, shall we say, the vacuum of a, as you frame, quite frankly, a Congress that doesn’t have the capacity or the capability to perform the type of investigation necessary to be able to reveal to the American people, really, that story, that morality story. We, Eric and I, and Eric and I and everybody who joined us. We pushed forward the truth on behalf of the American people because we are the American people.

[00:36:26.930] – Perino

Yeah. And if I could jump in there, but you did in a particular way, right. Because you guys understand the power of narrative. Narrative is what humans rely on. Right. We’ve always relied on storytelling. That’s how we understand the world. And when you have a congressional hearing, it just throws up a bunch of facts and figures.

That’s not something that anyone’s going to understand. So what did you do? You didn’t just talk about what the whistleblowers told you. You talked about Addie Polk, right? And you put a human face on the suffering that these kinds of practices cause. That’s what Pecora did. He had his own human faces. He talked later on.

He talked about as he had started the investigation, all these letters that were coming in to the Senate and people describing the hardships they were facing. And I pulled out one. I just want to read it because it struck me all over again. I will never forget the day there’s this reading room in the National Archives in Washington, D.C. And I remember pulling out this folder and turning over letter after letter after letter talking about people who had lost their life savings because of the things that Citi Bank had done to them.

And this letter is from an elderly gentleman from Brooklyn named Christopher Lane. And Christopher Lane says, “I’m writing this from the McGraph’s Funeral Parlor in Brooklyn. My wife is lying in her casket. She died of pneumonia. Had I hoarded my $10,000, I could have taken her south for the winter. When you see Mr. Mitchell, you might ask him why his bank so trusted could palm off such poor stuff on an old retiring teacher.” You know, it was those stories that Pecora tried to bring out in those hearings. And it was those stories that really drove Pecora and really drove what Pecora accomplished at the end of the day.

[00:38:46.610] – Grumbine

Michael, one of the things that you had mentioned, and I guess we’ve been dealing with throughout this. Is I guess it was Glass didn’t want to hear the stories. Just wanted to be a technocratic run sheet of facts and figures that would not have touched anyone.

[00:39:07.210] – Perino

Correct.

[00:39:07.210] – Grumbine

And in our current society, there is an entire elite group of people to this day who cannot handle any form of emotional anything. The minute you devolve from just facts and figures, it’s too much for precious ears to handle. And yet many of us are suffering. We’re screaming into a pillow. And thank goodness we have this platform, and it’s nowhere near adequate.

I am curious through your research in light of what you just described from that very graphic idea of a woman dying, how do you think framing the day to day struggle of American people going through these things would best be portrayed to bring about that hook that makes people really get hold of this is important. This is here and now. What do you think the appropriate use of those stories is?

[00:40:15.180] – Perino

I think that’s a great question, because to my mind, what we see so often in political rhetoric is they try to do that story, right? Everybody tries to say, oh, and I talked to so and so that I met from Iowa or whatever happened to be. And she told me the story of… But then they stop and they go on to the next thing, right? That’s not what Pecora did.

The story was in service of the larger narrative. That’s the piece that’s missing. It’s fine to tell a heart-wrenching story about an individual, but unless you can link up that story to the broader point that you wanted to make about the way things are regulated or not regulated right now, the story doesn’t do you any good.

And the only way you can do that is if you did what Pecora did, which is you take the story, but the story is on top of this enormous base of research and understanding about the underlying dynamics that are going on. And you weave the two together. That’s the secret. And so the heart-wrenching story without the underlying research is not going to work.

The underlying dry research without the narrative isn’t gonna work either. You gotta put the two together, and it’s the rare individual who can do that.

[00:41:43.070] – Vaughan

Exactly. So, so much about Ferdinand Pecora’s story and about how it ended up turning into so much is a story of the confluence of many streams of luck.

[00:42:01.390] – Perino

There’s no doubt about it.

[00:42:04.490] – Vaughan

Now today, do we have anything other than just stupid luck to hang our hat on? As far as, like that next moment of lightning in a bottle, where the right person, the right time, the right situation occurs that actually creates real change.

[00:42:26.080] – Perino

We never know when the lightning in the bottle is going to happen. That’s the problem. So you’re kind of left with you got to keep pushing, right? You just keep pushing, you keep pushing, you keep pushing. You waited for the opportunities. And every once in a while, if you push long enough and hard enough, you happen to be pushing at the time the lightning hits, and there’s no other way to do it than that because you never know when your opportunity is going to come along and you got to be ready when it comes along.

[00:42:59.500] – Vaughan

It’s like a saying that’s often repeated amongst us, especially often quoted by Mr. Bill Black. He says, “One does not need hope in order to persevere.”

[00:43:10.760] – Perino

True enough.

[00:43:11.870] – Grumbine

Very true. Michael, let me ask you to kind of close things out.

[00:43:16.190] – Perino

Sure.

[00:43:16.190] – Grumbine

Your book is phenomenal, and we obviously are trying desperately to find ways to take work such as yours and all the work of these great whistleblowers like Art Wilmarth and Michael Winston and Richard Bowen and all the other folks that have been part of this process that we’re working through through the work of Patrick, Eric, and The Con, and our own work here with The New Untouchables.

What do you think is, in fact, the common thread of corruption? What do you think makes this such an easy thing for them to pull off?

[00:43:54.920] – Perino

I don’t know that it’s easy. I think it takes some work, but I guess the through-line is – I’m working on a new book right now, which I’m not quite ready to talk about yet – but there’s a line in the preface that says, “Sometimes this system looks like it’s meant to create the appearance of accountability without actual accountability.”

And that, to me, is sort of the through-line. If all of the power on Wall Street and the power in Washington is all running in the same direction and the money from Wall Street is flowing to Washington, and Washington wants to keep the money flowing from Wall Street, then we’re going to make the system that looks like it should work, looks like it could work, but often doesn’t.

And oftentimes I do have to say it’s not necessarily corruption, right? You have people who are well-meaning, honest, trying to act in good faith, and you have them in all walks of life. You really do. But oftentimes they’re deceived. They are led astray. Oftentimes they don’t have the courage. You guys are talking about whistleblowers.

It’s hard being a whistleblower. The life of a whistleblower is not a happy life. And some people are so afraid clinging to what they’ve got right now that they don’t want to risk it. Maybe they’re brow beaten by a bully they fear to challenge, see the former President.

There’s lots of simple human dynamics that lead us to a situation where until the crisis hits, nobody’s got the willpower and the guts to stand up and do something about it. And that, to me, is that human nature and the way that the power in the system runs are the through lines that really take us from back in the 1930s all the way through today.

[00:46:10.070] – Lovell

Well, I think I’m going to ask maybe and frame the final thought here for your reaction and everybody else, really just in context or in deference, shall we say, it to Ferdinand. You brought up this point earlier that I was just so enthralled with. Ferdinand was not too dissimilar to a lot of groups that find themselves on the downside of our being recoiled by them.

Let’s call them immigrants, or maybe possibly Muslims or someone in the system. I mean, that he is a Sicilian immigrant at that time period would have been during that era. And he with such grace and dignity, found his way to seemingly always be there for anybody in his life. I mean, his family and so forth as you reveal in the book and and then later. I mean, he wasn’t a perfect guy. He was flawed. There’s no question about that. Let’s not make  . . . . [crosstalk 00:46:59]

[00:46:59.580] – Perino

He was definitely flawed.

[00:47:00.680] – Lovell

And nobody’s perfect. But what he was was perfect at the moment when it presented itself. And I’m wondering if you can just, because it’s so important because of just the kind of the shape-shifting between all of these different types of movements that have been happening over the course of the last several years, and we tend to kind of battle each other, right.

And everything that’s happened as a result of that, the context of the economy affects us all, right? Especially an economy where the powerful have all the cards, so to speak. Can you extend his sort of challenges at that time against the white Anglo-Saxon machine at the time and just characterize how important it was for him to imbue these sort of ideals being, I don’t know, Americana?

[00:47:42.080] – Perino

It’s funny. It really is this amazing immigrant success story, really. And he comes to this country when he’s five years old. He’s actually not living in Little Italy. He’s living in Chelsea, away from the Italian community. So the pressures on him to conform to not be Italian are even greater arguably. At that time, it was Italians who were illiterate, didn’t understand the American way of life.

Violent, settled their disputes at the point of the knife. That was the view of Italians. They were this lawless group of peasants who were descending on our country and destroying it. There’s lots of rhetoric like that in the newspapers of the time. A couple of weeks before Mitchell takes the stand, there’s a deranged immigrant named To Giuseppe Zangara, who takes a potshot at President-elect Roosevelt when he’s down in Miami.

And Time magazine wrote about Zangara, he said, “Most illiterate dagoes have the killer instinct, especially when their animal comfort is disturbed.” That’s Time Magazine in 1933.

[00:48:59.190] – Grumbine

Wow.

[00:49:00.190] – Perino

Yeah. So the fact that this Sicilian immigrant is in this magnificent hearing room in Washington grilling the white Anglo-Saxon leaders of Wall Street is to my mind and has always been kind of this signal that things really were beginning to change, right? That something was happening, that there was a new group and they were starting to assume power in society.

And so you read that quote and you look at today and change the ethnicity. But you’re seeing lots of things that are said about lots of immigrant groups that were said about Italians that were said about Jews that were said about the Irish before them. And it’s important for us to remember that many of us were once that despised group that came to this country. And we need to keep that in mind when we think about the new immigrants who are in this country.

[00:50:10.260] – Lovell

Thank you, Michael, for your work for inspiring us and I encourage literally anyone who cares about the functions of the law within our system, particularly as it relates to the most powerful and our financial elites to pick up “The Hellhound of Wall Street,” to understand Ferdinand Pecora, to tell everyone you know that we got it right in the past, which means we can get it right in the future or more, presumably now.

And I just thank you for your work on behalf of everybody that we’ve been able to bring together across this great country. We are certainly inspired by your work. Thank you very much, Michael.

[00:50:46.340] – Perino

Thank you very much. I’ve enjoyed your work as well, and it’s always great fun for me to talk about Ferdinand Pecora. Thanks a lot.

[00:50:54.240] – Grumbine

Awesome.

[00:50:55.060] – Vaughan

Fantastic.

[00:50:59.240] – Ending credits

The New Untouchables is produced by Andy Kennedy, descriptive writing by Rose Ann Rabiola Miele, and promotional artwork by Cristina of Paradigms and Revolutions Design Group. The New Untouchables is publicly funded by our Real Progressives Patreon account. If you would like to donate to The New Untouchables, please visit patreon.com/realprogressives.