Episode 66 – The Con with Bill Black, Patrick Lovell and Eric Vaughan

Macro N Cheese – Episode 66
The Con with Bill Black, Patrick Lovell and Eric Vaughan

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Bill Black [intro/music] (00:00:02):

A big part of our message is hope that we really can do things much better, that we are putting the lie to Tina. There is no alternative.

Eric Vaughan [intro/music] (00:00:13):

It was very important to us to go and find the people who actually got it right. Who actually understood what was going on and made sure that they did everything that they could to let everybody else know.

Patrick Lovell [into/music] (00:00:25):

Look, I’m not an expert. I’m not a PhD economist. I don’t have a law degree. I haven’t been at the highest levels of this game and…

Bill Black [intro/music] (00:00:32):

Stop bragging. [laughter]

Geoff Ginter [intro/music] (00:00:34):

Now let’s see if we can avoid the apocalypse altogether. Here’s another episode of Macro N Cheese with your host, Steve Grumbine.

Steve Grumbine (00:01:34):

All right. And this is Steve with Macro N Cheese. Today. I have a very different show that we’re going to go through. I have been lucky enough to speak with one of our guests, Bill Black in previous conversations. But today of all days, we’re going to talk because this is like the 33rd anniversary of the Keating Five meeting. And with that in mind, Bill Black came to me and told me, Hey, listen, they’re about to put together a series, a video series called the Con.

I was like, Oh, that sounds like something I’d be interested in talking to. And so he said, well, you gotta talk to my friend Patrick Lovell, and you got to talk to his friend, Eric. I said, Eric said, yeah, Eric Vaughan. I said, Oh, okay. And they said, they’re like the Coen Brothers of documentaries. I said, well, that sounds like a really fun interview. Let’s do it. So I decided, wait a minute, rather than do two separate ones, let’s bring them all in at the same time.

And kind of talk about what made for this documentary series and also get a little history about the Keating Five and the other corruption that has occurred not only during the Keating Five in the savings and loan crisis, all the way through the great recession back in 2008 and 09, and maybe even touch on some of what’s happening today. So with that, let me introduce my guests, Bill Black, Patrick Lovell, Eric Vaughan, welcome to Macro N Cheese.

Eric Vaughan (00:03:03):

Thank you.

Bill Black (00:03:05):

Thank you.

Patrick Lovell (00:03:07):

Thank you, Steve. We’re big fans, man. We really appreciate being invited on the show.

Grumbine (00:03:10):

Oh, absolutely. The pleasure’s all mine. Let’s start with you, Bill. Tell us a little bit about what the history of the Keating Five is and how we got to where we are today.

Black (00:03:23):

Sure. The Keating Five was important because it put together the two dominant things that produce these kinds of financial crises. One is elite crime by the CEOs running banks, but the second is corruption of their political allies.

And so this meeting involved five US Senators, coming for the express purpose of hammering us the savings and loan regulators to go easy when we had caught Charles Keating, the most notorious fraud that defined the savings and loan debacle in the worst violation of our rules in the history of our agency, the kind of violation that always leads to catastrophic failure. And five US Senators, four of them Democrats, hammered us to not do anything to Keating and let him get away with his fraud.

Grumbine (00:04:25):

That seems pretty typical. Even now, as we speak, we’re watching them make excuses for these folks. I don’t think anything’s changed has it?

Black (00:04:34):

It hasn’t changed now, but it did change then. And here’s the thing that people need to understand that we can succeed even against this immense power. Even when you have these elite private sector frauds working in conjunction with elite corrupt political officials. So what we did was fight back. We made over 30,000 criminal referrals to give you an idea of contrast in the research for this major documentary series project, The Con, we learned from the FBI that all of the federal agencies for the great financial crisis made fewer than a dozen criminal referrals.

Well by making over 30,000 criminal referrals and by embarrassing the justice department into prosecuting by saying look, 5,000 criminal referrals and only eight cases, right? And that department of justice got embarrassed by this drum beat of criticism. Every month when we put out the statistics, they started prosecuting and they decided to prosecute the most elite of the folks, the top 100, which was about 600 individuals. And they against the best criminal defense lawyers in the world, we’ve got a 90% conviction rate, got over a thousand felony convictions in this kind of era.

And so what happened? When we announced indictments, when we announced that we were taking enforcement actions, suddenly those political contributions that the industry used to buy the souls if there are souls in these corrupt politicians became a liability and politicians raced to give back the money or to donate it to charity. And so their greatest advantage, the crooks greatest advantage is its ability to effectively by immunity through political contribution, got turned around on them.

And it’s because the regulators, particularly Mike Patriarca, a name that people should know, but don’t and Ed Gray before him on April 2nd, the head of the agency had been hammered by four of those senators and refuse to buckle. But there’s this famous scene in it where Senator DeConcini who hosted the meeting, a Democrat said, why would these top account audit firms write these letters saying that the regulators were completely out of control doing awful things.

And Patriarca said, because they have clients. DeConcini said, are you saying that they would sell their opinions? That they’re, that kind of corrupt? And of course the only answer to that Oh, no, of course we weren’t saying that. Mike Patriarca, his answer was absolutely. They do it all the time. Every American should have been there to see their jaws drop. They had never seen regulators stand up to them the way this happened. Now, there was more terrible things.

The head of the agency removed our jurisdiction. We were the regional regulators over Lincoln savings because we refuse to give in, but that to produced the scandal, we blew the whistle on that. And he was the head of our agency. The presidential appointee running the agency was forced to resign in disgrace. So we can fight back. It doesn’t mean we’ll always win, but there is a real chance to do it, but we have to act completely differently.

We have to call out the corruption in the system. We have to document the corruption in the system. And again, that’s what The Con is all about is showing the American people exactly how this same type of thing happened in a run up to the great financial crisis, except that they never had to hammer the regulators because there were no real regulators anymore.

Grumbine (00:08:50):

Wow. So with that, let’s bring Eric and Patrick into the mix you guys decided to take on this challenge and what an incredible story. Right? Tell me a little bit about how The Con came to become a thing.

Lovell (00:09:07):

Eric, I’m going to defer to you to kind of launch first

Vaughan (00:09:10):

Well, that’s nice, cause I was just about to say that. The origin of this actually began with Patrick’s own experience. So in kind of like a corollary to this it’s like I’ve met Patrick years and years and years ago when we were producers on a show that was basically a home-makeover type show that we later found out was for all intents and purposes, a PR front for a subprime non-prime lender who was a contributor to the great financial crisis.

And it was an ironic turn that this thing that was basically, you know, paying for our daily lives, ended up being indirectly, an agent of our own downfall. And this is very much where Patrick’s story kind of picks up. And I’m sorry for speaking for you, Patrick, but you did throw it to me. So with Patrick, he had gotten into the housing market right in the middle of all this, I was lucky enough to have just gotten out actually.

So I didn’t feel the full brunt of 2008, the way Patrick did and Patrick found himself adrift along with millions of other Americans. And they came right down to the simple fact where it’s like, here’s this guy, who’s a storyteller by profession who basically had a simple question. What happened to me. And everything that he was seeing in the newspapers and the television and so on and so forth, wasn’t adding up to his personal experience.

Like I said, I was a little bit like I was shell shocked by everything that was going on, but I wasn’t as directly affected as Patrick. And I’ll let Patrick kind of fill in the gaps, but it wasn’t until Patrick called me up and said, Hey, will you go on this journey with me that I jumped in, but in order to fill that gap, I’ll have you jump in there, Patrick.

Lovell (00:11:04):

Well, sure. And Steve, I find it serendipitous that, you know, we’re broadcasting this on a day that is the first day of Pesach Passover. And I’m not a religious guy by nature, but I am fundamentally framed by the story of Exodus and particularly the integrity of law. I don’t think that God provided the 10 commandments to the people with one side of the tablets, for a set of rules for the people. And then on the flip side, some sort of secret sauce for those who are the power and their minions.

And it’s equally serendipitous that Bernie Sanders announced that he’s dropping out of the race, which is of course very disappointing for all of us who are Bernie supporters, which I am. But I have been in my space somewhat critical of Mr. Sanders from this particular vantage point, as much as I believe all the new deal corollaries. And several years ago, Bernie came out with a really profound statement that literally fell on deaf ears.

He said, Wall Street’s business model is fraud, but there was no followup. It was crickets. There was no followup from the pundits. There was no deep dive. There was no echo chamber in the mainstream media. And it was incredibly difficult for me. We’re on this podcast with Bill Black and Mr. Black was the answer to everything that I had been seeking.

So in my own experience, when we go back to the 2008 financial crisis, I’d been an independent entrepreneur. I’m a business guy. I know how to make things happen. I’m a producer. I was actually living the 101 version of my American dream. I happened to get shoehorned into a pretty easy deal in my first home. I had a young family and then on September 15th, 2008, the world came crashing down in my head and it didn’t make sense. None of it made sense.

The media made no sense. Bush’s, you know, emergency situation with Paulson and the behind the door meetings between Geithner, Paulson and Bernanke. And of course, all of the heads of the families of Wall Street. And I say that kind of tongue in cheek, but it makes sense for those of you who have Progressives all along and understand sort of where I’m going with this, but none of it made sense and I was just literally dying for answers. And I’m trying to dig out of the rubble and you know, I’ve got my family on my back. I ran out of income and it was a horrible, horrible situation.

In fact, it nearly ended my life and the reason why it feels so crystal clear to me today is because a lot of people are on the verge of that happening because of this COVID-19 and the way that the bailouts are working right now and ultimately how the working class of this country and the vulnerable kind of pay a very heavy price on the other side of this, considering the criminal and chief. Right? But I bring it full circle to Bill Black because I caught him on Bill Moyers.

And suddenly I literally almost fell out of my chair because everything he said was like checking off the boxes of everything that I had been dying to understand. And so one thing led to another, I reached out to Mr. Black and I had been concurrently working with Eric and now we fast forward and the timeline somewhat, but we went on a journey where we were able to serve the occupy Wall Street wave to try to find out what the rest of America was trying to figure out.

And we made our first documentary in that time space. But as I was moving through it, I was reading a lot of Matt Taibbi, I’m reading every financial journalist I can get my hands on. And Taibbi specifically was propping up a couple of whistleblowers and I kept scratching my head going well, wait a second. This story just seems so much bigger than the one lines that most of the mainstream media was promulgating at that time. And they were talking about really people being greedy.

Homeowners using their houses at ATM’s, you know, that they were responsible for this calamity. That wasn’t my story. It didn’t make sense. And so suddenly I’m looking at this huge jigsaw puzzle and I find that there’s a whistleblower on this side of the equation that connects to another whistleblower that connects to another whistleblower. And then suddenly I find Bill Black on Bill Moyers and I’m like, Holy crap, that’s the story.

So one thing leads to another, we go down this incredible. I don’t want to call it. It’s not a rabbit hole. We just got to understand the story and reality in reality is that we had a criminal syndicate in charge of our country and regulation. I E laws have been disbanded since the Reagan administration has gotten worse and worse and worse and worse until now and now.

So what am I saying about Bernie Sanders dropping out of the race and the profound kind of symmetry with the idea or the notion of Passover and laws and integrity and everything else. Bernie should have put Bill Black at the forefront of his campaign. If you literally wanted to make it about corruption, because Bill Black is the foremost expert on financial corruption in this country and how to deal with it.

Grumbine (00:15:41):

I couldn’t agree with you more. That’s outrageously powerful. And I want to just piggyback on something. You know, I almost lost everything. That frigging recession crushed me. And I’ve been on the air so many times talking about my calamities and stuff to hear you talk about your side. It was like a very surreal moment because there’s a lot of us out there. It’s not like it’s unique.

Millions of us were destroyed during that time. And these people got off as if it was just a simple mistake, like, oops, sorry about that, too bad about that. And you’re right. Bill Black should have been at the forefront of the Bernie Sanders campaign, not just Bernie Sanders. If Bill Black would have been in the front of that, the represent us gang could have also easily signed to that. Cause the anticorruption that they’re fighting for as well.

There’s so many groups out there that maybe are not Democrat, or maybe you’re not distinctly partisan here and maybe not even progressive, but completely are bought into the idea of anti-corruption laws. And to have someone like Bill Black out there as a surrogate for him that could actually fight that fight with that platform.

Similar to what Bernie Sanders was able to do for Stephanie Kelton in terms of the economic lies that we’ve been facing to have the corruption lies, exposed, and have someone as an attack dog out there for that, that would have been absolutely Epic because all those DNC insiders that suckle up to these people would have been forced to be on the record as to being either A: against corruption and prove it or B: they’d have been exposed. And I think that that’s a damn shame. I think you nailed it perfectly. Bill, it sounds like you’re in pretty high esteem with everybody on this call. How’s it feel to know that you’re a hero?

Black (00:17:31):

Yeah. I think that’s Lincoln thing about being taken out of town, tarred and feathered, not a rail that, but for the honor of the thing, I just assume to skip the experience.

Grumbine (00:17:42):

Well, let me just say this. I think that this story in general, I would like to say that the story that you uncovered is unique, but it’s unfortunately a continuing story. It’s like a sequel that never ends and we’re still experiencing it now. I mean the most recent and Patrick nailed it.

The most recent bailout that occurred here as the quote unquote stimulus really didn’t help the people at all. It just helped the bad doers in the background. I mean, the result of this is really quite tragic actually. What do you see in the current environment?

Black (00:18:16):

So you put your finger on exactly one of the themes that I have and certainly that The Con has. And by the way, I have no financial interest in this effort. I just help with technical advice and such and, you know, introducing them to folks. So as a first small thing, I’m in Minnesota this semester. So I am five miles from where the Coen Brothers actually grew up in St. Louis Park, Minnesota.

But the thing you put your finger on that I want to build on what Patrick said that I’m not Jewish, but obviously there are the famous four questions that when asked at Seder and the first one is why is this day different than all other days? And your point is the correct one, it isn’t. This is the same thing repeating endlessly with minor variants, but we, at times, effectively responded as a nation.

Well, why? Because we got the facts. So again, one of the things that The Con does is put this in historical perspective. Why was there a new deal involving banking? Because there was a Pecora investigation, Ferdinand Pecora. And we tell that story, you know, this is a guy that knew nothing about banking, but he was honest. And he had been a prosecutor of corrupt people and he realized the story was one of corruption, corruption in the private sector, corruption in the public sector.

And of course the interconnection of those two things. And his exposees were a sensation in the nation. They provided the facts. They created the political space for real reforms and we had real reforms and they worked brilliantly for a half century. And then we violated one of the key rules of conservatives that actually make sense, which is, if it ain’t broke, don’t fix it, right? That’s actually a smart rule.

So we took a system that was working brilliantly and at the behest of the banks and at the behest of what they called themselves, the new Democrats, we destroyed that system. And now to put my criminologists hat on, we created a criminogenic environment that creates wave after wave of elite fraud. That with the Gresham’s dynamic, in which you gain a competitive advantage, when you cheat well, then market forces become perverse and bad ethics drives good ethics from the marketplace.

And so the great financial crisis is actually the third episode. The third act of the tragedy that is the savings and loan debacle. It’s the same people. That’s what we show in The Con it’s using the same fraud and predation tactics that we saw in the savings and loan debacle. Indeed, you asked about compliments. The most sincere compliments I’ve ever received in my life are from Charles Keating and from Roland Arnall. Keating was the head of Lincoln savings. Roland Arnall was the head of AmeriQuest.

And both of them decided they had to get out of the jurisdiction of the office of thrift supervision West region, because we were so effective. And so in the first case, Keating used immense political capital. These five US senators connections to the White House, the speaker of the house who was also a Democrat Jim Wright and such all to get our jurisdiction removed over Lincoln savings, producing massively greater losses. In the case of Roland Arnall, it was he decided there was nothing he could do because we’d fought back so effectively.

So he voluntarily gave up federal deposit insurance, voluntarily gave up his charter as a savings and loan to escape to the sanctuary of what is now called the shadow financial sector without regulation. And then he is the one that built and grew massively over the course of roughly a dozen years and spread through this Gresham’s dynamic this epidemic, but the test bed, what is the savings and loan debacle, where all of these forms of elite fraud, predation, and corruption were adopted.

In the savings and loan debacle there were people that fought back courageously. Let me ask you another name, Joe Selby. He was in charge of our Texas, which is one of the epicenters of fraud. Why was he there? Because Ed Gray, the chairman of the agency, a conservative Republican, and had this road to Damascus experience because he listened to the examiners, right?

And he, Ed Gray, went to everybody he knew and said, who are the two best financial supervisors in America? And the answer with Joe Selby and Mike Patriarca, I’ve already mentioned Mike Patriarca, my boss in the Western region, the other epicenter, California of the savings and loan debacle. But Joe Selby was actually the most prestigious. He twice, rose through the ranks from, you know, a little GS 11 type to the acting comptroller of the currency. Right? Of course, because he wasn’t a political type, he could never actually be appointed to run an agency.

God forbid we should appoint someone of competence and courage to it. So Gray personally recruits Selby and Patriarca successfully puts them in the worst regions. Selby knew it was going to be catastrophic because Texas was such an epicenter of fraud. And what did the frauds do? Exactly what you predict. They outed him as a homosexual and the Speaker of the House, a Democrat demanded that the head of the agency, fire Selby on that grounds, Ed Gray refused, but his successor, Danny Wall, openly took credit for forcing Selby out of the government.

This is the most effective, bravest, most competent financial regulator in the world. And they didn’t just force him out, they bragged about forcing him out on the most disgusting unrelated basis in history, right? Despite all those things where Selby knew, if he took a position like that, he would probably be outed in such where Patriarca had knew that his answer, of course, that most elite audit firms are corrupt and giving clean opinions to the worst fraud.

All these people knew that this was going to end their careers and all of them, not only did it, but would have done it again. And I will tell you the other thing. I was one of the four regulators that took the notes of the Keating Five meeting that led to the Senate ethics investigation and such. So I worked very closely with my three counterparts for a decade, right? To this day, I have no idea what the political affiliation, if any, of my three colleagues was. It was literally not an issue.

Government can work well. You just have to pick people who believe that government could work, who are intelligent and courageous, who listen to the examiners, listen to the regulators. And so The Con has to do what the Pecora investigation did because we’ve had no real investigation because all those criminal cases we had and the big civil cases we had, that weren’t settled, they put facts in the public record.

Not only did we have no convictions out of the great financial crisis of any of the elites that drove the crisis, we never put the true facts. Instead, we put a whole series of lies and The Con exposes all those things.

Grumbine (00:26:52):

I want to say something here real quick. What is often missed in these white collar crimes, and they try to paint them out to be administrative crimes. What is lost is the suicides, is the lack of healthcare and everything else that comes from the financial destruction that occurs to everyone not in the elite and as much as I am all for finding corruption and getting it out. I want to also put things in a proper context.

It has been my experience that people often times avoid the very real bloodletting in their description of the outcome of these white collar crimes. They make them seem like it’s just a matter of, well, I don’t like that somebody rich got over on me and that’s not the case at all. If it was just simply a matter of white collar crime and so forth, whatever, but people literally are dying from these things by dividing it up and ignoring that.

I think people miss the real impact of your work as a whistleblower, Bill. I think they miss the real work that Patrick and Eric are doing in terms of bringing this out. There is real honest to God death that comes from their behavior. Do you agree with me here?

Black (00:28:13):

Yeah, I’ve been talking a lot, so I’ll try to make this very brief. Two things. One as white collar criminologist, we know that white collar crime kills and maims more people than all the blue collar crimes combined. And second your point, let me give you an example of that. Charles Keating. Charles Keating deliberately targeted retirement communities, deliberately targeted widows, tested and hired and found the ideal person to scam them, which was an 18 to 19 year old kid, a boy, young man, if you want to be generous. This is their first job ever.

And they would convince them to put their life savings, not in insured deposits of the institution, but uninsured junk bonds in the holding company owned by Keating. That was actually insolvent where they would suffer massive losses. And so a couple of things, one, yes, that led to immense awful things for those victims, including suicides, but it also meant they had made so many victims, $300 million of fraudulent sales, almost entirely to widows and to nuns by the way, Keating pretended to be a super Catholic.

But on top of that, it allowed us to pick among the over 3000 victims, in fact, over 10,000 victims, the ideal story. So this is what we did. We led not with some statistics, not some complicated story about the fraud scheme, but the widow. And that was a bait and switch. So Lincoln savings, the insured institution would advertise certificates of deposits, you know, at a slightly longer year.

So a slightly higher interest rate. And if you called in seeking that insured deposit, they would say, Oh, if you’re interested in a slightly higher interest rate, you can get it through our affiliate. And it’s backed entirely by the savings and assets of Lincoln savings, you know, buy this bond. And so the nice young man told the woman that, this is the story she told him, she was the sole support for her daughter who was, you know, like 50, who was a quadriplegic.

And the only significant joy that she got was she loved the coast. And so mom, the widow in her seventies is telling the nice young man, I need to save so I can buy a van that is wheelchair accessible. And then I’ll drive my daughter along the Pacific coast and she can get, you know, some enjoyment of life. And the nice young man said, good, take all of your savings and put it in this bond. And of course she lost everything. So this is not about greed, right?

This is often about people trying to do absolutely the best thing that we’ve told them all their lives are supposed to do. You know, buy a home, do things for your daughter and such. And these criminals are among the worst pond scum you can possibly imagine. They will take advantage of people at their most vulnerable, but that isn’t the most obscene part.

The most obscene part was that Santelli rat that kicked off the tea party movement, where they blame the victims and use the full weight of corporate media to demonize the victims who had suffered from these white collar crimes. Many of whom, as you say, too many committed suicide, and I’ll toss it to Eric and Patrick, but The Con centers on one of those human tragedies.

Lovell (00:32:11):

I want to pipe in here real quick. I’m gonna toss it to you, Eric in just one second, but I want to just pick up on a couple of these themes that Mr. Black righteously on this very profound day and justly tells the story of the targets. So again, it’s not greed. When I think of greed, I think of, you know, Ebenezer Scrooge pinching pennies, right?

During the great financial crisis, Obama had said, there might’ve been bad ethics and so on and so forth, but it was shenanigans. It wasn’t breaking laws. When a guy like Obama should have known exactly what laws were broken and I suspect he did but, on that note, you know, Mr. Black had taught us this from the outset.

And so we had understood and what I said at the opening of this conversation, Steve, was we put together the whistleblowers first, I did kind of a high end top-down sort of understanding of what was taking place in terms of this financial deception that was being used and ultimately trickled down to me, right?

It still didn’t really make as much profound, powerful sense as what I was seeing out there in the real world with millions of people, tens of millions of people losing their homes in the calamity that followed that many are still dealing with as we roll into this disaster that we’re dealing with. And Mr. Black summed it up, I thought brilliantly when he said their targets were the meek, the weak and the ignorant.

And suddenly Eric Vaughan, my partner, a guy who’s basically been inside my head for 10 years. And then, you know, by my side, every step of the way as we learned the steps through Mr. Black suddenly found something that changed everything for us.

Intermission (00:33:55):

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Grumbine (00:34:44):

Eric. I want to ask you to weigh in on this, but I want to say one thing real fast. When you think about this actual pain and suffering today with the virus as it pertains to all this, we’re literally watching a movement that has been trying to bring about justice and all this stuff to the forefront right here, right now.

And with Bernie stepping down, it’s got to feel a little bit aimless and rudderless. And what you’re talking about, Bill and what you just talked about, Patrick. It’s terrifying. It’s absolutely, unbelievably terrifying. There’s nobody that’s really able to take that lead. Anyway. I just wanted to… Bill, you’re going to have to step up brother. Anyway, Eric, I’m sorry. Go ahead man.

Vaughan (00:35:28):

Oh, no, no, no, no. Not at all. I mean, a couple of things. It was always very important to me that we, on one hand, very careful about being able to walk people through all the different steps of all of these machinations that were going on with government and laws being passed and how those laws are deregulations, you know, would domino into the next one, basically leaving the new deal, you know, left the shambles and having us exposed for all of the corruption and all of the predatory behavior that came from that.

But what was always the most important thing to me was to, and I think that you mentioned it just a little bit earlier, was we get this notion of white collar crime is clean, is somehow a clean crime. And I wanted to destroy that as much as I possibly could in both the way that we tell the story and the visuals that we use to tell it. And because I was so critical, I wanted to approach it more like a true crime documentary rather than a economic documentary.

Like, there’s a lot of really great ones that were out there, like, you know, inside job did a really great job on a couple of things and so on, but it was always talking with these people in like these nice offices, you know, the top of a tower in New York or in some sort of law library or something along those lines. And we never got a sense of the actual human cost. And that’s why it was important that we didn’t tell this story from the perspective of the people who were up there, making the decisions who got it wrong.

It was very important to us to go and find the people who actually got it right, who actually understood what was going on and made sure that they did everything that they could let everybody else know. And we also show this is effectively how every single time that that happened as often as it happened, the powers that be came in and made sure that their voices were quieted in whatever way they possibly could, whether it was whistleblowers within corporations or whether it was whistleblowers in the most pivotal departments in our government.

There were people, many, many, many people even through 2008 that were there doing the right thing and trying to protect us, you know, the regular Americans that are out there. And that’s why ultimately the thread that we tell our story, The Con is a four-part documentary series that covers about five and a half hours worth of story. And through that whole story, we base it off the thread of a woman from Akron named Addie Polk.

Addie Polk had a brief moment of fame for all the wrong reasons. And that, back in the day, I believe it was October 2nd, when the second bailout bill in 2008 was being debated in Congress and Dennis Kucinich came to the floor. And just the day prior, the news had broken local Akron and Cleveland newspapers about this woman, Addie Polk, who, when the sheriffs were coming to evict her from her home, a home that her and her husband had fully purchased all the way back in the eighties.

It’s like they had purchased it originally in the early seventies and they finished paying it off, I believe sometime around 1985. Right? And then Robert Polk, Addy’s husband who was a worker in, I think not one but two of the different tire factories in Akron, you know, classic story of the great migration, right? You know, people coming from the South, coming up to the industrial Midwest to find jobs and find their part of the American dream.

Lovell (00:39:12):

They were African American.

Vaughan (00:39:15):

Yes, being African American and they were living it. They had that, the protections that were put in place from the new deal made that possible. It gave them the opening for them to go and pursue their dreams and live their life. And as those were being degraded and as those were being eroded away. So, too, was that dream taken away in the early nineties, Robert Paul passed away natural causes nothing dramatic 1995, actually.

It wasn’t a year later that Addie started getting calls from predatory lenders, giving her all the different song and dance routines about why she put up her home for collateral, get into a loan, so on and so forth. And as it happens her home needed repairs. And so she ended up getting involved with one of these loans. And once you’re in, it’s a trap that you can’t get out of. And she ended up being involved with several loans rolling along, you know, year after year.

And she was completely entrapped. And that’s the best version of the story. There’s another possibility with this story that we go into in a documentary. And I think at this point, I’d rather let that be something that people discover as they view our documentary, but that’s the best version of her story that can possibly be. But through this, when the sheriffs came to our door in that October day in 2008, she went into a case, pulled out her husband’s old revolver and shot herself five times in the chest.

Grumbine (00:40:51):

Oh my God.

Vaughan (00:40:51):

The sheriffs were there. A neighbor had said that he was worried about Addie. They heard the noises, they weren’t entirely sure what it was. They’re able to get into the home and they found the body. Or Not the body, I’m sorry, because she was still alive at the time. And that was that day. And her story goes on from there. She didn’t die immediately, but it became very apparent that this was the story, right? She was of the minority population.

And one of the things that came out of the 2008 financial crisis is that if you were a minority, you were hit harder 70%, I believe in, make sure I get this right, Bill. But I think it’s 70% of the wealth of the Latino community was lost in the 2008 crash. And I think 65% of the black community as well was lost disproportionate to other communities.

They went after specifically elderly people, especially, basically, if you were vulnerable in any way, shape or form, those were the targets. And we show in The Con how people were targeted, the techniques that they use, how they systematized it, how they basically turned lending institutions into fraud factories, and how those fraud factories fed the banks, and how those banks use those fraudulent and predatory mortgages in order to defraud other people further downstream.

And we show how this entire thing gets covered up. We show who’s in the pivotal places, making the pivotal decisions that make it possible, that this strange place that we’re living in right at this very moment today. We’re the origin story of the world we’re in right now. Ultimately, that is what The Con is. But anyway, the main point is, is that yes, understanding that real people were hurt, whether you were a person who were getting involved with fraudulent and or predatory loans, or whether you are a pensioner whose pension management company basically got duped into taking securities that were based off of these fraudulent loans.

If you were on the front end of this and you have real money, you lost, if you were in the back end of this and you had real money, you lost everybody in between. Most of them may not like bandits and that’s the world we live in today.

Grumbine (00:43:17):

I interviewed Keeanga-Yamahtta Taylor, of Princeton, not too long ago, who had just written a book about redlining and the end of redlining and predatory inclusion, the loans and the idea of home ownership, which basically is the spark of everything you’re talking about in the early seventies. These people were given houses that were literally dilapidated and nobody would have moved into. They were absolutely rat infested and floors were breaking apart and pipes were bursting.

With the need to own a home, the idea of having wealth and so forth. The banks were completely and utterly protected from these fraudulent loans from bringing these people who didn’t have anything else in their lives going for them, trying desperately to get some security under them. They prayed on them. They put them into these horrific situations. And I think that these were just the beginning.

Redlining, you know, obviously was horrible, but then the end of redlining involved more corruption, more of the same stuff. And that was early seventies. And as you carry that into the eighties, it’s clear that these things were building on their own. There’s a little bit of a tsunami effect that took place here. And we’re in the midst of a second or third or fourth wave carrying people out to sea. It’s an atrocity. It’s absolutely an atrocity. So when is The Con expected to be released and how is the distribution for it?

Vaughan (00:44:47):

Well, we’re working on the release schedule right now. It is coming very soon is what I have. But I think Patrick probably has a little bit more details than I.

Lovell (00:44:56):

Let me answer the question with a question to you, Steve. You’re in independent media, right? You’ve got to do this thing bare bones, do it yourself. You know, I looked at your bio on LinkedIn. You’re an extraordinary talent. You’ve got the ability to wear a lot of hats and to configure what brings this, you know, blog to the people in a way that’s up against, shall we say, mainstream media and the formula that they feed upon is really the subject matter, correct?

Grumbine (00:45:25):

That’s correct.

Lovell (00:45:26):

Okay. So just ask you a question. If you had the Pecora hearing, the modern day Pecora hearing, and let’s just frame this because we talked a lot about the material, but right after FDR got elected because of the radical movements at that day led quite frankly by Wright Patman, who was a first district Congressman from Texas, who was part of those old radicals, the farmers against quite frankly, the bankers of that era.

And he knew what was happening with the great depression, which incidentally was a pre carbon copy of what happened in 2008. And quite frankly, everything from the first act of the SNL crisis, which also includes of course, Michael Milken and the junk bond King and the leveraged buyouts and all of that stuff that played in. So, the point when you follow this chronology all the way through, you think of media really as especially with all of the different variances and the models that we can go and we can self distribute right now.

But when you think of Netflix and when you think of HBO and you think of all of these guys within the context of this, right? So right after FDR got elected the puts in Ferdinand Pecora to get to the bottom of this, to discredit the bankers, which leads to the new deal. You can’t get to the new deal without a Pecora hearing. So that’s what Bernie was trying to get was a new deal, but he never put forth the Pecora hearing.

So then you think of all of this in the context to a choked media, we all know on the progressive side that the media is choked because whether your mainstream media, MSNBC, Fox, CNN, they’re all part of the same source, right? But then if you go down another tier, where do you think Netflix and everybody else gets their funding from?

Grumbine (00:47:08):

All these folks that have been bilking us for years,

Lovell (00:47:12):

It’s debt financing. So we don’t know exactly what’s going to happen next, but I think this is how this whole thing’s gonna play. Basically, we’re going to be disruptors. And as you can imagine with this type of material that’s taken us seven years to put together that we’ve heard from, we’ve got an agency out of New York that did the Tigertail on Netflix, which is all the rage. They also did finding Neverland the story of…

Vaughan (00:47:35):

Leaving Neverland.

Lovell (00:47:36):

Leaving Neverland, I apologize. As well as going back, Making Of A Murderer. So these guys are A-list when it comes to this stuff and they told us in no uncertain terms, The Con is beyond all of those combined. So we’re going to start with a self distribution model that will then hopefully, and this is all work in progress, land of on to Netflix, right before the Democratic convention. However, that’s all work in place. So, you know, more to come. We’ll keep you in tune of what happens in what step. But I’m curious just because this is your world. How do you respond to what I just told you?

Grumbine (00:48:07):

Well, let me tell you, I used to reach 30 million people a month through my primary platform of Real Progressives. And through this podcast, you know, we reach tens of thousands, not millions. So the choke hold they have on distribution is greatly tightened just through social media alone. Our ability to reach people. I have 126,000 followers on Facebook of which hundreds see my posts.

Hundreds out of 126,000 followers. And that’s them gating and limiting the reach of the people that say they are interested in hearing what we have to say. And then you go to YouTube and we are burdened with a thousand forms of crabs, trying to crawl out of the barrel, pulling each other back into the barrel and the people that are above, they seem to make out. All right, it’s getting out of that barrel. It’s almost impossible.

Lovell (00:49:08):

Let me ask you this question, Steve. Do you think given what we both know and we both understand and what we have, and we know that Bernie has a platform to multiple millions as does AOC. Do you think AOC and Bernie ought to try to wrap their heads around The Con?

Grumbine (00:49:24):

There’s no push back out of me. In fact, I think that if I were in your position, my efforts would be channeling through Bill, through Stephanie, right up into Bernie’s world. And I would be funneling this to all of the surrogates. I would be working my way through Nina Turner. I would be doing anything I could, I would be getting to Bernie’s people, folks like myself, a gladly helped give air cover for this, because this is a much needed piece of activism. So yeah, that would absolutely be how I would approach this.

Lovell (00:49:58):

Well, it’s beyond activism and I’m not making light of activism because I am an activist. And it’s incredibly important to be engaged, of course, but this is, literally, the Pecora hearing that never happened. We’ve got, so, you know, the former director of investigations of the FBI who tells it like it is, we’ve got the former director of white collar investigations for the DOJ who tells us exactly what happened. We’ve got high level people at the SEC.

We’ve got attorneys, general galore. We’ve got the, of the top that all got it right. Leading to this and should be the people in control. But, of course, let’s just take a quick gander at what the world is we live in right now. What did Trump just do in his QVC pitch for his non FDA approved drug? He shushed the nation’s leading expert on communicable diseases, right? This is the world we live in. We got to break it.

Grumbine (00:50:50):

Yeah, the anti-knowledge is rich and deep. And the disinflation machine is epic. I mean, Leni Riefenstahl would blush if she knew how bad it was, it’s at peak propaganda and truth is very much a revolutionary act. I’m going to be honest with you. I’ve talked to several people, including Ryan Grim of the intercept. And he spoke about the Bernie Sanders campaign and a podcast we did here recently. And he spoke about the conflict of Bernie’s approach.

And this may be will speak to what you’re talking about. He said on one hand, Bernie Sanders is trying to be conciliatory. He’s trying to be part of the gang so that he can quote unquote, build enough movement within the party to make his policies come the bait. However, he reviles the glad-handing, he reviles the networking. He reviles the actual building of consensus within the party to actually get those legislators to do it. But instead he built a movement outside there that was kind of, on one hand, burn it down.

But yet really at the end of the day, not burn it down as we see him basically hanging it up. So the question comes into when you take something like this, that is truly earth shattering. It got folks like Tim Canova down in Florida who were jobbed out of an election and we’ve got the Becks, took the fight about the DNC rigging the primaries, et cetera.

A lot of these important corruption type things with Debbie Wasserman Schultz and others who literally rigged elections. They were swept under the carpet and they were ignored and they moved by and said, there’s a lot of what the hell is going on. Why aren’t you taking these things all the way? And your question in the very beginning of this, Hey, why doesn’t Bernie Sanders have Bill Black on his team?

These are questions that are, in my opinion, quite fair. And I love Bernie. Goodness gracious. I do. But this revolution is going to have to figure out a way forward. And it’s things like what you’re doing, the work you’re doing that will absolutely take and put a spotlight on the criminals that are leading us down these false paths.

Unfortunately, I don’t think there’s anybody courageous enough right now to take this kind of work because I think it probably leads to a death sentence. I think there’ll be suicided, really concern about the people that have that bold whistleblower. I don’t know that there’s enough protections baked into our society anymore to take care of people that are telling the truth.

Lovell (00:53:23):

Well, let me give you a perspective on where I’m from, and this is the whole Genesis of what led me to Bill and Eric, again we’re two sides of the same coin, except he’s a whole lot smarter than I am.

Black (00:53:37):

And better looking.

Lovell (00:53:37):

But the one thing that I am is tenacious. But look, I’m not an expert. I’m not a PhD economist. I don’t have a law degree. I haven’t been at the highest levels of this game and.

Black (00:53:49):

Stop bragging.

Lovell (00:53:50):

And, but what I am is just a regular guy, right? I’m a producer, I’m a competitor, I’m an entrepreneur, but I’m also a football guy, right? And so I always look at this through the lens of just kind of the every man. And most of us understand how the game of football is played We’re great fans. We understand all of the levels of the draft and who makes what maneuver and salary caps and all of these complicated levels of what actually makes a Super Bowl champion in this day and age, right?

We can wrap our heads around that. It’s pretty crystal clear, but what we do is we root for a fair game. That’s why we have over 165 million people or whatever those extraordinary numbers are that watch the Super Bowl, because we really expect the highest levels of competition with integrity of the game to rise to the level that we all championed. That seems to be the American spirit.

So what I’m trying to figure out and what I’m trying to tap into, Steve and tell me where I’m wrong or where I’m right. But the fact is there is so much overlap between those that are blindly following the MAGA’s right now, because they have no idea how the system works. Then you’ve got people in silos all over the place that can’t put it together. But at the end of the day, like we said, at the outset of this conversation, it’s simple. It’s the integrity of law. Are you a nation of laws?

Which enables what I think is the American dream. And of course, what Martin Luther King spoke to. And it’s all about the fierce urgency of now, because we’ve lost it and it’s going to get worse. I mean, with Biden being the head guy, do any of us think that Trump’s not going to destroy Biden? I don’t think so. So to that point, it’s a pretty simple consensus. We have to recognize the problem for what it is, and nobody can wrap their heads around it because they get lost in translation because of the complexity of finance.

And it’s not that difficult. You’ve been played. It’s simply a game of deception and you are nothing but chattel. That’s the idea. That’s what we’ve become the American middle class, the dynamism of upward mobility, all of that, stuff’s dead. People need to get up and figure it out. Cause it’s going to get worse.

Black (00:55:44):

I’m gonna push slightly in a different direction because I think the message also is one of hope. Now, part of it is one of our mottos during the savings and loan debacle that is not necessary to hope in order to persevere, right? So that’s part of the message. You just do the best you can, but as you deal with, Steve, all the time in discussing MMT and job guarantees and such, a big part of our message is hope that we really can do things much better, that we are putting the lie to TINA. There is no alternative.

That Democrats need to throw millions of people into unemployment and kill social program after social program, in a series of Sophie’s choices and that they not only do this insanity, but then they glorify it acting like they’re being virtuous in seeking budget, surpluses and austerity that will cause immense destruction. We show each you can succeed. What we also show is that there’s no such thing as a decisive battle where you win for all time.

It takes every generation fighting all the time to fend off folks and is powerful. But I think viewers are just gonna absolutely love seeing another thing that Eric was able to put together. And that is the Akron taskforce. So this is a group of basically local cops who managed to do a fairly sophisticated white collar investigation. And as they said, the white collar folks were, you know, there’s the Akron variant right of wall street. So not exactly in metaphors NFL level, the type folks, but you know, complicated, involved tens of millions of dollars of fraud, thousands of people being defrauded.

And these basically about eight to nine cops who had virtually no experience in dealing with white collar and finance managed to get successful prosecutor against all of those folks. And they’re interviewed in a diner and they are just us, right. I, I grew up in the Midwest. They all happen to be white. And they’re asked, so, you know, who are these friends let’s go after and you heard that comment, the weak, the meek, the ignorant, I was quoting Charles Keating’s people. That’s an actual quote. Right?

They said that to their targets were right. And so the Patrick asks basically that question knows. So, you know, where they going after everybody, or they have specific targets and just all of these middle-age white males go out. No, no, of course it was blacks. They were going after and such. They are another example of Patrick is sort of every man in this documentary project. But these are also examples of every man just like Addie Polk was every woman.

And I want to add one other thing and it puts together, I think a couple of the things you’ve talking about, Addie pokes home that was supposedly worth all this huge amount of money through appraisal fraud, which is a major substantive theme of the documentary. The house in fact was worth so little that it made economic sense, decided the bank after foreclosure to tear it down. And so there are these images of just showing the blank space and these incredible to me, effective things of going.

It turns out they’re actually specialized places in America for destroyed home, right? Where they go through the tritus looking for metal. So it’s like a destructive mausoleum type of thing. But to me, it comes back to the real metaphor that ties together what Patrick and Eric had been saying. It isn’t just that all of this happened. It isn’t just that there were all these individual victims it’s that we could have prevented it.

We knew exactly how to prevent it. We had incredibly good warnings. We had incredibly brave people in these Whistleblowers who came forward. They gave the case on platinum platters to the regulators, to the prosecutors, to the SEC, know what is incredibly painful and the metaphor is perfect, is they erased Addie Polk. There is literally not even a dwelling there. They sought to erase her story. And The Con gives her back that voice.

Grumbine (01:00:51):

I want to ask you one final question. Before we close off of this. I have long been critical of people that call out the problems, but don’t have even an inkling of the solutions. We talked a little bit about hope a second ago. You know, Patrick asked some questions that were tough questions, but let me put this to you as a way of putting the bell on this.

What is the path forward? How do you solve this problem given the way things are today with the way the law enforcement is today, the way that the government behaves today, the way the legal structure allows it to behave today with the veneer of honesty and dignity with the media covering up for it? How do we take this beast on in a meaningful way?

Lovell (01:01:43):

You shine the light of the truth of what actually happened to inform how to move forward. And that’s exactly what we’ve done, but to put the truth in the hands of those who have actually a megaphone to the people that need to hear it. What we have is a choked, clogged system that has basically obfuscated and lied, denied, switched the blame and implicated the victim. And what we have to do is build the consensus of the critical mass of the masses that are under the thumb of the system.

Because that’s what it is. It’s a system that is marching us all to oblivion with one, you know, form of problem or the other, whether it’s climate side or whether it’s the end of law, as we know it. But it all begins with the integrity of the system because if you don’t have integrity, you’re not home. Right. And the bottom line is, that’s what we put together. And to me, I’ll finish where I started.

Bill Black is the man this country needs to listen to. We’re watching right now, President Trump fire inspector generals to be able to use a slush fund in any way he wants off the heels of whatever happened yesterday in Wisconsin because of the Supreme court and yada, yada, yada. The bottom line is that it’s a hostile takeover folks. And there’s good people that really cherish the notion of life, liberty, and justice for all. And that’s what side we’re on.

Vaughan (01:03:02):

I just have two thoughts to conclude with. I think one of them is that corruption as an issue has no side, whether you’re red, whether you’re blue, no matter how conservative, no matter how liberal you are, no matter where you are on any kind of scale, there is nothing controversial about the idea of rooting out corruption from our system.

And I think that with all the different conversations that are out there, they’re splitting us apart that if we can at least rally around this, everybody can rally around getting rid of corruption. Then there’s a shot, a big shot for something to happen. Right? And then the other thing is because I kind of want to continue on to like, the more hopeful side of this is that one of the things that we show is that at every single level of this con from the street, all the way up to the C suites and to the halls of power in DC, there were people that were doing the right thing.

There were people who a system had every chance and every opportunity to do the right thing and make the right things happen. It took very specific and very well placed individuals to thwart that. The system, if it’s minus that, can still work. It was set up to work. We had whistleblowers, we had people, you know, at the FDIC. We had people at the SEC. We had people in the DOJ. We had people in the FBI who were all ready to do the right thing. And it was just certain individuals at the right place at the right time or the wrong place at the time that stopped it.

Grumbine (01:04:51):

Right on. And Bill, in a separate conversation, I think I can find an MMT lining here for another followup to this, because.

Black (01:05:00):

Oh, of course. Absolutely.

Grumbine (01:05:00):

This right here is, for those of you who follow me at all, you know, that I live and die on the MMT message because I feel that it unearths the biggest corruption of them, all that even gives the veneer to the corruption we’re speaking of today. And when I think about the lies of money creation and how money gets to people, and I think about the capabilities of the federal currency issuing government, and I think about why we even have these predators out there to begin with allowing these things to happen.

It sets a whole new conversation that I can’t wait to have with you, Bill. And you guys, thank you so much, Eric. And thank you, Patrick. I really look forward to seeing The Con and we’ll do anything we can to promote it because wow, what phenomenal work. And it’s just a pleasure to meet all of you. Bill. I’ve talked to you so many times. I really appreciate your friendship. And I look forward to talking all again soon,

Lovell (01:05:58):

Steve. Likewise. Thank you, man.

Vaughan (01:06:00):

Thank you, Steve.

Grumbine (01:06:01):

You’ve got it, man. Y’all this is Steve Grumbine, Bill Black, Eric Vaughan, Patrick Lavelle. We’re outta here.

Announcer [music] (01:06:14):

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