The Best Way to Rob a Bank is to Own One (2/9)

In part two of the series, Bill picks up the story of the S&L fraud of the ’80s, when bankers were charged and went to jail – unlike what has happened since. Bill Black joins Paul Jay on


Paul Jay

Hi, I’m Paul Jay. Welcome back to Please don’t forget the donate button and subscribe button on YouTube. Be back in a second.

So, this is a continuation of my discussion with Bill Black about what he calls control fraud, sort of the modern history of financial fraud in the United States. Once again, Bill Black is an American lawyer, academic, author, and a former bank regulator, which we’ve been talking about, with expertise in white-collar crime, public finance regulation, and other topics in law and economics. He’s the author of the book The Best Way to Rob a Bank is to own one.

He’s an associate professor at the University of Missouri, Kansas City in Economics and Law. Thanks for joining us again, Bill.

Bill Black

Thank you.

Paul Jay

So, if you haven’t watched part one, you should, because there is a compelling story of the massive banking fraud that took place during the Reagan administration and we’re kind of continuing on that conversation.  I’ll kind of pick up where we left off with this question. A lot of people actually did go to jail. A lot of senior banking executives went to jail as a result of you and your team’s work and others who were investigating and prosecuting. Yet when we get to the 07 08 crash and another massive banking fraud, the executives do not fear in any way being charged with fraud, going to jail. They were quite right not to fear it because none of them did. So, bring us back to this next chapter of the S&L investigation you were involved with when people do start going to court and going to jail and getting punished, but it didn’t seem to change anything.

Bill Black

Well, it actually changed an enormous amount of stuff, but nothing works forever. When they abandoned the things we did, then you get exactly what you talked about, but they didn’t have to abandon everything that worked. So, what worked? We embarrassed the Department of Justice into prosecuting, and they came up with something clever that was actually good for the world and it was called the Top 100 project. You had to fight for which cases were the top priorities, which caused the most harm, which ones do we have evidence where we can get convictions, et cetera. So, it was a very serious process. Led to the top 100 list, and that was roughly 300 institutions, roughly 600 individuals. Virtually everybody on the top 100 list was prosecuted and we got over 90 percent conviction rate against the most elite defendants.

Paul Jay

So let me just ask one quick question. This took place after Reagan had left office, and it’s now Bush one? In other words, a lot of these people who were Reagan’s friends start getting prosecuted when Reagan is no longer president.

Bill Black

Correct. This occurs under President Bush, the first. Right. These people have the best criminal defense lawyers in the world, America still does something right, and the firm will spend money like water to try to keep them out of prison because they control the firm as well. So, a lot of their legal work is free. We still managed to get that success rate and again, against the most elite folks, and in that era the sentencing guidelines were weaker, but we still got over 80 percent of them getting prison terms. So, we didn’t just convict them, which in itself is a big deal, getting that on their record, but we actually sent them to prison in the overwhelming bulk of those cases. This was so successful that it completely changed the political dynamics.

Our biggest disadvantage, of course, is money, political contributions, and lobbying, which I told you the extraordinary success, a majority of the House of Representatives, five U.S. senators, the Speaker of the House, the ability to prevent. Ed Gray was not able to get a single piece of helpful legislation during his entire term in office. Zero during this crisis, but when we did these convictions, a couple of things happen. First, it was no longer a business page story alone, it was a front-page news story alone. It was a front-page news story because in part of the political counterattack on us. So, once it became a story of political corruption of the Keating Five intervening and removing our jurisdiction, Speaker Wright demanding that gay senior regulators, be fired and such.

The business press was extremely hostile to us, but general reporters, political reporters, hey, we were bringing them a great story, and the nature of narrative is they have bad guys. The bad guys were the executives and their political cronies. That kind of needed a good guys in the story, and they looked around and said, oh, my God, we’re going to have to use regulators as good guys, during this period when regulators were demonized. There’s just an absolute norm by both parties. For a very brief time, regulators became kind of the heroic folks holding back these forces of evil that were ripping you off. We really went after that. We didn’t just make criminal referrals and get these cases. We, and I in particular, collectively spent thousands of hours explaining to the media what the fraud schemes were, who was hurt, how they used political connections. That pays off eventually. If you establish credibility with them, that you’re telling them the truth and that we would explain it in English and in vibrant English so that they could actually have good copy and such. So, there were many more substantive stories explaining the nature of the rip-off. Being Texas, there were all kinds of stuff, including, providing prostitutes to the top state regulator in Texas of savings and loans on a regular basis and doing so on the sister ship to the presidential yacht. Texas had the sister ship to the presidential yacht parked to the Potomac as its lobbying platform, complete with the speaker of the House and prostitutes and such. Well, you tell those stories, and the world starts to perceive all of this a lot differently, and the numbers that they’re ripping them off are so big. Both how much money is going to the top executives, but also how much immense loss to the public in all of this.

Paul Jay

How much?

Bill Black

Collectively about one hundred and fifty billion dollars, but then Keating unintentionally did us a further service. Our problem, both in law and in PR, was that there’s not much identifiable individual victims and we know that statistics don’t move people. Narrative moves people. People that can identify with. Victims they can identify with, which, of course, every lawyer knows. As a prosecutor, you present the victim if they’re alive and the jurors relate to that type of thing. But deposit insurance means nobody gets a bill, that says you’re going to have to pay two-thousand dollars because of the screw-up at Lincoln Savings. So, the taxpayers don’t really know directly what’s happening. Keating decided to rip off uninsured people. Because of a regulatory crackdown, he couldn’t rip off the insured people quite as much for a while, and so he targeted uninsured people to sell worthless junk bonds of his holding company out of the branches of the savings and loan, so the people would think it was safe. On top of that, he decided to target this good Catholic, alleged good Catholic retirement communities in California and did this to tens of thousands of people. Now, they suffered real losses, and now we had over thirty thousand identifiable victims. So, we could go and look among them as to who had the best narrative.

Paul Jay

OK, let me just make sure that our viewers are following. These are people who do not have their junk bonds insured by the federal government as other people with savings accounts did. So, when they lost, they lost.

Bill Black

They lost personally and there was no insurance fund to bail them out, and they lost a much bigger portion of their savings, often all of their savings, because they get a bait and switch operation. Lincoln Savings Insured Entity would advertise for, fully insured certificates of deposit. The type of thing where it’s a two-year term, so you get a slightly higher interest rate. People would call in from the retirement community and say, hey, I’m interested. Then comes the switch now that you baited them. Oh, if you’re interested in a higher yield, why not look at the bonds of our holding company? They’re backed entirely by all the assets of Lincoln Savings, and they pay a higher interest rate. So that’s how the basic game worked, right. They discovered that 18-year-old boys were the ideal folks, because disproportionately the people living still in these very elderly communities were women.

Paul Jay

Eighteen-year-old boys are trying to sell the stuff?

Bill Black

Not trying, succeeding. They had contests. Bond buster T-shirts. Weekly rewards.

Paul Jay

Was Keating the only one doing this or was some of these other SNL types?

Bill Black

Keating was the only one doing this particular one. At the end of the year, at the Christmas party, they did a skit mocking the elderly victims of all of this. They were 18-year-old boys, they don’t know anything about finance, there’s no training. They’re lied to by Keating’s executives. So, a number of them put their grandmothers in this as well, and mothers. So, it’s a mixed thing, but as I say, this gives us over thirty-thousand people we can choose in the story. So, we led with the woman who was, I think, in her early 60s, who explained to the nice young eighteen-year-old that she was trying to save for a wheelchair accessible van because her daughter was in a terrible accident and was a quadriplegic, institutionalized, and the only sort of real joy she still had in life was driving down the coast road in California, where you can actually smell the ocean and such. The nice young eighteen-year-old man boy who, by the way, were picked to be clean-shaven, well-dressed, and exceptionally polite. That was their key training. In other words, they were the grandson they all wish they had.

Paul Jay

I was about to say the perfect grandson.

Bill Black

All of this stuff is very carefully planned and scripted. They literally use scripts. Then they have entrepreneurs innovate, find even better ways to rip people off, and then they revise the script in a sort of a quasi-evolutionary struggle. So, she tells a nice young man about this and he says, well, then you should put all of your retirement in the bonds of the holding company. So, you lead with a witness like that. It’s all over, because for the first time, there was a human face on the victims, and the human face was your grandmother. Again, the super Catholic who famously gave a million dollars of our money, not his to Sister Teresa, even ripped off a convent through the sale of these worthless bonds. So, these are people who are depraved, in psychology terms, it’s a dark triad. They combine psychopathy, Machiavellianism. And extreme narcissism, so that changed things enormously. Those hearings, because who watches C-SPAN disproportionately? Older Americans. Who was targeted? Older Americans.

Paul Jay

When you say $100 billion of public money went to bail this out, what would that be in today’s dollars.

Bill Black

$225 billion. It was $150 billion. Actually, it would be at least $300 billion. It’s big but let me give you a preview of what’s going to come. The loss of GDP out of the great financial crisis, the best estimate is $41.7 trillion.  The American kind of trillion, which is a thousand billion, not the Brits type of thing. It’s staggeringly different scale of these things. It was terrible. It was widely considered the worst financial scandal in U.S. history, but it didn’t even cause a mild recession, most economists think.

Paul Jay

We started this segment with you saying out of these convictions, some things were put in place, and the reason we get this crash, the big fraud in 07, 08, is these things were removed. So, what are these things that were put in place that were removed?

Bill Black

OK, so just to fill in one loop before I get there, I noted that the key thing was changing the politics. It wasn’t just the prosecutions. It was our civil suits which were not against the bank. They were against the executives. A huge change from the great financial crisis and our enforcement actions, which were overwhelmingly against the individuals again. Once we did that, we again followed the same policy of putting it in plain English because we were drafting those, not the Justice Department, and explaining them in plain English and the importance. The combination of all these things is you got a story when there was an indictment, you got a story when the trial began, you got a story when key evidence occurred. This was regional and local and national news often, and you got a story when you got a conviction, and you got a story when they went to the prison. Drumbeat type stuff. As a result, the politicians, as soon as we filed the civil action before any proof began rushing to return political contributions. The advantage we had turned jujitsu like into a liability. We knew we had one when one particularly sleazy member of the House, totally cynical, began wearing a pin, literally six inches in diameter that said jail the SNL crooks.

Paul Jay

Huh? Who was that?

Bill Black

He was…I’m blanking. He was swept up in the postal scandal and had to resign in disgrace [Dan Rostenkowski]

Paul Jay

What happened to Keating?

Bill Black

So, we eventually were able to get a conviction of Keating as well. We also did a removal on prohibition actions and brought huge civil suits against him, but also against all the major entities that contributed to his effort, like the outside auditors and such.

Paul Jay

Did Keating go to jail?

Bill Black

Keating went to jail.

Paul Jay

For how long?

Bill Black

I think three years, three and a half years type of thing. Just a footnote, but as a criminologist, I don’t want people to rot in prison. In fact, I want relatively shorter sentences. I’m not just talking about white-collar types. I think over incarceration is a major problem. Here’s the key thing, among the key things, to my knowledge, not a single person that we successfully prosecuted in the savings loan debacle appeared in any future thing like the great financial crisis. I’ve asked prosecutors who are more familiar with the Enron era, and they believe the same thing, that nobody that they prosecuted in the Enron era showed up again.

Now we get to the great financial crisis. So first, what people need to know is a great financial crisis is really the third act of the savings and loan debacle. In 1990, where all good financial frauds began Orange County, California, our examiners identify a novel. Think of this. They’ve never seen this before and they get it right away. They say this doesn’t make sense unless they’re engaged in fraud in essentially the same way we’ve seen in the savings and loan debacle, but they’re using a new fraud ammunition. The fraud ammunition in the second phase of the debacle was commercial real estate. Commercial real estate, you might think of it, as wholesale as opposed to retail home loans, more like retail. Much, much smaller. Commercial real estates are often $100 million a pop. It’s actually easier to run scams in commercial real estate. But this new system in Orange County was using home loans. The key thing it was doing – they weren’t called this yet in the industry, they wouldn’t be called this for something like five or six years – was what we now call liar’s loans, where you don’t verify the borrower’s income.

There was a new element and that was predation. Targeting blacks and Latinx folks. Now, big commercial loans, $100 million a pop, they aren’t making those to people of color all that much, right? So, it had lots and lots of problems, but racial and ethnic predation wasn’t on the list of that problem, but this new scheme did, and therefore it overwhelmingly used, and this is an incredibly critical thing that almost nobody talks about, loan brokers. Using loan brokers. There are two Nobel Prize winners in economics, George Akerlof and Paul Romer, who wrote one of the most important economic studies ever, “Looting: The Economic Underworld of Bankruptcy for Profit” in 1993, using as their primary example exactly what we’ve been talking about.

They worked with us and said, you folks are right. The other economists are wrong about this honest gambling stuff, and they even adopted the same language as the sure thing and such. Akerlof gets the Nobel Prize in 2001. Romer gets it in 2018, so this is not exactly chopped liver, right. In that article, which they published in 1993, they said explicitly loan brokers are terrible and everybody has known for years that they’re terrible. They have perverse incentives to do terrible things. What do they give you if you’re running the kind of fraud schemes I’ve been talking about? This accounting control fraud or looting. They give you plausible deniability. The really dirty trick things the loan broker does instead of your employees, and you go they promised me they wouldn’t do things like that.

This is how it worked, you created enormous incentives and the loan brokers key in the first fraud, first deceit. The Financial Crisis Inquiry Commission, the inevitable commission to look at the causes of the great financial crisis quotes, and indeed you can hear they’ve got the full tape recording of the interview, the key guy who trained people. He said, our fundamental deceit, which we organized everything to get you to deceive you about is that we work for you. The borrower. Our interests are directly antagonistic to you. We screw you, that’s how we make money. That is the business plan of a loan broker. Screw customer, paragraph one. Paragraph two, repeat endlessly.

Paul Jay

So just to understand, they are giving mortgages to people.

Bill Black

No, loan broker can’t give a mortgage, they’re a middleman.

Paul Jay

OK, they’re brokering a mortgage for a mortgage company, a bank.

Bill Black

For a bank.

Paul Jay

For a bank, and they know the person will never be able to keep up with the payments. So whatever equity the person has, they’re going to lose.

Bill Black

Yes, but equity is not the issue. That’s one of the leading myths that people focus on equity. So, a very poor person might have $2000 in equity. Sure, they’ll be happy to steal the $2000, but that’s not where the money is. We haven’t discussed the second part of fraud in the loan underwriting process. I didn’t do it in the first segment either, but what the critical fraud was to massively inflate the appraisal. So how do you massively inflate appraisals? They do it in a really elegant fashion to use the concept of elegance in mathematics that old people like me were taught right. I tell you what the number needs to be, I tell you what the purchase price is. I tell you, hey, there’s a rush on this. Give me an oral estimate of value. You give me the oral estimate, let’s say that the sales price was $200,000 and the oral estimate is $190,000. I tell you, don’t bother you complete your work. Probably a stiff you on your feet, too. In fact, we have surveys that indicate that was the norm about 68 percent of the time in those circumstances, but what I sure as hell do is blackball you going forward. So, you blackball the most ethical people so that you can select the least ethical appraisers who are willing to be extorted. So, it’s an outright extortion racket, which, by the way, is a federal felony. Just like when the loan broker fills in a false income number that’s a federal felony. So, it is incredibly bizarre since we have good evidence on how incredibly common this became in the great financial crisis to do both of those things, to extort appraisers, to inflate appraisals and to massively inflate the borrower’s income, that economists still go fraud.

Excerpt from The Con

“The first question the task force set out to answer was how so many houses all over the city were selling at prices much higher than they were really worth. The appraisal was not only, you know just a little beneath or a little above, it was thousands, tens of thousands above. Then the government appraisers would go out with us and they would appraise some and say, you know there’s just no way. This this is total. This is total falsification here. The first appraiser to actually come clean we had been looking for payoffs and we could not find any payoffs and he explained to us that it was actually repeat business.

Bill Black

He worked with others in a systematic way to commit a series of crimes, just like the mob. I think there’s no question when it comes to the grander and bigger national conspiracies to sell people loans that they shouldn’t have been sold and then to package those loans into securities that could have been proven by hard work and a commitment to see the investigation through, to take this on the same way that we did in Akron. Unfortunately, all the federal investigations and I’m aware of stopped at the level of the mortgage broker. Or maybe they threw in an appraiser who provided a false appraisal of the property, but they never used the opportunity to move up the chain to get to the folks that were actually the masterminds of this conspiracy.

Frankly, what should have happened in 2010 is some CEO should have gone off to jail. And RICO is a statement basically saying this is a criminal enterprise and we’re going after this for what it really is. It’s a criminal enterprise. It isn’t a lone actor. It isn’t one or two bad apples in the barrel. This is a whole barrel of bad apples, coconspirators working together to inflict damage on our society.

So, I think RICO makes a very, very dramatic statement. I mean, you have to have a visible deterrent for bad behavior. There has to be some price to pay for criminal behavior, otherwise, we’re in total chaos. You can’t just apply that to violent crimes and that type of crime genre. You’ve got to apply it to the most sophisticated criminals in the world who are white collar criminals. They’re deterrable, in my view, because they don’t like to go to jail. You take a violent career criminal, and they live in jail. They thrive in jail some of them. White collar criminals don’t want to go to jail. So, deterrence does have its effect in the world of financial crimes and white-collar crime.

Paul Jay

This is the early 90s. Now, the brokers making his fee and the higher the appraisal and the more the loan, the bigger his fee. What’s in it for the banks at this stage?

Bill Black

The bankers. The question is never what is in it for the bank, because this is looting. What’s in it for the bank? That’s the remember the title “looting the economic underworld of bankruptcy for profit.” So, what’s in it for the bank? Bankruptcy eventually, many years later. What’s in it for the banker? That’s the profit part of that title. So always ask the right question in that regard, but we haven’t yet even mentioned the largest source of income to the borrower, to the loan broker.

Loan brokers gets two fees potentially. One fee is a percentage of the deal. So, as you say, if I can induce people to buy homes at overpriced levels, way in excess of market value, I get more money as part of my standard cut, but the second one goes much more to this predation, the really nastiest aspects. So, the loan broker every day, sometimes multiple times a day, gets what’s called a term sheet from the bank that he works for and the term sheet says these are the terms on which we’re willing to make the loans. There’s a lot of wink, wink, nod, nod, but let’s just stay with those forms. You are forbidden to show the term sheets to the borrower by contract. Your contract as a loan broker. All right, so this is definitely designed to make the world opaque, to maximize predation, and by the way the same scam exists in car financing. So, you should never get your car financing from the auto place that sells you. So, the form says we’re willing if they have the following characteristics, to make the loan at nine percent, however if you can induce them to overpay, and they agree to pay a 10 percent interest rate, then we will pay you a kickback. Of course, the bigger you inflate, are successful in inflating, the bigger your kickback, so your interests are completely contrary to that of the borrower as loan broker. And how often were they able to induce people to overpay? Almost exactly 50 percent of the time where we have data. Which is to say they all typically would and that this thing that I’ve just described, the kickback is statistically bigger. In fact, it’s materially bigger than your regular fee. Even only succeeding half the time it is. This is where the real money was, in screwing your customer.

Paul Jay

At this stage of this don’t people have to be making payments for them to make their money? Does the broker get a front-loaded chunk of dough for signing the person?

Bill Black

Let me now explain accrual accounting to you. So, under generally accepted accounting principles and the international financial reporting system, firms use what’s called accrual accounting. This this is your credit card, that they counted as an asset as soon as you use your credit card, even though you haven’t paid them because you’ve undertaken an obligation. So, I think what you were getting at are the exploding rate ARMs [adjustable-rate mortgages] that will develop years after this. So, we’re starting in 1990 now. We’re going to go forward to about 2004ish when exploding rate ARMs start. By the way, they discovered originally that consumers hated them, and didn’t want them, and so they engineered an entire campaign to figure out how to sell this. So, the idea of blaming this on the homeowners is also bullshit. OK, exploding rate ARMs is you start out with a rate, sometimes you start out with an even super teaser rate that might be as low as 1 percent. Then you qualify the borrower on the basis of that absurdly low rate. So, at that really low rate, of course, your monthly payments wouldn’t have to be as big, and so you would have sufficient income to repay it at 1 percent. But it’s not going to be one percent. It’s going to be 1 percent literally for one month of a 30-year mortgage, and then there’s a second rate and that rate might be three percent and the three percent you pay for, then it gets complex, but let’s say two to three years and ignore the complexity. Then at year three-ish to five-ish, the rate will explode, and it’ll be 6 percent. Which is roughly you’re going to double the monthly payment.

This dramatic increase in mortgage fraud cases was the canary in the mine. It was the warning. This was money chasing people. This was not somebody looking for a loan. It was all designed to maximize profits for all of the different players. The person who sold you alone made more money if they sold you a higher rate loan. They were sold a lot. They’re selling to their very clients these loans that they know are a disaster. I lost my home not because of money, because of fraud. I don’t believe Addie Polk took out the mortgage on her home. I don’t believe she signed any documents. They just generated all this junk, took home huge bonuses, and then when it collapsed, they said, oh, not us. This notion that the financial crisis was there wasn’t fraud and there wasn’t crime is absolutely wrong. It’s dead.

Paul Jay

All right, let me see if I’m understanding this. So, the broker and the banker who’s on the bank side of this, they’re getting fees based on a promise of payment that they all know is bullshit, that it will never actually get paid because they never qualified the loaner of having the money to pay this, but their fees are based on a projection that’s fantasy.

Bill Black

You were fine until the they’ll never be able to because it’s a little more complicated than that, of course, but you’ll like it. Stick with me. OK, the point is that even when you’re paying 1 percent in cash, instead of what will be the fully amortized rate of 6 percent in the hypothetical I just gave, you get to for accounting purposes, treat it as six percent, because they’re on the hook for the six percent and so you get to recognize currently as income the difference? Even when you’re paying the one percent you get to count it as six percent.

Paul Jay


Bill Black

Baseball has been very, very good to me.

Paul Jay

Haha. All right answer.

Bill Black

In the trade, this is referred to as phantom interest, and so places like Countrywide, near the end, roughly a third of all their income was phantom interest. Now, the reason I intervened about will they ever pay it back is you’re missing one central dynamic. If this fraud scheme simply collapsed within months, it wouldn’t be anywhere near as lucrative, and so they make it far more lucrative. Now, one of the reasons they come in with the exploding rate ARMs is part of the process of delaying default because you only have to get, much less cash up front. So, your default will occur later, but the second and far bigger one is the strategy of just paying an incredible amount of money to loan brokers, and that’s the key thing people need to understand. Wall Street is brilliant about one thing. It’s not cheap when it comes to bribing people. Right, they are quite willing to kick off significant amount of money. So, again, the testimony of this guy who trained the loan brokers for much of the nation is that the quintessential prior job to being a loan broker was flipping burgers?

They wanted people who know nothing about finance. That had never had a professional job and professional mentoring about what it means to be someone who serves a customer, because that would all just get in the way. What they wanted was your income in the United States flipping burgers full time would have been somewhere around $17,500, if you got some overtime type stuff. The average loan broker got $150,000 the first year if they survived. So, in a single deal with what we call a jumbo, a really large mortgage like in California, $600,000 or $800,000 mortgage, you could through the kickback and the regular fee, get more money than you had made the entire year before flipping burgers. Just one of those deals.

Paul Jay

They must be trying to identify sociopaths.

Bill Black

That’s exactly what they’re identifying. What they do and this is in the books, they hire 30 and you come back a month later and one is left. They put them in to a dog-eat-dog contest. Then they keep doing it until they have staffs and as I say, then they develop scripts and then they find better ways and they improve the scripts, or they create more sophisticated scripts about this is how we approach women of this age. This is how we approach black males of this age group type of thing. This is what works best. The loan brokerage account. The United States is notorious for not having branch banks in the poor neighborhoods. So, loan brokers, sometimes they had no office other than their home, but usually they’re in storefront places, in poor places. They’re of the neighborhood, and again, this guy that trained folks explains that his model, that he trained people that blacks should screw blacks and Latinx should screw Latinx, and you have to be a capitalist first. That’s a quote from him. It’s not some screed by a Marxist publication, and this is a guy who loves the “free market” explaining all of this.

Paul Jay

Just let me add that when this broke in Baltimore, Wells Fargo was involved. They got hold of some of the internal emails of Wells Fargo and they were out and out racist, the way you’re talking about, overtly targeting black people and then talking about the people in the most racist, derogatory terms and in fact, wouldn’t even try to sell some of these liar loans, as you say, to white people. They were explicitly told, don’t sell to white people. It’s just for black people.

Bill Black

Yeah. So, I mean, this was just hardcore stuff and to skip forward, as you’ve mentioned, I’ve been very active in The Con. Well, The Con tells the story of the great financial crisis for the first time. It’s the first documentary treatment that actually tells the truth about these things and with a real emphasis on this form of predation, but also the liar’s loans and the fraud and the looting nature of it. So almost every documentary presentation about the great financial crisis is just absolute nonsense. It has nothing to do with what actually happened in many cases. Some of them are fun, but they don’t really relate to the substance.

Paul Jay

OK, Bill, so we’re going to end this segment and we’re going to show a clip from the film The Con. I introduced this in part one. Bill was an adviser and is in this film The Con, and they’ve very generously given us some clips we can show. So, I’m going to end this segment with a clip from The Con and then we’ll do a part a Part three with Bill and continue the story. So, thanks for now, Bill, and thank you for joining me on, and we’re going to end with a clip from The Con.

Excerpt from The Con

Addie Polk was specifically targeted for who she was because she was living in a poor area. She didn’t have any direct descendants. She was widowed, and she was a minority. You can go in mostly poor minority neighborhoods and you would have people canvasing the neighborhood, knocking on doors, putting fliers in your mailbox saying we can help you. We can get that roof fixed. We can get you new windows. Sometimes they would have information on your house, but you didn’t give them. They would just look up your house. That was commonplace. “The weak, the meek and the ignorant are our best targets.” That’s the words they put on paper to describe those folks. So that has meant that the quintessential victim, if you wanted a single face that face, would be of an elderly black woman. That’s the quintessential victim of predation in the financial sphere.

Keep in mind, when you had all of these little mortgage companies, these people had to find their victims because they had to keep things going into the pipeline. They had to keep up a certain number. It started in the inner city, but like anything else, when it was getting good and the money was in, then it branched out and everybody became fair game. This is why we have to stop seeing each other by color, because if it starts over there, it’s going to come over here sooner or later. As a result, it’s now a national problem because everybody knows somebody who lost their home. The system said that poor and minorities are disposable. The system says that that was simply the cost of doing business. The mortgage company said after Addie shot herself, we’ll forgive the loan. You should have never made the loan. You should never have made the loan. We’ll forgive the loan, but she shot herself already, people can say all lives matter. I say black lives matter not because white lives don’t matter, but because traditionally when something like this occurs, no one comes to help. Black Lives Matter, Addie Polk matters. Anyone else who has lost their home, who have lost their life, they matter. I hope, I pray that we can come to some sort of common ground. That people need protection from those who are seeking to make profit. People need protection.

America’s Parasite

Frankly, Trump doesn’t give a damn.

It’s funny that Donald Trump doesn’t like a movie about con artists who invade an elegant house and wreak chaos.

He should empathize with parasites.

No doubt the president is a movie buff. He has been known to call advisers in the wee hours to plan movie nights at the White House for films he wants to see, like “Joker.” And, in an early sign of his affinity for tyrants, he told Playboy in 1990 that his role model was Louis B. Mayer running MGM in the ’30s.

Trump interrupted his usual rally rant Thursday night to bash the Oscars, saying: “And the winner is a movie from South Korea. What the hell was that all about? We got enough problems with South Korea with trade. On top of it, they give them the best movie of the year?”

He added: “Can we get ‘Gone With the Wind’ back, please? ‘Sunset Boulevard.’ So many great movies. The winner is from South Korea. I thought it was best foreign film, right? Best foreign movie. No. Did this ever happen before? And then you have Brad Pitt. I was never a big fan of his. He got upset. A little wise guy statement. A little wise guy. He’s a little wise guy.” (When he accepted his Oscar, Pitt complained that the Senate did not let John Bolton testify.)

Our president is nostalgic for a movie romanticizing slavery and a movie about an aging diva swanning maniacally around a mansion, living in a vanished past. (I am big. It’s the party that got small.)

Trump’s xenophobic movie criticism, combined with his mocking pronunciation of the name “Buttigieg,” harked back to the days when George H.W. Bush ran in 1988 wrapped in the flag, saying he was on “the American side,” while his celebrity endorser Loretta Lynn complained that she couldn’t even pronounce the name Dukakis. Too foreign-sounding.

It also echoed a segment on Laura Ingraham’s show, in which it was suggested that Lt. Col. Alexander Vindman, an American war hero who immigrated from Ukraine, might be guilty of espionage.

And in his Vegas rally on Friday, Trump was again calling his predecessor “Barack Hussein Obama.”

This was another bad, crazy week trapped in Trump’s psychopathology. No sooner was the president acquitted than he put scare quotes around the words justice and Justice Department and sought to rewrite the narrative of the Mueller report, whose author warned that Russia was going to try to meddle in the U.S. election again.

Philip Rucker wrote in The Washington Post: “As his re-election campaign intensifies, Trump is using the powers of his office to manipulate the facts and settle the score. Advisers say the president is determined to protect his associates ensnared in the expansive Russia investigation, punish the prosecutors and investigators he believes betrayed him, and convince the public that the probe was exactly as he sees it: an illegal witch hunt.”

Trump, who moved from a Fifth Avenue penthouse to the White House, is sinking deeper into his poor-little-me complex, convinced that he is being persecuted.

His darker sense of grievance converges with a neon grandiosity. Trump is totally uncontrolled now. Most presidents worry about the seaminess of pardons and wait until the end. Trump is going full throttle on pardoning his pals and pals of his pals in an election year.

The Republicans have shown they are too scared to stop him and won’t. The Democrats want to stop him but can’t. (Although if they win the Senate back, Democrats will probably end up impeaching him again and this time have plenty of witnesses.)

Now, in a frightening new twist, the president is angry at his own intelligence team for trying to protect the national interest. He would rather hide actual intelligence from Congress than have Adam Schiff know something that Trump thinks would make him look bad politically.

As The Times reported, the president’s intelligence officials warned House lawmakers in a briefing that Russia was once more intent on trespassing on our election to help Trump, intent on interfering in both the Democratic primaries and the general. (They also told Bernie Sanders that the Russians were trying to help his campaign.)

News of the House briefing caused another Vesuvian eruption from the mercurial president, who is hypersensitive to any suggestion that he isn’t winning all on his own.

The Times story said that “the president berated Joseph Maguire, the outgoing acting director of national intelligence, for allowing it to take place,” especially because his nemesis Schiff was present.

A few days ago, the president replaced Maguire as acting director with Richard Grenell, the sycophantic ambassador to Germany whose qualifications for overseeing the nation’s 17 spy agencies include being a former Fox News commentator and Trump superfan who boasts a gold-level card with the Trump Organization.

As the Democrats sputter and spat and fight over federal giveaways and N.D.A.s, the unfettered president is overturning the rule of law and stuffing the agencies with toadies.

Nothing is in the national interest or public good. Everything is in the greater service of the Trump cult of personality.

In “Gone With the Wind,” Atlanta burned to the ground. In Trump’s version, Washington is aflame.

Why do some people become psychopaths? (30 Jan 2014)

Professor Essi Viding, UCL Psychology and Language Sciences

Although childhood behavioural problems are relatively common, not all problems develop for the same reason, and only a few individuals will go on to develop psychopathy in adulthood. This lecture reviews behavioural problems in children, in terms of genetics, brain function and development, and considers why some children may be at an increased risk of developing psychopathy when they grow up.

Narcissistic & Psychopathic Emotional Manipulation | Can it be avoided?

This video answers the question: How can people that are narcissistic and psychopathic use emotions to manipulate people? What I’m really talking about here is a specific type of manipulation, where people try to elicit a specific emotion to achieve objective. We know this tends to be more associated, as a behavior anyway, with narcissism and psychopathy. Somebody doesn’t have to be narcissistic or psychopathic to be manipulative. When we talk about emotions what we see is that emotions are thought of as helpful.

If we look at emotions, we see there are only six basic emotions and they are present across all cultures. The emotions are anger, disgust, fear, happiness, sadness, and surprise.
Emotions are simple, immediate, and they’re constricted to really just six types, although the amount of expression would be different depending on the situation.

typically without the personality traits
of narcissism and psychopathy another
reason that narcissists encyc could pass
they’re so successful manipulation is
they lack empathy and this is a real key
even at the subclinical level here even
if somebody has narcissism and
psychopathy but doesn’t rise to the
level of any type of disorder any type
of mental disorder they’re still gonna
have some lack of empathy and that’s
going to be enough to facilitate
emotional manipulation in some cases now
we talked about specifically grandiose
narcissism and psychopathy so leaving
out vulnerable narcissism for a moment
we see the individuals with grandiose
narcissism and individuals who are
psychopathic are not vulnerable to
emotions right they’re exempt from the
rules they’re not invested and this gets
into what I call the trail of
destruction so imagine like an
individual who’s in a totally fireproof
it’s not only fireproof but it’s
resistant to heat they can pour gasoline
everywhere and play with matches if
something burns they’re ok with that
something doesn’t burn they’re ok with
that too another expression here is
they’re playing with the houses money so
if they go into a casino and the people
the casinos say look here’s $10,000 but
you have to gamble it it’s not a big
deal you’re playing with the houses
money it’s not your money you’re not
losing anything you’re not risking
anything and that’s kind of how we look
at this grandiose narcissist and
Psychopaths don’t have anything to lose
because they’re not again they’re not
vulnerable to emotions
they don’t have to play by the same
rules they don’t have a way to get hurt
with the emotions the same as somebody
who does not have those personality
traits now the last reason that
narcissist in Psychopaths can be
successful with emotional manipulation
is they tend to be attracted to the
suffering of other people
sometimes we
call this schadenfreude oh right the joy
and the suffering of others except with
narcissism and psychopathy it’s a little
more intense and if somebody lacks
empathy and they’re not vulnerable to
emotions and they like what other people
suffer it makes sense more or less why
they would use emotional manipulation
from their point of view that’s logical
it helps them to meet their goals so
what do all these strategies have in
common I find this pretty interesting we
look at all the emotional manipulation
strategies including examples I used
before what they have in common well
they’re all immature right that’s what
they really have in common they indicate
immaturity not sophistication so we know
that school-age children know these
tricks they use these tricks of
emotional manipulation
so why do they
work on adults why they continue to work
as people grow older that’s because
people believe that emotions and
feelings necessitate a response again
they tell us something important we
should listen to them follow your heart
go with your gut trust your intuition
all those phrases are based on
separating yourself from logic and
following emotions even though there’s
not strong evidence that they always
point in the right direction now another
reason these strategies work is
impulsivity it’s hard to discount the
power of impulsivity so this is when
somebody has a negative emotion or
positive motion and they fail to
restrain themselves they feel compelled
to act on that emotion so impulsivity
again is a big part and believing that
emotions tell us something important is
a big part of it so when somebody
realizes that emotional manipulation is
occurring how can it be stopped how can
we stop emotional manipulation from half
well I talked about this in videos
before boundaries boundaries are a real
follow the rules that you set all
the boundaries that you set before
experiencing an emotion so don’t wait
until a time when the emotions are
strong make those rules make those rules
when the emotions are expressed at a
relatively low level or there’s no
emotion now when people fail to react to
efforts to manipulate that will
eventually extinguish the behavior
so another tactic here would be to cut
off the reward so if somebody’s trying
to manipulate you and you react to that
that’s only rewarding them for that
attempt to manipulate so we can think
about it from the point of view of like
operant conditioning right goes back to
the roots of behaviorism if there’s an
animal being used in an experiment and
they have to press a button to get a
pellet of food and every time they press
that button the power of food comes down
they’re gonna continue to press that
button if the reinforcement schedule has
changed so they have to press the button
twice they’re still gonna do it they’re
gonna press it twice and get the palette
of food and this number can be increased
quite a bit they can have to press the
button ten times or twenty times and
they’ll still do it because they know
that eventually they’re gonna get that
food so the only way to really
extinguish the behavior is to never
reinforce it
it’s really surprising how
many times people will engage in
behaviors without the reward because
they know it’s still possible now I’ve
heard another argument in this area that
another tactic here would be to have the
opposite reaction that the manipulator
expects but in my experience this is
still a reward this is still a response
and it may not be the response the
person wants but it still may bring some
sort of pleasure or be satisfactory so I
would say that’s not always a good
strategy no reaction I think in terms of
behaviorism is a more effective strategy
most of the time now these ideas about
how to avoid emotional manipulation
they’re not the same thing as not having
emotions rather not engaging in a
or at least not engaging in it when the
person who’s narcissistic or
psychopathic or whoever they are can see
you if you have to react if there’s no
way to kind of suppress that reaction
have that reaction in a place where you
could not be observed by the person who
is attempting the manipulation again
whether their narcissistic psychopathic
or not that’s still a way to avoid
rewarding them so I know whenever I talk
about narcissism psychopathy
manipulation whether it’s emotional or
not there are always going to be
different thoughts people are going to
agree or disagree or have other opinions
please put those opinions in the
comments section they always generate a
really interesting dialogue as always I
hope you found this description of
emotional manipulation to be interesting
thanks for watching

Inside Cornell: Analyzing the words of psychopaths

Using computerized text analysis, Cornell professor of communication Jeff Hancock and colleagues at the University of British Columbia found that psychopathic criminals tend to make identifiable word choices when talking about their crimes. Hancock and UBC professor of psychology Michael Woodworth discussed the implications of their study at the October 17, 2011 Inside Cornell session at Cornell’s ILR Conference Center in Midtown Manhattan.

When Trolls and Crybullies Rule the Earth

How technology reshapes consciousness.

Over the past several years, teenage suicide rates have spiked horrifically. Depression rates are surging and America’s mental health over all is deteriorating. What’s going on?

My answer starts with technology but is really about the sort of consciousness online life induces.

When communication styles change, so do people. In 1982, the scholar Walter Ong described the way, centuries ago, a shift from an oral to a printed culture transformed human consciousness. Once, storytelling was a shared experience, with emphasis on proverb, parable and myth. With the onset of the printing press it become a more private experience, the content of that storytelling more realistic and linear.

As L.M. Sacasas argues in the latest issue of The New Atlantis, the shift from printed to electronic communication is similarly consequential. I would say the big difference is this: Attention and affection have gone from being private bonds to being publicly traded goods.

That is, up until recently most of the attention a person received came from family and friends and was pretty stable. But now most of the attention a person receives can come from far and wide and is tremendously volatile.

Sometimes your online post can go viral and get massively admired or ridiculed, while other times your post can leave you alone and completely ignored. Communication itself, once mostly collaborative, is now often competitive, with bids for affection and attention. It is also more manipulative — gestures designed to generate a response.

People ensconced in social media are more likely to be on perpetual alert: How are my ratings this moment? They are also more likely to feel that the amount of attention they are receiving is inadequate.

As David Foster Wallace put it in that famous Kenyon commencement address, if you orient your life around money, you will never feel you have enough. Similarly, if you orient your life around attention, you will always feel slighted. You will always feel emotionally unsafe.

New social types emerge in such a communications regime. The most prominent new type is the troll, and in fact, Americans have elected a troll as the commander in chief.

Trolls bid for attention by trying to make others feel bad. Studies of people who troll find that they score high on measures of psychopathy, sadism and narcissism. Online media hasn’t made them vicious; they’re just vicious. Online has given them a platform to use viciousness to full effect.

Trolls also score high on cognitive empathy. Intellectually, they understand other people’s emotions and how to make them suffer. But they score low on affective empathy. They don’t feel others’ pain, so when they hurt you, they don’t care.

Trolling is a very effective way to generate attention in a competitive, volatile attention economy. It’s a way to feel righteous and important, especially if you claim to be trolling on behalf of some marginalized group.

Another prominent personality type in this economy is the crybully. This is the person who takes his or her own pain and victimization and uses it to make sure every conversation revolves around himself or herself. “This is the age of the Cry-Bully, a hideous hybrid of victim and victor, weeper and walloper,” Julie Burchill wrote in The Spectator a few years ago.

The crybully starts with a genuine trauma. The terrible thing that happened naturally makes the crybully feel unsafe, self-protective and self-conscious to the point of self-absorption. The trauma makes that person intensely concerned about self-image.

Psychologists have identified the kind of emotional intelligence that makes internet trolls so mean

online behavior that indicated a propensity to troll—such as agreeing with the statement, “Although some people think my posts/comments are offensive, I think they are funny.”

.. The researchers were looking for particular traits including social skills, psychopathy, sadism, and two types of empathy: affective and cognitive. Having high cognitive empathy simply means they can understand others’ emotions. Having high affective empathy means a person can experience, internalize, and respond to those emotions. The “trolls” in the study scored higher than average on two traits: psychopathy and cognitive empathy.

So even though “trolls” exhibit one kind of empathy, coupling it with psychopathy ultimately makes them nasty

.. participants were asked to agree or disagree with a set of statements such as, “payback needs to be quick and nasty.”

.. High levels of cognitive empathy make these people adept at recognizing what will upset someone, and knowing when they’ve pushed the right buttons. The lack of affective empathy allows trolls not to experience or internalize the emotional experience of their victims.

.. “Results indicate that when high on trait psychopathy, trolls employ an empathic strategy of predicting and recognising the emotional suffering of their victims, while abstaining from the experience of these negative emotions,” the researchers wrote. They added that because psychopathy is associated with thrill-seeking and impulsivity, it’s possible that “creating mayhem online is a central motivator to troll.” They also found that trolls were likely to be high in sadism—the will to hurt others—and were more likely to be male.