The Con: Interview with Eric Vaughan About the Stunning New Series on the Financial Meltdown

VEA Vice Chair Nell Minow highly recommends the new series The Con, an exceptionally thorough and compelling history of the 2008 financial meltdown. In an interview with Ms. Minow, series director/co-writer Eric Vaughan talked about making the extremely complicated transactions accessible to the interested-but-not expert viewer, who he wanted to interview but could not get, and his opinion on the question that still rankles: why none of the senior executives involved went to prison. To view the series:

Your series begins with one tragic story, Addie Polk, a 90-year-old woman from Akron, Ohio who shot herself at age 90 as sheriff’s deputies tried to evict her from her foreclosed home. The rest of the episodes are all about the layers and layers that led to all of the Addies who lost their homes and their pension money. There are so many layers and so many people — ultimately is everyone at fault? Is that why it has been so difficult to fix?

Yes, the title of the first episode is “Who killed Addie Polk?” And I wanted that to be the key question because so much had to happen for her situation to occur. Ultimately, if you follow the trail of perverse incentives all the way up, it does narrow it to a small group of people. 

I mean, when we’re talking on the non-bank lenders side, the show goes all the way up to Angelo Mozilo, right? If you follow the thread just through the quote innovation unquote of subprime lending, then you can go to Roland Arnall. If you’re following it through, on the banking side, I mean, whoever came up with the idea of giving warehouse lines of credit and creating incentives within those warehouse lines, in order to ensure that predatory lending would occur, well, then you can take that straight up to the CEO of whatever bank. 

And then beyond that, you have ratings agencies and government regulatory regimes and people within law enforcement who stopped meaningful investigations from occurring. So, it is a wide list of people who I would lay the blame for, but it’s not everybody. I subscribe to the idea that if you blame everybody, then you’re blaming nobody. I don’t think that that’s the case. I think that this does eventually narrow down to a small group of people who either made this happen or let it happen.

I really appreciated the historical perspective on the post-1929 stock market crash Pecora commission and the parallel to the Financial Crisis Inquiry Commission. So, why was one so much more effective than the other?

That was Pecora. One of the things that they were very successful in doing was putting that front and center in the consciousness of the American people. They were on the radio, and it became kind of appointment, entertainment might not be the right word, but it was huge in the media, where with the FCIC, it was the exact opposite. You would have to struggle to find people who even knew that it was going on. I think that more than anything, that was the case. Also, there was a lot more impetus behind the behind the Pecora commission. I mean, the financial crisis inquiry commission, as fine of a job as I actually think they did, you read through that and it’s like, yes. They kind of nailed it, but they were ultimately underfunded. They could have gone so much further, and ultimately, they were only supposed to be the beginning of a solution, and as it turns out, they became the end of it.

You have a lot of “I told you so” people who are very valid in the concerns that they raised. And a lot of people who were very frustrated because they tried to do the right thing. But no one who tries to defend what the banks or the government or the ratings agencies or the mortgage originators were doing. Who did you want to interview? Who wouldn’t appear?  

I would have loved to have been able to talk to many of these CEOs, or Gary Cohn, or Steve Mnuchin, Eric Holder, or Lanny Breuer. We tried to reach out. Many of them make it very difficult even to reach out to them. And, it’s like, basically, there’s very little interest. One person that we did have an opportunity to speak with, and we’re actually going to be using a good portion of that interview, if we’re able to do our second season was. Peter Wallison. We interviewed him and it was really fascinating. I really want to use portions of those interviews, but it became difficult, when it became clear that it would not work within the edit. I couldn’t help but feel it would misrepresent what he wanted to say. And so, because ultimately his interview was very similar to the story that we told right up until you get to the GSEs.  

We talked to Josh Rosner, who was in there just briefly, but we have a much more extensive interview with him that once again, we’re hoping to include in season two, where we really touch upon the GSEs and that part of it. But yes, it was just a weird space where all of a sudden, it’s like there’s a certain unit empty with the story, from multiple sources and multiple angles. And they’ve had that right up until that point. Like, they get to the point to where it’s like they would place any of the blame on wall street and just placed it firmly on the GSEs. And since that ultimately wasn’t the story that we discovered, that we felt represented the truth. I didn’t want to include them in there and have it sound as if they were saying something that they weren’t, but I think we’re figuring out a way to include them in season two.

Many people do not know that the bailout money has been repaid. But people are still angry that almost no one and none of the senior executives went to prison. I did not know about the financial executives who did go to jail in Ohio, which is covered in your series. Why didn’t we see more of that?

I can’t say a hundred percent for certain, but I can speculate a little bit. And if I’m doing that, then I think that there’s a few things. One, in Ohio, they were able to get a conviction on something like 68 counts, under the criminal racketeering law, RICO. The idea of a RICO conviction of a Wall Street bank is highly problematic for a lot of people. Just the nature of the ramifications of what that would be. 

And they hid behind the idea of the systemic danger of these huge banks to avoid prosecution. I think that Dennis Keller said it really well when he said that banks don’t do things; bankers do.  But the narrative was fed to the people that you cannot prosecute the banks without endangering the entire system. And I think that if you really scrutinized that logic, it doesn’t hold water, but it certainly sounds reasonable if you’re uninitiated.

There’s just a lot of protection going on. I mean, lobbying happens the way lobbying happens. When Jamie Dimon is having in-person conversations with Eric Holder at the Department of Justice — maybe the easiest way to put it is that as George Carlin said, “It’s a big club and you aren’t in it.” But if you’re in that club, then I think that there’s a high level of protection. You’re part of that club, and so nobody’s going to step on anybody else within that club. I think ultimately what makes people avoid the spotlight to large degree is the fact that so many people have benefited from these schemes and in the lax regulatory regime, and in the lack of prosecutions that anybody who points the finger at somebody else can have five fingers pointed right at them. And so, I think ultimately, it’s sort of a group of people who are all guilty of very similar things, and nobody wants to be the first to fall because nobody wants to point the finger at anybody else because the finger will go right back to them.

I was very impressed at how accessible you made the very complicated material. Who is your target audience?

The number one thing is that I wanted to make a series that I could understand. I’m not a financial expert. I’m not a legal expert. I know how to make movies. That was actually a strength given who I wanted this to speak to. It was important to me that this was a bottom up view of what happened, because I felt that the other documentaries and feature films, “Inside Job,” and “The Big Short,” and “The Flaw,” and “Park Avenueand so many other documentaries are made about it, which are all quite good are very much from the top down. 

Even though they talk about the regular people, the regular working people of America who got hurt, I didn’t ever feel that was what they were focused on. And that’s what I want to focus on because to a large degree, I think that the election of 2016 and quite possibly this election will be very much be based on what happened. 

So many people, like people that were in my neighborhood, for instance, in Akron were screwed. They know they were screwed, and people in the Midwest are so much more sophisticated about these things than anybody wants to give them credit for.  And then in 2016 the two candidates that made the most noise about Wall Street were Bernie Sanders and Donald Trump. 

Trump was kind of late to that game.  As soon as Bernie Sanders basically went away from pointing the finger at Wall Street, that’s right when Trump picked it up. And that’s right when Trump started to pick up real attention on a national level. People are so desperate for anybody who can potentially shake things up that they’re willing to go to very drastic place in order to do so. 

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