The Story Behind "The Con"

Crushed by the 2008 financial crisis, Patrick Lovell joined Eric Vaughan and white-collar crime expert Bill Black to expose “control fraud” and the real story behind the 2007/08 crash. Lovell and Vaughan join Paul Jay on

To view the full collection of clips from the documentary series The Con, click here.

Paul Jay

Hi, I’m Paul Jay. Welcome to I’ll be back in just a few seconds to talk to the filmmakers who made the series The Con. You’ll remember that from my series of interviews with Bill Black where we talked about the series. Bill features very much in that documentary series. We’ll be back to talk about The Con, which is the con by big finance, by big banks, 2007-2008 crash, and of course, in one form or another, the con continues. Please don’t forget the donate button, subscribe and share and all the buttons. Be back in just a few seconds.

So when I did my series of interviews with Bill Black, I can’t remember how many parts it was. I think it wound up being like 12 or 13 parts. It was just so interesting I couldn’t stop. It was essentially the history of modern financial fraud in the United States, going back to the savings and loan crisis where Bill was a financial regulator and helped in the prosecution of some of the big bankers that were involved in that fraud.

Going on further right up until recently, Bill now teaches about financial fraud at the University of Kansas City, Missouri. The film that Bill was in, called The Con, he was featured prominently in that interview series. The filmmakers, Eric Vaughan and Patrick Lovell, are two of the most obsessive, passionate people I’ve encountered these days. In their interest to expose this financial fraud not because it’s some interesting sort of academic question for them, but because so many lives have been destroyed by this fraud. 

The real criminality of what took place from big finance both in the ’07-’08 crash and afterwards; it’s often talked about how dangerous it is for the system, and it becomes a number of statistics. What’s so great about their film series is they combine both the systemic analysis with the personal stories of people whose lives were destroyed. In fact, Patrick himself was one of those people, which is what led him to this film.

So I’m going to talk to Patrick and Eric about the making of The Con and why they have been so ardent in pursuing it. Then you’ll find below links to a bunch of clips and segments from The Con, which you can watch on their own. Then I’ll also put up on the website the series of interviews with Bill Black. So it’s interesting you’ll be able to go back and find those segments with Bill.

So now joining me is Eric Vaughn. He’s an award-winning director and producer who has been producing long-form unscripted content for more than nine years since founding Red Point Digital in 2011. He’s the writer-director of the five-part documentary series; as I said, The Con. Eric lives and works in Akron, Ohio.

Patrick Lovell, he’s an independent producer and investigative journalist specializing in the intersection of political power, global finance, geopolitics, and political policy. Lovell evolved from a career as a mainstream producer specializing in entertainment and sports when his world collapsed in the aftermath of the 2008 great financial crisis. This led him to produce The Con, a quest to answer questions that didn’t make sense to him. Thanks very much for joining us, guys.

Patrick Lovell

Thank you, Paul. 

Eric Vaughn

Thank you, we appreciate it. 

Paul Jay

So, Patrick, tell us your story. What led you to make this series?

Patrick Lovell

Well, Paul, it’s ironic that we just learned five minutes ago that Robert Durst, the subject matter of The Life and Deaths of Robert Durst, just died. The reason that’s relevant to your question was because that series on HBO was a huge influence on what Eric and I discovered had to be the format to tell a story as complicated as what we began to unravel with The Con. I came into it personally because I actually got into the foreclosure process. I was working as a television producer with Eric. We were literally giving away houses across the country in 2005/06/07.

Paul Jay

What does that mean, giving away houses?

Patrick Lovell

We were on a television show, Paul. We were doing a reality television show, kind of like a home makeover show. We were literally giving away houses to what we call deserving individuals who were falling on hard times to get them back on their feet through homeownership. It was a big step up in my producing career because I went from being an action sports producer on smaller productions to we had, I don’t know, 25 guys travelling around the country. Week in and week out, putting together a pretty significant television show, incredibly highly produced, I should say.

The show’s executive producers were literally flying around all over the country on G5’s [Gulfstream G550], and then suddenly, they went bankrupt in 2007. So Eric and I were senior producers on the television show, and I’ll never forget it.

Paul Jay

So hold on. The gimmick of this show is the show would buy a house and give it to somebody. The segments are the story of the people getting the house.

Eric Vaughan

Well, actually, sorry for interrupting, Patrick. To a large extent, that’s the story of how I got wrapped into this whole thing. Just really quickly, the basics of it was that when we were getting people into a house, what we were doing is— the executive producers were actually part of a larger company that was a non-bank lender. It was Barclays North or something like that, Patrick?

Patrick Lovell

Out of Seattle.

Eric Vaughan

Yeah, out of Seattle. And what they were doing is they were collecting all these applications for mortgages from all these people in these different areas under the guise of being on a show. Then we would take these people who qualified, and then we go and call them as producers to see who’d be a good show, who would be interesting, who has really fun family members or friends, whatever the case might be. Then we would meet with the family and friends, get into this house that we would then have this team of carpenters and designers and such come in and redo the house. Then we’d surprise the couple or the person with this new house that they didn’t know they were getting.

So what we later found out was actually happening is that they were paying for the first year of the mortgage and all the upgrades and all the furniture and stuff, but the rest of the mortgage they would have to pay. So ultimately, what we later found out and what got me into this whole project of The Con that made me the impassioned person that I am about it was having that understanding that we were actually a PR front for a sub-prime lender or non-prime lender, I should say, and we were part of the problem.

Paul Jay

That’s crazy. 

Patrick Lovell

It was nuts. They were literally flying around on G5s. We had the perception that they were billionaires, and they may have been. They had residential and commercial projects happening all over the United States, particularly in [Las] Vegas and the West Coast. Also, in Phoenix, incidentally, a lot of the hot spots that would later inflow, of course, as a result of the 2008 crisis. One day in 2007, we’re on the set, and we see our boss, who is an executive producer of the program that hired both Eric and I to be senior producers on this program, literally almost come to blows with this executive producer who was the money behind the show constituting what Eric provided as what was happening behind the scenes.

We didn’t know that. We were just trying to tell great stories. Feel-good stories of people coming together to remodel houses with great people and then surprise you’re a new homeowner and the tears and the great family stories. You put a button on it and all the rest of it, and it turns out to be a front for what I would later go through myself.

Paul Jay

This is an actual show on a real network?

Patrick Lovell

Yes, it was actually. Sorry, go ahead, Eric.

Eric Vaughan

It was syndicated. We were in all sorts of different markets in really great positions everywhere, but yeah, it was a nationally syndicated show called Home Team. Troy McClain was the host of the show and was one of the more charismatic and beloved characters from the first season of what was it called? Trump Show.

Patrick Lovell

The Apprentice.

Eric Vaughan

The Apprentice. He was Donald Trump’s favourite boy on the first season of The Apprentice, and he was the host.

Patrick Lovell

Yeah, him and whoever the African American woman was who was always kind of in the Omarosa [Manigault Newman], something like that.

Paul Jay

I guess they got paid by various television channels to run this thing or did they pay the channels to run it? This is all about gathering mortgage applications.

Patrick Lovell

We weren’t in on the buy. They were WABC in New York City. They were on what they call prime access, and that would be 7:00 P.M to 08:00 P.M on the eastern seaboard. Then they were on

[inaudible 00:13:05] in Los Angeles, for example. Actually, the craziest thing about this is that as the show rolled on and we were getting up to this point in time that I just described to you, our numbers were literally increasing. Everything was looking golden for the show. So all of a sudden, these two executive producers are arguing on the set about stuff that we had no insight on. We just were observing this, and so we were caught unaware.

Ultimately, I’ll never forget it because I’m into my first house. I’ve got a young family at the time. I’m kind of living the American dream, 101. Got a College education —

Paul Jay

Where is this?

Patrick Lovell

This is in Park City, Utah. That’s where I was, and I’ve been living in Utah ever since.

Paul Jay

Which is what? The home of the Sundance Film Festival?

Patrick Lovell

That’s correct. Great lifestyle. It’s the home of the ultra uber-rich, interestingly enough. Especially as of 2022, a lot of our revelations lead to what’s happened since —

Paul Jay

So you’re riding this intoxicating bubble yourself?

Patrick Lovell

Absolutely. As a matter of fact, I’ll never forget it. One of the big developers of Deer Valley was a client of mine for a long time. After this television show imploded, we were working on developing a structure of a business relationship where we were going to start our own production company. I was set to sign the papers with him and his attorneys on September 15, 2008, the day Lehman [Brothers] collapsed.

My entire life, after Home Team collapsed, Eric and I went independent, and I had saved up enough money to try to develop my own production company, but money had completely evaporated from the system. So I’m a business development guy. I know how to put deals together, and there was no money to be found anywhere from 2007 onward. At that time, none of us were really aware of what was taking place.

I didn’t know about the collapse of Bear Stearns in March of 2007. I didn’t understand all of the things that would actually lead to the collapse, the Lehman collapse, which most people associate with the 2008 great financial crisis and everything that happened after that. I’ll never forget that day— and this is my point— I was about to sign a deal to move me to the next level of my career, and my investor was like, I don’t know if you’re paying attention to what’s going on on Wall Street, but I’m losing everything. I can’t move forward.

So my last literal gasp and opportunity to sustain myself and move forward, which was this lifestyle that I’d become accustomed to, was going down the drain. I had a wife, and I had a young son, and it propelled me into the most horrendous conditions I’ve ever experienced in my life.

As a result of that, Paul, I got thrown into this foreclosure disaster where I was dealing with what they called [inaudible 00:16:01], trying to modify a loan, and my wife and I ended up getting two jobs apiece. I went from this kind of cushy senior producer television job to where there were no jobs, so we had to get jobs in the ski industry. So I’d work in a ski shop. We worked in restaurants. We went from making really good money to making no money, working three times the amount of hours. I mean, my life collapsed.

As I’m living through this process and dealing with those on the other side of it, trying to modify my loan so that I could keep my house, I kept running into these insane questions. Nothing made sense. Nothing made sense with the bigger picture, and nothing made sense on mainstream media. Nothing made sense.

Paul Jay

What do you mean by insane questions?

Patrick Lovell

So, for example, I think in the transition, if we go back to the very beginning. When the Obama administration was coming in on its populist wave to reset what Washington had become; we know about this, looking back on this many years later, that there was a populist wave that people criticized many years later, that there was an [Franklin D. Roosevelt] FDR moment. Not too many people understand what that FDR moment constitutes. Being in the madness of the foreclosure disaster, what we were told and what was advertised on television and what was coming out of mainstream media, particularly the majors like CNN, was that there was going to be a two-tiered approach to what was happening all around us. One was they had to create liquidity for the banks. They had to save the banks. This was a catch-all. So pensioners, homeowners, everybody else, if you save the banks first, that would be beneficial for those that were actually going through this monumental downturn.

Instead, what happened was particularly in my case, and this is actually the case of millions of people. We ended up having to deal with trying to modify our loans. That was in its own right and in a completely criminal fraudulent enterprise, of which I was in the mix of, and as a business person, who knows, okay, you write down debt, you can negotiate situations based on asset value and so on and so forth. That I was dealing in this insane conundrum where it seemed like a set-up, where I would deal with one person from an entity that I had no idea existed. They were supposedly connected to the people that I thought I had taken my loan out with, which was Chase. As it turns out, it’s called a Servicer, and these guys are servicing the loan.

At the time, you ended up getting passed around through a different representative each and every time you had to make payments on what I was able to negotiate, which was a modified loan and ultimately, that modified loan was a test to see whether or not I can make those payments. The terms of that deal was they were going to write down my monthly based on what the asset value of the house was in the aftermath of the great financial collapse, and then ultimately, I was to make those payments for 90 days, and then they would solidify that loan. So therefore, I would be able to make those payments moving forward, and everybody would write down according to what the value of the asset was.

That’s what we did in the aftermath of the Great Depression, for example. That’s what was the message coming out of Washington and everything that led to at that time, I’m kind of jumping around here, the National Mortgage Settlement, which is another variation of this. In my particular case, what happened was they kept moving me along, shuffling me along. I had to make Western Union payments, that was supposed to be one thing one day, and then it was something the next, and it was never consistent.

Then ultimately, I was notified that I was put into the foreclosure mill, which means that even though I was up to speed on my payments, they were going to foreclose upon me. Now, my wife and I at the time were like, wait a second, this doesn’t make any sense, and it led to a whole other set of revelations that would come downstream.

Ultimately, the more we started to pull the thread on this, the more questions I had. As a result, I was like, we got to figure out what the hell is going on because nobody else is.

Paul Jay

How did you get into this?

Eric Vaughan

Well, I mean, with me, I was fortunate to a large degree in that I had purchased a home that I had no business getting in retrospect, at one point, like around 2004-2005. Then I ended up selling it just immediately, just because I wanted to get out of it. There’s other things going on in my life, and so because of just stupid luck, I kind of avoided the trap that Patrick found himself in. However, as we were talking about before, we were involved with this show that was involved with non-prime lending and ultimately Liars Loans and that type of thing, which we didn’t know until after the fact.

Then, later on, after Patrick had gone through his foreclosure experience, he went, and he contacted who would eventually become the third in our three Musketeers of producers for The Con and that was Adam Bronfman. Not only did he help us get the show off the ground as far as production is concerned, but became a really powerful and important creative cog too because he had a very unique perspective, which ultimately we discovered that we had three very different perspectives on this crisis and that’s ultimately what made The Con, and we can get to that in a bit.

What really made me extremely upset where you’re asking where my passion and obsession came from was our first take at trying to understand what happened was a documentary that Patrick produced and directed called Forward 13, and I was helping him as a DP [Director of photography] and co-producer. Basically, we drove across the country trying to get our first question out the door, so to speak. In a lot of ways, it was the precursor to The Con.

At one point during one of our long drives, and there were many of them, it just hit me the full realization. That just like some of these people, Patrick would get on the phone for a Servicer where it was a person who didn’t know any piece of the puzzle except for that they’re supposed to call this person and try to collect. That’s the only thing that they knew, I understood that, oh, my gosh, we’re the same thing. We were like this tiny sliver of this entire system of fraud, and we had no idea, but we were part of it.

I’ll never forget how that felt, understanding that without knowing it at the time, we were part of the problem. That just did not sit well with me. It made me incredibly upset.

Paul Jay

Patrick, when you start to realize that this fraud is being perpetuated by the biggest banks, the largest financial institutions in the country, some of the leaders of the country, the people that go in and out of government and help create financial and economic policy. What does it do to your whole view of the society, of Americanism, of your identity? The whole thing is, to a large extent, a con?

Patrick Lovell

I had to be reborn in a very painful way. I was a firm believer in our system. I come from a family. My father is a professional, he’s a corporate attorney. I grew up really loving and believing in the American dream and the spirit of the American dream or the identity of it. My point of view was always, Look, I get on a plane, and I expect the plane to take me safely from point A to point Z. I don’t have to be an aeronautical engineer. I don’t need to be a software expert. I don’t need to know the ins and outs of everything that makes that possible. I just had an expectation that things would work, and that came from the vantage of somebody who always believed in upward mobility and that professionals get placed in specific positions to make sure that certain things work the way they’re supposed to.

I had an understanding of banking, of finance, I thought, based on my undergraduate education, but then I had real-world experience for a long time. I used to work in Los Angeles for Warner Brothers and Paramount, and I had been in proximity to power for some time.

So what I learned along my journey prior to this whole thing happening was there’s always a way decisions are made, and there’s always a way that things flow from that process. So therefore, when I was in the tumble cycle, which literally nearly killed me, Paul. That the only sanity that I could find in redemption was to answer questions that didn’t make sense, I started to find and unwind as we move forward. That to your point, everything, not just the financial system, not just the banks, but, like you were intimated. The government and, ultimately, media were in on it.

I know that sounds like hyperbole. I know that sounds like, okay, are we talking to Alex Jones? Is this guy in the weeds? No, man. Why? Because one Sunday afternoon, I happen to be a producer beforehand. So I always know how to ask questions. I know how to put deals together. I know how to make factual references and make sure that the information that I was always putting out in whatever production I was involved with was correct. It’s just what I do. That’s what I got paid to do.

Minus, obviously, what Eric was just describing because it wasn’t our job to get behind the finance structure of what our television show was. Our job was to actually just present the story that we were supposed to do. So I give you that kind of background in terms of context because I always believe the systems were supposed to work the way systems work, and if you got shoehorned into one of them as a professional, well, then there’s accountability, and there’s credibility, and that’s why people get paid the big bucks to be in those positions.

So one Sunday afternoon, when nothing is making sense, it’s not making sense from Anderson Cooper. It’s not making sense from Rachel Maddow. It’s not making sense, of course, on the other network whose name I won’t mention, but it all seemed to be a giant confused train wreck where lies were being used at every level because it wasn’t relevant to what it was that I was actually experiencing.

So I turned on the television one afternoon, and it’s Sunday, and I happened to be just channel surfing, and I come across Bill Moyers, and he has a guest on by the name of William Black. The next thing I know, he starts to check off all of these boxes of what suddenly made incredible sense to me because I kept asking myself, wait a second, don’t we have people in positions of power to actually fix this if there’s actually any wrongdoing? Don’t we have people that are there to do deep-dive investigations, to actually go after whatever wrongdoing there may be and hold it accountable? Isn’t that what we do in a land where presumably the law is equal throughout the land, and nobody is above the law?

That was the premise. That’s where I was coming from. Then, suddenly I realized, well, wait a second, listening to Bill Black, these guys got it right in the S&L [Savings and loan] crisis, and we weren’t getting it right now. I kept asking myself, well, how could that be? And we spent the remaining ten years answering every single question we ever had, and it led to revelations that we could never have dreamed at that time.

Paul Jay

The kind of revelation or epiphany that this is structural. The con is structural. I know Bill focuses on the criminality of this whole enterprise, and much of it is criminal, out-and-out illegal fraud that no one gets punished for. There’s never accountability for. A lot of what goes on is legal, but it’s also part of the con. A lot of the structural part of this is because there’s just a tendency within modern capitalism towards monopoly. The more you get concentrated ownership, you get concentrated political power. So all kinds of stuff become legal because you control Congress, and you make it so.

We were talking off-camera just before we started about trying to understand people that are anti-vaxxers. Listen, I’m vaccine four times, so I’m all for vaccines because I believe the science supports it. I understand this profound distrust in government who’s telling you to get vaccinated because there’s such a fabric of lies that once you start to see how much of what’s supposed to be, as you just said, reasonable people that are supposed to control and make things healthy. I mean, you watch this television show, Dopesick I don’t know if everyone has seen it about Purdue and OxyContin and the way the FDA [Food and Drug Administration] protected the pharmaceutical company for years and hundreds of thousands of people died.

So this profound distrust in government is well deserved. It’s rational. It doesn’t mean it’s right about vaccines. I don’t think it is, but one can understand it. So for you, Eric, where did you come from in terms of how you saw Americanism, and I don’t know where you were to start with but shape how you saw your identity, what the society was?

Eric Vaughan

That’s a really interesting question. Without going into all the different in’s and out’s, my family background is basically Mexican, Native American and Japanese. For instance, I had a relative who was sent to Manzanar, the internment camp. We all know the history of American Indians and Native Americans in the United States. We all know what it’s like being a Mexican American, or at least there’s a lot of indications as to what it’s like to be Mexican American in today’s modern society. So I think that just from natural family background perspective that there was always a healthy skepticism towards power, towards government, but we also have a very strong belief in government.

My father worked for the National Weather Service, and I remember going to work with him a lot. He would take me to all the weather stations and meet all these different people at airports and stuff like that. I found that these federal workers were some of the most dedicated and the hardest working people that I’ve ever met to this day. On one hand, it’s like there’s this deep, painful history of all the different places where government has failed people. Then at the same time, there’s all the different moments and places where it is the only thing that’s protecting people and how powerful and incredible government can work if it’s being run well if it’s not corrupted. At the time, the National Weather Service was one of these uncorrectable things.

Can I just jump in here for a second? I really think what you’re saying is so important how much the vast majority of civil servants, the vast majority of people even in the state at various levels, are really genuinely interested in doing what they can to make this society better. That really gets overlooked in all this. It’s really important what you’re saying because they don’t control policy at the top levels, and it’s at the very top levels, you get such corruption and the exercise of monopoly power, but at so many other levels, you’re so right about what you’re saying.

Eric Vaughan

Ultimately that I feel really strongly that we show in The Con. Of course, we talked about all the political appointees who basically undercut all the efforts, but we also highlight all the whistleblowers who were part of the SEC [U.S. Securities and Exchange Commission] Or the people in the Department of justice who did everything that they could Bill Black’s story. You’re right, that’s one of the things that we want to make sure that we highlighted that there were literally thousands of people out there all trying to do the right thing, and it took an awful lot for the powers that be to make sure that they were undercut and that’s usually done at the level of the political appointee.

But getting back to where my personal come from was, I think that this skepticism towards government, but having this idea that government only fails when it’s corrupted or when it has an agenda other than that of the peoples is the only place where government fails when it’s not doing that, it works. So I think that that is very much the lens that I brought into The Con as we started really digging in and working really hard on the project.

Paul Jay

Well, now I got to decide where to go with this interview because what you just said opens up a whole topic for a conversation. I just want to add a comment, and then we’ll get on because this has been kind of preoccupying me. Democracy is a form of government. It’s not an abstraction, and what is government? Government is to pass laws that have a kind of organized society, but those laws serve those who have the most control over the government. Then what are laws without enforcement, which means guns, which means police, which means army. Democracy is a form of government which uses armed force to impose the will of the government.

Now, supposedly this is an abstraction. Oh, majority rule. From the very beginning, the United States was not majority rule. It was white property owners. Then it becomes supposedly everybody gets to vote, but obviously, the Senate is not majority rule. The Senate appoints the Supreme Court. So that’s not majority rule, and the electoral College appoints the President, which means a bunch of small States controlled by Republicans or sometimes Democrats, but more of them. They get to pick the President often, not the majority vote.

The essence of the whole thing is the more money you’ve got, the more property you own, the more wealth you’ve accumulated, the more Democracy you have. Clearly, that’s what American Democracy is about in spite of that, and this is what I think is so important about what you’re saying, Eric. In spite of that, it’s amazing that a lot of good gets done through government because of the kind of people you’re talking about who work in it and actually do care about the society in spite of the insane policies they often have to deal with that come down from Congress. A Congress controlled by essentially the financial sector, and then we get back to The Con again.

So, Patrick, I mean, pick up the story, so you start to pull the thread to figure out what the hell happened to you, and you encounter Bill Black and then what?

Patrick Lovell

I think I’ve been struggling with those questions for decades prior to this situation, just based on history, and another area of interest for me was always Nazi Germany and everything that that constituted, particularly the deception. So as a filmmaker, I came up through Hollywood back in the ’90s, and I remember there were two independent films that really created my foundation of thinking for a long time. The first was The Usual Suspects, and I’ll never forget Kevin Spacey’s wonderful line when he said in The Keyser Söze reference that “the greatest trick the devil ever played was to convince the world he didn’t exist.” And I just channelled my inner, Easy Rawlins, which was Denzel Washington in Devil in a Blue Dress, when he said, “I got tired of them pissing on my head telling me it was raining.”

So when Eric and I went off on this amazing journey, the first part of our journey, the prologue, was Forward 13. We had to understand power, Paul, and by the time I got to the end of that journey, I’ll never forget it was the Yellow Brick Road. We were approaching Washington, DC, and we timed it perfectly, Paul, for the Occupy Wall Street movement. We literally got on the road in the Northwest the day Occupy Wall Street started, and we landed in Zuccotti Park the day the NYPD blew it up.

Along those lines, as we were approaching the Zenith, of course, Washington, DC, and New York City, the corridor. I remember saying to Eric out loud, it just occurred to me. I just said, “look, man, we got two columns of our soul. On one side, you’ve got character and integrity, on the other side, you’ve got complicity, duplicity and corruption, and we tend to skew one way or the other, depending on what the influence is.”

So what ultimately is the answer when we’re humans. We’re flawed, right? The answer that we were seeking is, how is it supposed to work versus how it actually is working? That’s when we got to understand what Bill taught us that led us to these amazing whistleblowers and people within the system, not to mention victims, to get to the bottom of what is our system, the largest criminal conspiracy and cover-up in our lifetimes that never ended.

Today, for example, we’re talking about inflation. We’re talking about any number of things from the insurrection and the lack of investigations into what constituted that. What Eric and I found along this journey was that the government completely vacated its role to do what we depend upon to deliver a government of, by and for the people, to deliver a government of and for the corrupt.

How does it do that? And how does it get away with that? Well, because nobody knows the information, nobody has the facts. That’s what you get from an investigation. So what we did in The Con was ultimately what Ferdinand Picora and Congress and the powers that be at the time after the Great Depression were able to piece together to prove what Wall Street did to create the Great Depression. As a result of that, we wound up with the Securities and Exchange Commission, the Securities and Exchange Act of 1933, and most notably above all, go to the source with Glass–Steagall to prevent investment banks from using deposits to speculate with other people’s money.

Now what we’ve added to that at the next level is Federal Reserve policy and how we were able to get to that is still the most mind-boggling thing I’ve ever experienced in my entire life. Now, again, this is the journey of the wizard of Oz, ultimately. What we were able to find through what Bill Black taught us, ultimately de-regulation, de-supervision and de-criminalization enabled the con. That’s what let it fuel itself, it came through Federal Reserve policy during the time of Alan Greenspan, specifically after de-regulation that took place in the late ’90s with the [Bill] Clinton administration. That built up speed after, obviously, Reagan said government is the problem.

So it was four decades of what a lot of people refer to neoliberalism, which is correct, but really, it’s ultimately at this stage of the game in 2022, and I know you feel like we do like what year is it? It’s Groundhog Day. We’re still grappling with the same problems because the people don’t understand the building blocks of financial fraud that has become our system that is literally fueled and guaranteed by monetary policy. When you put those two things together, you’ve got the eureka that we’re no longer of, by and for the people.

Paul Jay

Eric, how about you? When you start to see the systemic roots of the problem now from your family history. Let me just back up a second. This is so much a question of identity, and because of your family history, you get a lot of the structural, systemic nature of the oppression, really the systemic nature of how the ruling circles use this kind of mythology of Democracy and fairness. If you work hard, you’ll do well, and you’ll grow up, and every American can grow up and be President, and there’s a Santa Claus and a tooth fairy.

When you grow up Japanese, Mexican and Native American, you kind of already know that’s bullshit. Whereas if you grow up in rural Alabama, in a white family who is poor and has a culture for a couple of hundred years or more, that the only thing you can be positive about is at least, I’m not black, because you can’t even say poor rural whites even benefited that much from systemic racism.

I’ve always been just wowed at this idea of the number of poor farmers and workers that fought for the Confederacy and died in the thousands and tens of thousands to defend a slave system that actually undercut their own wages because slavery helped depress the wages of poor white workers and farmers. Yet they go out on the field of battle and die for it.

You have it even now where how many, especially from these same States where the main recruitment for volunteers for the American armed forces come from go and fight in Iraq or Afghanistan to what? Defend American freedom. I mean, it’s so ridiculous that going to invade Iraq so [Dick] Cheney’s Company Halliburton can get a multi-billion dollar contract, and that becomes, ‘I’m there to defend American freedom.’ And it’s okay that poor people from all races because it’s certainly not only poor whites, it’s poor, poor workers, and not only poor lot of people join the armed forces after 9/11 from all levels of life because they really had it so internalized that this fight for American freedom meant you go off to Iraq or Afghanistan.

Coming from this kind of family background, you came from that kind of Americanism, it’s not the same for you. On the other hand, when you start to really see how systemic the issues are with the financial sector, the financial system, how does that open your eyes further?

Eric Vaughan

I think that what that did for me as far as being a filmmaker is concerned is that it always made my focus to be about the people, the bottom up. I think that that was one of the great places where Adam, Patrick and I really mixed when we were talking about multiple perspectives was that especially Patrick, coming from a political science background in College, he was always very much a top-down sort of way of looking at things. Whereas with me and just my unique perspective, I’ve always been more of a bottom-up, and I think that that’s what we end up getting in The Con is that we see both the bottom-up and the top-down. I think that that gives us a sort of objectivity that it wouldn’t have had, had I just made it myself, or Patrick just made it himself or Adam had made it himself or whatever the case might have been.

So I think that there’s a power in that collaboration which kind of goes back to what I think that in a broader philosophical sense you may have been getting at in that the powerful have always known that creating discord amongst the less powerful was how you hold on to power. So I think that, yes, if you can pit poor white people against poor black and brown people, that’s going to keep you in power. If you can pit the kind of wealthy to the not wealthy at all, that’s going to keep you in power. I think that an awful lot of what we see is a direct result of that. Everybody talks about how polarized our country is right now. Who does that serve? And did it just come from nowhere, or can we point at different institutions and organs within our society that have made it so?

I mean, I think that to me the answer feels pretty clear that this was something that was very much deliberate, that we’re being divided on a constant basis day after day, just by feeding some stupid news story into the news cycle, having the media outlets that you own repeat it again and again and again and then going online and creating the arguments. Next thing you know, we all hate each other. I think that as long as that’s happening and we’re not united to one, just as our common bond is being Americans, but also United and understanding that it’s not because you’re white or black or whatever, that I’m your enemy. In fact, you’re not my enemy at all. In fact, we’re both being victimized by a financial system that is built specifically to crush me, to enrich the people above us.

If we can ever get past this discord, ever get past all these things that have been put in place of our ability to join with one another as Americans. We’ll have the opportunity to actually look at things from a much more objective perspective, say, no, we’re not going to be screwed by this any longer. We are going to make sure that we put the right people in place that the right laws are enacted in order to protect us from the people who have been victimizing us. Until we’re able to see past all this badness and fake discord and so on and so forth, we don’t have a chance. We don’t have a chance.

Paul Jay

I’m always amazed how strong this American identity is. Like, why the hell do you want to unite as America? Maybe because I’m a dual citizen, I don’t give a shit about being Canadian or American. Why isn’t it unite as a people? Because on the other side is in that financial, corporate, congressional, military, industrial complex, big tech elite, you’re not going to unite with them. Do you know the truth of it? They compete a lot with each other, but they’re actually fairly united. Those guys, honestly, they kind of get the laws they want.

Eric Vaughan

I still feel this, America isn’t those companies. America isn’t even like all the different individuals. To me, there’s an idea, we need to get rid of the American dream and replace it with the American ideal. I think that American ideal is what that dream was supposed to be a promise of, a fake promise of. I think that there’s an understanding within me and perhaps with other people like me, that everything that we see that’s wrong with our country, all the duress that we’re causing amongst our own people, all the duress that were causing people in far-flung societies and in other countries, whether it’s by financial, whether it’s by the economy, or whether it’s by warfare, I think it’s antithetical to what I believe is what the promise of the ideas that went into the building of America create.

You’re right, it is a very strong thing, and perhaps it’s a pipe dream to a large degree, but I do strongly believe that if we ever at any point were able to actually adhere to those principles that have been mythologized and basically shit on by us throughout our history. I think that we would actually be that thing that we all want to be. It sounds ludicrous to say it, but the shining city on the Hill, bullshit and everything like that, it doesn’t have to be bullshit. We have the economic capacity to enact an awful lot of good in this world. If we just pull our heads out of our ass, stop fighting each other, and get the criminals out of power, we might actually be able to do that, and I have to believe that.

Paul Jay

So, Patrick, here’s where I don’t know if we disagree or come at it from somewhat a little bit of a different perspective, but what Eric just described, getting back to America’s ideal, I think that is all part of the con. I think the fact that there’s an American ideal is part of the con. The actual history is a country formed out of slavery and the genocide against native people. An original Constitution where white men get to vote if you own property. I just saw The Washington Post had a thing in the paper today, how many members of Congress owned slaves.

It’s unbelievable, even for years after the end of the Civil War, members of Congress owned slaves. The American Democracy was always Democracy, really for the elites. It’s a way for the elite to settle differences amongst themselves, especially when it becomes big monopolies and lots of capital. They can settle differences with each other without another civil war. Although the way we’re heading now, we’ll see if that maintains itself, because that was the point of these Democratic institutions, to have this kind of development industrial, capitalist development without having actual wars between different sections of the elites, and it worked for a long time.

When they’re saying now how they want to defend these institutions and these Democratic institutions are starting to fall apart, it’s because sections of the elites are getting to the point where they’re ready to fight again without the kind of norms, but it was never Democracy of the people. It never was that. Maybe [Abraham] Lincoln talked about it, so if you want to say that was kind of an ideal. It never was meant to be that it was always a structure of government to enforce laws that at the very heart was defending the private property of the elites.

You need to get people to buy into that. So they get to buy into it by telling everybody, oh, you’ve all got the right to vote and choose. There’s a wonderful quote which I keep referring to over and over again. George Will, that right-wing pundit, writes for the Washington Post or used to. I don’t know if he still does. He was on the George Stephanopoulos show, and somebody was going after [Mitt] Romney. This is a few elections ago about how rich he was and how many houses he had, and all that.

So George Will start getting really frustrated with the conversation, and he said something I don’t think he meant to say publicly. He said, Listen, all of our presidents wound up being rich. All the people that run government are rich, and then here’s the key quote. We all know that in elections, you get to choose which section of the elites are going to govern. I mean, that is the truth of it.

Patrick Lovell

Thirteen years ago, before this whole thing went down, I would have probably disagreed with you, Paul, to a certain extent. I would have said, look, the sacrifices that were made during the American Revolution, the sacrifices that were made during the Civil War, and all of the other things that led to the civil rights movement and everything else were very real. I always would have compartmentalized in my mind in order to form a more perfect union. 

I’m very aware that we’re flawed as human beings, and I’m very aware of the terrorism of history, as it were. I believe that we learn our lessons, and we move forward, and that’s why you have people that elevate and rise to the level of society of power that should always have as a baseline the integrity and the principle of the American ideal at the forefront of what they do.

I had to be reborn into a really horrible reality to understand everything you just said, based on my own experience with what happened in the aftermath of the 2008 great financial crisis. I’m reminded while you guys were talking about that something I learned years ago growing up in Texas when [Lyndon B. Johnson] LBJ stated that if you convince the lowest wrong white person that he’s higher than the highest rung black person, then you can pick his pockets all day. Which always had me thinking, wow, that’s pretty diabolical, right? To your point about the Confederacy and so on and so forth with that. Then I learned years later that the entire functionality of the machinery of slavery created the financial products that became the financial products of the 2008 crisis. We’re talking about CDOs [Collateralized debt obligation] and the Securitizations, et certra.

So nothing’s new under the sun, really, the deeper you go into it, and what we did, Paul, and I’m convinced of this, we did the work in this modern era that the FBI [Federal Bureau of Investigation], the DOJ [United States Department of Justice], the SEC, the collective Alphabet soup of agencies weren’t able to do because of the corruption that we’re alluding to, which we show specifically in The Con.

It all stemmed from our other partner, who we’ve alluded to several other times in this broadcast, Adam Bronfman, who said to me the day that I first met with him that we had to get to the bottom of this, was he said to me, look, man, if you can go from how we went from of, by and for the people, presumably because he’s always had the same cynicism you’ve had, Paul, to proving how we went to of, by and for the Corporation that I’m in.

So I always kind of sense that he had a next level of understanding. I was just naive. I was totally naive. I always knew the commonality that money talks bullshit walks, but I still thought of accountability and credibility. I mean, I came from the ’80s. We’re not naive, Paul. We understood Watergate and whatever that was. Contra Gate has its own elixir. And I knew from William Black that we got the S&L crisis. We got 1000 executives in the crosshairs after 30 thousand criminal referrals of a system that made sense. Was it perfect? Absolutely not. But it was one one-hundred eightieth at the size of what became the 2008 financial crisis, and to this day, people do not understand, Paul, what it took to actually right the ship supposedly.

Right to Ship for whom? Is the answer to your question. We right the ship of the people behind the scenes that constitute exactly what you describe. How did we do that? We provided $29 trillion in emergency lending, of which, from what we understand, and we got to go more deep dive on this. I’m not the ultimate expert in this, and we’re going to have other podcasts that we’re going to bring some of this information to light because we’re in the universe of the people who actually know this stuff from the inside and actually got it right.

That’s really our job, our mission, our objective right now is to do what all of media, minus yourself and I have to give you a giant thank you, Paul. Especially all of your work, but I am a huge admirer of your work, specifically as it relates to 9/11. To this day, how is it that Saudi Arabia is in the position that it is, considering what we all witnessed on 9/11? 2008 is the flip side of the coin. I don’t know exactly where we are. That’s why it feels like Groundhog Day, but I can tell you this.

Pam Martens’s of Wall Street on Parade, which is a fabulous independent publication. I highly recommend everybody to check out what she’s been putting out there for a very long time. I know a lot of users of Reddit are now familiar with what Miss Martens has been doing recently because she’s taking what we show in The Con to the next level of, which we’re going to anyway. In 2019, we had $11.8 trillion metastasized from the Federal Reserve into the banks based on repo loans that nobody knows what constituted those repo loans to this day, and there’s a media blackout regarding what that is.

So if you’re counting we’re over $40 trillion to the system, I think it’s closer to $50 trillion to the system in emergency lending to what constitutes what we show in The Con, Paul, which is really the baseline of everything you’re talking about. You talked to some of the best minds over and over and over that were inspirational to us. Matt Taibi, incredible guy, many others, but they didn’t talk to Bill Black. Bill Black was the answer. If you get inside of what Bill Black has taught us, you understand why the Department of Justice didn’t go the mile that it needed to, to re-right the ship on behalf of the American people. You know what the SEC was involved with.

Look, I got to point this out before I forget this point because it’d killed me if I didn’t get this before the end of the broadcast. Because of what Eric described earlier, he always wanted to understand this from the ground-up, not the top-down. I had already gone to the whistleblowers, for example, Michael Winston from Countrywide, who had basically [Angelo] Mozilo dead to rights.

We went to, I think, the most important whistleblower maybe in our lifetimes, Richard Bowen, who literally laid it all out at what was going on at city that led to $90 billion of illegal securities that he tried to prevent and, of course, Robert Rubin stopped him, and the government covered up for him. We’ve got all those guys, we went top-down. Eric says we got to go bottom-up. He always said to me, “guys, why isn’t this Rico? Why isn’t this racketeering?” And I’m thinking to myself, well, everything that we’re seeing makes that absolutely clear. But as a result of what Eric demanded from us, and quite frankly, what Adam Bronfman did, too, we discovered Addie Polk.

Addie Polk was a 91-year-old African American woman who was forced to shoot herself four times with her husband, Robert’s [Polk] Gun, on the day she was being evicted from a home she believes she owned. That’s the story. Through that tragedy, she opened up this glorious door to this revelation it was the former AG [Attorney General] of Ohio and the Summit County Department Police Department that put together a top-notch forensic team that would put together all the pieces that led to a RICO [Racketeer Influenced and Corrupt Organization Act] conviction of what was a small level player that was doing the exact same thing the Wall Street banks were doing.

That’s the only RICO conviction in the entire country that led to a $29 trillion heist. Now, some economists might say, okay, that number might be a little extended when you get into the variables, and again, I’m not a Ph.D. Economist. I can only tell you what I’ve read, and I believe these source materials through and through, and it’s what everybody doesn’t get.

We literally had a crime syndicate built on preying upon African American women, which you alluded to throughout this entire broadcast, which were the targets of what led to this mammoth criminal enterprise that literally had seven layers of what we present inside The Con, and that’s just season one, and there’s more. We find out there’s always more, but what it tells us is government has failed us.

We need America to understand that. If you believe in which I know you don’t, Paul, and I don’t blame you for not believing it. I believe in the principles of it, and this is what drove me the whole time. If you believe in liberty and justice for all, you cannot sit on your hands and expect somebody else to do the work right now, as required by citizens of the United States to rise up in mass and say, enough. Enough of this corruption that I believe anybody who knows two pounds of their worth, if they’re a professional, to do the work and had this thing handled long before we came to the scene. Why was it incumbent upon us, Paul? Because we’re citizens.

So at the very least, baseline level here, what I hope you believe in is that while our government might be a myth, the American history might be a myth. The American people are real.

Paul Jay

I promised you’d be able to take your kid to the dentist, and so we’re going to do another segment, another day, to keep this going because I think this is kind of a primary conversation. I got to say one last thing, and if you guys want to say something else afterwards, fine. Otherwise, we’ll end it and pick it up. The aspirations of the American people have always, on the whole, the majority been for liberty and justice for all. There’s always been amongst the people an aspiration that America should live up to the rhetoric.

The system itself it’s not about evil people at the top, either. If you’re born into a family that’s very wealthy, that will be your identity, and you’ll take advantage of the opportunities that present themselves, or if you’re born into a family at any stratum of society, and because of the whole culture and the education system, it’s all about, I got to get ahead myself, and if the opportunity presents itself and you’re smart enough to take advantage of it to a certain extent, yeah, you can climb in the society.

That being said, what Eric was talking about before, the vast majority of people that work in government, but the vast majority of all of ordinary Americans and everybody, never mind Americans, every country. What do most people want? A stable life, a family, to be able to do something good in the world, work hard. That’s the vast majority of people. I know I was saying America never was this, but it wasn’t because anyone was evil. That was the stage of human society.

We’re on this long journey. That’s how I envision it, from ape to human, and we ain’t made it to human yet. We’re not a really fully realized human society yet. I’m watching this TV show being repeated on prime or Netflix called The Pillars of the Earth, it’s about medieval England. I mean, it’s so barbaric. A King can just kill anyone he wants. The torture and slaughter and the number of peasants that went off to fight for bloody Lords and got slaughtered in these horrible battles. We’re on this long road of human progress, and we’re really only partway there. In the early stages of development, in spite of all its faults, capitalism and American capitalism, on the whole, move the ball down the football field. It was another step in human progress.

But the thing that happens and this is why what’s so important about your film and this whole conversation is something happens objectively, not because of any bad people. Finance starts to become dominant when you start to have mass industrial production, and you need so much money to develop large-scale industry. Instead of just being one piece of the economy, the nature of banks, you could say moving capital, that’s surplus in one sector of economy by loaning to another sector of the economy that needs capital to grow. Banks start to become dominant, and they start to control the boards of big companies. I’m talking as you head into the 1920s, and then because you have so much concentration of wealth, speculation becomes rampant. They don’t know what to do with all this money. Everybody’s encouraged to get into the stock market.

I was looking at the ads trying to encourage ordinary workers to leverage stock buys in the 1920s. For a dollar down, you can buy $100 worth of stock. The whole thing gets built on this imaginary structure, which, of course, had to collapse. What happens is that the system starts to get more and more degenerate.

There’s a very interesting quote from Roosevelt in 1938, I Believe it is. He talks about the rise of fascism, and he says in a speech on monopoly and fighting monopolies that when a section of the corporate elites take control of government, that’s fascism. The financial sector now controls government, and let me just add two other pieces to this because Patrick is about to explode. He has to say something.

But let me just add this is where this stuff is objective. It’s systemic. It’s not about bad people. Two things happen as we head into the late ’70s and early 1980s. Because of the digital revolution, computerization globalization takes off like a rocket ship. You can now have a global supply chain where terribly paid workers in Asia can be played off against American workers. Lower the whole standard of living of American workers, but it’s so beautifully organized because of computers, one tube of toothpaste gets sold in a Walmart somebody somewhere in Asia knows to make another tube of toothpaste.

But it does something else. And this doesn’t get talked about enough. It made speculation on Wall Street not just because they had more money, but computerization made speculation possible in a way never imagined. This was explained to me by a guy in LA [Los Angeles] that used to be a broker in the 60s. He said, imagine modelling and carrying out sub-prime mortgage with a pencil and paper. It couldn’t be done.

Patrick Lovell

You’re right. I am about to blow out of my seat. Sorry, Eric. This is Patrick being Patrick. Look, the way I’ve always framed this since we figured out what the heck is going on is that its corporate fascism undergirded by a criminal syndicate, which is a mafia state. The American people must come to the realization that I did back in 2009. I got tired of them pissing on my head, telling me it was rain. So the insurrection is one aspect of lack of investigation.

We know what’s not happening, supposedly with Merrick Garland and Donald Trump’s hierarchy, as it were. But that’s just a long line of what’s been going on since, I don’t know, maybe I’ll go back to congregate in our lifetimes. Look, the bottom line is that in this wake of the great financial crisis, they just use the American people, like [Timothy] Geithner said, as foam on the runway for a corrupt financial system that has unlimited backing. I’m just going to say what was quoted in Pam Martens’s Wall Street on Parade, and this is the bottom line.

I really don’t want to get obscure with the Federal Reserve and policy and all the rest of it. It’s just simple criminality that Americans can’t get out of until we have accountability at the highest levels. She said, quote “if the Fed has propped up the same zombie banks for the second time in eleven years, the Fed must be stripped of any and all oversight at Wall Street banks in any and all ability to create electronic money out of thin air to bail them out.” It’s pretty simple. You got to hold the bad guys accountable. You got to purge this system. That is a facade because it’s all, and I don’t want to get into all of the technical lexicons right now, but it’s all based on assets and, you know, assets in a big way.

Paul, I’ve watched some of your stuff. I know you know BlackRock, I know you know Larry Fink. I know you know their proximity from the Resolution trust with Larry Fink when he was before First Boston, before Aladdin [Asset, Liability and Debt and Derivative], and I know I’m sounding slightly obscure, but I want people to understand that in the aftermath of the great financial crisis when the Federal Reserve created through systemic emergency lending, this obscure regulation that allows them to just flood the market with liquidity when they need to was called thirteen-Three.

On the other side of that, the asset manager responsible for distributing the money was none other than Larry Fink. This was right during what we call Maiden Lane, which preceded the Lehman collapse. So to your point, these tentacles, ‘the greatest trick the Devil ever played was to convince the world he didn’t exist.’ All of these cliches, all of these fictional models are real, man, they are so freaking real, and it comes back to integrity for me, it always will. If you don’t have courage and integrity and the right guys in the right place to carry out their job, then Democracy is a complete failure, and we have been a failure for a very long time by my Mark, at least the last 13 years and, of course, to your Mark, Paul. Maybe since its inception.

Paul Jay

Okay, I’m very concerned about your kid’s teeth. There’s going to be some cavities that are going to get worse if I don’t let you out of here. So I’m going to stop it now, Eric, we’re going to pick this up again, and Eric is going to get to jump in because it’s his turn. So we’ll figure out a day, but go do your kid’s teeth. And because as much as we got to save the world, you got to worry about dental hygiene.

Eric Vaughan

Thank you.

Patrick Lovell

Thank you for the opportunity, man. Wow, that’s all I have to say.

Paul Jay

All right, we will do it again. It took us a while to get this date, but we’ll make sure we do it again sooner, and everybody watching weigh in with your comments and everything and next time, we’ll respond to some of your questions and Comments too when we talk. So thank you, Eric. Thank you, Patrick, and thank everybody for watching, and again, don’t forget the donate button subscribe and share and all that stuff.

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William Kurt Black is an American lawyer, academic, author, and a former bank regulator. Black’s expertise is in white-collar crime, public finance, regulation, and other topics in law and economics. theme music

written by Slim Williams for Paul Jay’s documentary film “Never-Endum-Referendum“.  

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  1. Hold them accountable?! Why the heck would they even ALLOW anyone to hold them to account. They hold the reigns. He who holds the gold rules. If it were realistically simple to hold them to account, would history be riddled with revolutions and armed resurrections?

  2. While listening to you and your guests, i was so eager to jump in.
    A train can travel only on the rail that it is traveling on. That is the system.
    Capitalism is to serve those that have capital, as a matter of fact that is why they call it capitalism.
    We need a system that has nothing to do with capital, people need to contribute as much as they can, and take as much as they need.
    I forgot what they call this system. we need lots and lots of humanity, capitalism in this stage is Barbarism. Thank you.

  3. My gosh, did the USA financial system just do America what they did to Russia in the 1990s?

  4. Hope you don’t mind the off-topic, but on the subject of poor white southern farmers fighting to preserve slavery… it’s important to recognise what the disagreement about slavery actually was: the white nationalists of the north, who formed the Republican Party AS a white nationalist party, saw the enslaved black population as a long term threat to the possibility of keeping the country for whites. In the decades prior to the “civil war”, they had been resettling thousands of black Americans to the west coast of Africa, forming the country we know as Liberia, in what I call “black zionism” (pretending to be returning “a people” to their homeland to feel good about the ethnic cleansing of said people). The idea that they wanted to free the blacks, and just have them loose in the country, is a myth. The North fought to stop the south from leaving the union. Escaped slaves were kept as bargaining chips, to tempt southern land owners to switch sides to get their slaves back. Only after three years of not winning the war did Lincoln decide to use those escaped slaves to help him win. Once that happened, black rights were protected in the south by federal troops to stop them from fleeing to the north where they weren’t welcome (see “white flight”).

    Incidentally, one reason why slavery had to be quickly ended (officially, it did continue under the peonage system until 1942) came thanks to the new technology of photography, which showed people in the north something extremely troubling: after generations of white slave owners raping increasingly pale skinned slave girls, there were starting to be “black” slave children who you could not tell apart from white children by looking. Slavery wasn’t just a threat to white nationalism, it became a threat to whiteness itself.

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