I just want to read a couple post did an article about you in 2005 and lines. Tell us what your approach is. Ohio. Sswoman from who called martha a courd. A wrinkly d to her one of the things that happens when you try to cover inside politics, a lot of these pics are basically inaccessible to broad audiences. If you want to talk about congressional procedure. Inaccessible to is this person thats that sort of character and there is a good guy over here and it allows them to follow the story. There is a term paper which will is this person thats that sort of character and there is a good guy over here and it allows them to follow the story. There is a term paper which will put them to sleep. The other side of the political system gets the same treatment, you say on harry reid, the Senate Democratic leader from nevada, quote a prolife mormon with a Campaign Chest full of casin know money. Another thing i know about this process is if the reader knows what your the finances are really responding to, especially now when they see the news landscaping fractured more and more overtly in the republican camps. I know youre not with Rolling Stone anymore. How long did you write for them. To howg does you asked long you were there . I was there for 10 years. I loved working there. It was an iconic organization. I couldlly had the job write about anything i wanted. It was a fantastic job. It allows me. They were going in and out of different places. I believe she is in the 100. They are allowed to principally search her house. Fors say you are flying welfare and you are a single mom and he do not have any other source of income. They want to make sure youre not cohabiting. Law allowed the state to come in and check around and see if there was evidence of a man in the house. They would go through your underwear door, look for your to rush rack. Korea was one of the will who had to go through one of the searches. Did you talk to it . This is through her lawyer. There were not that many. It does not go back that far. She was one of the very first. What about her was interesting to you beyond what you party told us . Mainly that i had access to her. Discoveredthings i was things like welfare, housing. They had been arrested or charged with fraud or were on welfare. Their highly relet and to talk about their experience. It is very shaming. For me to trying to find people who have been through this program. I eventually found a couple of people who have been on the record about it. There was a lawsuit about this program. I got to talk about some of the plaintiffs. Find peopleult to who will talk about their experiences. Thee book is named device. When did you start on it . Ever since the 2000 eight crash, i have been primarily covering corruption on wall street. This is considered an accidental detour. Left right politics, that sort of thing. Rollinge crash in 2008 stone decided to assign me a set the isstory what caused what happened at aig. We got such a tremendous response to that story. I ended up essentially doing that and only that for the next five years or so. Thise course of covering material, there was a theme that kept resurfacing. There are these awful crimes that would be committed. None of the individuals responsible with effort the prosecuted. The worstcase scenario was always the same. Caught, theyy got would either simply promise never to do it again or they would have to pay. I wanted to talk about justice inequally. There is one class of people that is nonjailable and another class that is jailable. I want to show you a video that goes back to 2008 and its richard fold who you devote a whole chapter to and then we can ask you about it. Youve been able to pocket close to half a million dollars. Is that fair although its still a large number, i think for the years that you are talking about here, i believe my Cash Compensation was close to 60 million which you have indicated here and i believe the amount that i took out of the company over and above that was i believe a little bit less than 250 million. How does he fit into your book . I have a whole chearpt about all the sha unanimous gans that went on. But that particular episode was interesting for a number of reasons. First of all, there had been a whistle blower name oliver buddha who had gone to the s. E. C. About eight or nine months before that congressional hearing and told the s. E. C. That there were discrepancies in the way they were reporting his income and that his actual income was much higher than he was reporting to congressman waxman in that hearing. He said half a million and what he really meant was half a billion. And so the s. E. C. Was aware that there was some abuse in terms of how leeman executives were counting their stock options, they are underreporting their income but they ignored that warning from a highly placed whistle blower and ignored other warnings about the company. And right up until the time this massive bomb of leverage exploded and nearly destroyed the world economy. The other interesting thing about this is here is a guy who was a c. E. O. Of a company that almost destroyed the entire world. The collapse of leeman pros was an event that you just cant understate the significant of it. It triggered a series of losses that wiped out 40 of the worlds wealth. Thats how much money disappeared in the 2008 crash and the triggering event was lehman. Here is the c. E. O. Of that company who engaged in irresponsible practices for years and years and years. Its definitely happened on his watch. And hes unapoll jet i can about the fact hes taken hundreds of millions of dollars out of this company that he gets to keep even as the taxpayer now has to go in and spend as much as 7 trillion filling in the hole that was caused by the irresponsibility of executives like that. And thats what is really striking to me about the attitude of a lot of the people who worked on wall street. This total lack of shame or apology or any sense they had to bear any responsibility for any of it at all. And also the idea that its totally natural that the government should come in and bail them out. This is what has to be done and they feel this way even as they feel its totally outrageous for somebodys whose house is in foreclosure should they get any aid from the government in keeping their house because that would be rewarding somebody for being irresponsible. They dont see the discrepancy between the two. Why do you think they dont . Because they live in a bubble. There are so many reasons this is the case. One is the Financial Press caters exclusively to people who work in the Financial Service industry. Financial reporting if you are somebody who doesnt work on wall street, its almost indesive rabble. If you are average joe who works in Middle America and has some job unrelated to finances. If you pick up the wall street journal and try to read a story about derivatives clearing or High Frequency trading, it might as well be in greek to you. They are the press that covers this group of people is very worshipful. It tends to agrandize anybody who is successful in making himself a lot of money. You see this like with the treatment of jamie diamond who is line iced on wall street by financial reporters despite the fact his company paid out the single biggest settlement in the history of regulatory settlements because jamie diamond makes a lot of money for his company. 13 million in one lump sum to the United States government. And 20 billion overall for the year. What is the reason they are getting this kind of money out of a company like that . Because they committed aon thishing misdeeds, engaging in subprime fraud to lying about the london whale episode where they had this suck hole of losses that was expanding within the company and they didnt disclose this in time to their investors and shareholders. There were so many things that went on at chase and they were charged collectively with all of this stuff. They were burning off banker. They somehow missed the fact this gigantic hedge fund wasnt making any trades and they could have sounded the alarm years beforehand. This is jamie diamond testifying in 2012 with barney frank in the chair. You did say finally that there would be some callbacks for compensation. Youve also taken some responsibility here. Will the callbacks is your compensation on the table for callbacks . This will be reviewed by the board . Just answer my question. My compensation is 100 up to my board. Is it under you said there are going to be callbacks for people responsibility . Is your compensation in the pot being considered for that . They will seize what they see is appropriate. Jamie diamond got a raise at the end of this year, again after having spureded a ship that stewarded a ship that had the big els settlement of settlements. How tough was he on somebody like j. P. Morgan . The london whale episode, that may have opened the door for future regulatory actions. You cant blame it all at the feet of congress. I think congress on the whole has done a better job than the regulators have of examining a lot of these issues. I was at a couple of those hearings and i was struck by the fact that jamie diamond was bored during these proceedings. There were numerous occasions where he was sitting back almost rolling his eyes while senators and congressmen were asking him these questions. Because there isnt this sense of urgency that any of this really matters to these guys because they dont have to feel individually the pain for anything that they do wrong. And diamond is just a classic example. Here is a company that was made sort of a symbol of corruption in the Financial Services sector. The department of justice and the Obama Administration superficially decided they were going to make an example out of chase and that led to this massive settlement, the 20 billion in fines. But how did chase pay for that . How did they handle that . First of all it only put a dent in half of their profits for the year. They still ended up in the black. But they laid off 7500 lower level employees and overall compensation for the upper level employees still increased at the end of the year. And the people primarily responsible like jamie diamond not only didnt suffer or lose their jobs, they got raises. You have to contrast this with what happens in other countries. Like in brain which wh we had the libor scandal which was this massive price fixing scandal involving the biggest banks in the world where they were manipulating interest rates, and they caught bark liss being involved with this. Essentially the bank of england basically told the c. E. O. Of barkleys that he had to go. His name is also diamond, bob diamond. And he was out. In the United States we cant just tell a guy he has to leave but jamie decimed still sitting there and sitting there with a raise. This is a tremendous difference in approach between the structure there and here. Mary joe white was here recently. Here is a clip of what she had to say and she talks about this very thing about whether or not they can bring criminal cases. Lets listen. The s. E. C. Did you want have the criminal powers and i certainly understand the call for accountability in the financial crisis. I mean lots of people obviously tremendously damaged and harmed. But one thing you have to step back as a Law Enforcement person, criminal or civil, what is the evidence and can you make a case and can you make a criminal case. And so i think its a matter of the s. E. C. In particular, i think has a very strong record. Were on and thats what she explained. What did you think of her answer . This is the answer that i get all the time. Its just really too hard. These cases are very difficult to prove. Its hard from the outside to say that there is enough toveed put somebody in jail. Here is my response to that. Lets take a case like sbc which bot got a 1. 9 billion settlement a year ago. And in that part of the deferred prosecution agreement for hsbc they admitted they had laundered 850 million for a pair of drug cartels. We are talking about not only did they commit minor financial infractions, were talk k about an organization that was operating at the top of the illegal narcotics pyramid. This is a major criminal enterprise and they admitted it. And if they didnt find the evidence to put those people in jail, thats on them. Thats a failure of the regulatory system. If you have somebody you know is guilty that has admitted they were guilty who are in league with truly dangerous and violent people in helping them out with the worst kind of behavior a bank can be involved with and nobody does a single day in jail, thats outrageous. But its even more outrageous when you look at it in comparison with who does go to jail in america and thats the people at the very bottom of the illegal pyramid. The consumers. People caught selling dime bags on the corner and they go to jail for real time. Five years, ten years. At the same time we are letting hsbc off with a total walk, nobody pays any individual penalty in that case. There was a racetrack owner in texas who got busted by the u. S. Attorneys office for laundering money for another mexican drug cartel. And that guy got a ton of years. He got like 15 years for his sentence. These are enormous discrep sis between 20 years and nothing, 15 years and nothing. Here is the other thing i would say about that over and over again with these settlements, we have situations where companies approximate pay massive fines, in the case of chase 13 billion, Goldman Sachs pace 550 million for their role in the scandal a couple of years ago. We have instances of companies that have liability in the hundreds of millions or billions and yet somehow there isnt enough evidence to prosecute criminally, to move ahead in a criminal case. That just maybe in one instance that might be true but it defice logic that you could have billions in liability and no criminal liability and not enough evidence of criminal linalt. I just dont believe it. A couple of weeks ago toyota was find over a billion dollars and seems like there have been a lot of fines in the billions for corporations. Is it unusual . Not just wall street, but this is another thing i talked about in the book. There are pharmaceutical companies. Just last year there were three enormous settlements with pharmaceutical companies for things like mismarketing drugs they knew to be dangerous for con sums by addless nts. And this is all part and parcel of this new strategy that is being employed by the regulatory structure and the justice department. And its an outgrowth of something that eric holder came up with called collateral consequences. There are lots of twists and turns to it. But what it comes down to is the government looks at these Big Companies that commit misdeeds and they say if we charge this company criminally, it might result in lots of job losses, in the current financial climate if we charge a bank, it might also result in a Chain Reaction of losses, a new financial crisis. So what we dont want to do is willie nilly go in and charge somebody criminally where there might be drastic consequence of that action. This has also more fed into were not going to charge the companies but were not charging individuals either from these companies. And decided instead on alternate forms of recourse and this tends to be very large fines. This is the way theyve decided to go. There has been a huge spike in collection of fines since the mid 2,000s and this really started after author anderson did the accounting company, the government filed a single felony count against them for the role in the enron scandal. Company went under. 27,000 jobs were lost and after that it sort of became a political given that charging companies of this size and of that importance with something you should only do in very very extreme circumstances and you should always seek some other form of recourse if you can. What mark would you give the New York Times or washington journal for their coverage of this same story . The New York Times has done great stuff. Theyve been on top of this story from the beginning. I think there is a growing awareness in the main stream media that this is a serious problem. And its something i talk about with other reporters from other organizations. You are starting to see more coverage of this. Last year front line did a documentary on this and that resulted in senators calling for more action. But when jamie diamond got the raise, that broke the camels back for a lot of reporters. They can see the rational for not yanking their bank charters, like hsbc they left the business in company when they clearly had the power to wipe them out. You can see the rational behind that. You dont want to destroy but somebody has to pay. . Where did you learn how to do what you do . Where did you learn how to figure out what is going on . And how many lawyers did you have to have to vet this book . First of all, lawyers were a lot of my sources for this book. A lot of the stories that i write about in the divide were legal stories. They are arcane financial tails of a company that was for instance and you tack by a series of short sellers and they nearly go out of business and they try for years and years to get the regulatory system interested in protecting them and they cant danny . So lawyers for Companies Like that will reach out to me and they will walk me through the whole process and i have to go through the whole process of finding out what is true and what isnt and reading all the evidence. But lawyers, its a difficult thing. And this is another one of the problems with this story is that its very difficult for sort of nonfinancial journalists to get up to speed on a lot of these issues quickly. You have to make a commitment of significant time, for instance to understand the libor scandal. That is something you arent going to get in a day. Its going to take a while. You dont have that in modern news. You only have a few hours and thats one of the problems. I want to show video of your father. Those who watch television may know who he is. I want you to talk about what influbse he may have on you. Here is mike. . Hes covering the Michael Jackson trial. How much do you talk . I was there with him. I covered the Michael Jackson trial too for Rolling Stone back then. My father was an enormous influence on me. Hes very old school. I talk about this a lot. I grew up around journalists my entire life. When i was a boy all of the people i knew were journalists or cameramen or photographers. At the journalism, the peop