sense it whole to reestablish it. it was absolved under ataturk at the beginning of the 20th century in various sunni military groups over the course of the past decade had attempted her claim to want to restore this, but none have done it until isis this past summer. so that is one thing that makes them unique. the alleged realization of the goal of reestablishing the caliphate. the second thing that made them very unique in my eyes connected intimately to the first is that as a group that wages transnational jihads, it is a holding territory. this is the nature of the caliphate. unlike al qaeda responsible for september 11th attacks, these groups for the most part did not have an interest in state building. isis is quite the office said. caliphates and that is what make isis special.

>> yours look at some of the upcoming book fairs and festivals happening around the country. all this weekend, life in the texas book festival in austin. happening this weekend as the boston book festival to look for coverage in the coming weeks. ..

the program is about an hour. >> host: hi and welcome. i'm nomi prins. i'm here today with jake halpern, the author of a fascinating and horrifying new book "ba "bad paper: chasing dt from wall street to the underworld." cheka, welcome. >> guest: thanks for having me. >> host: this book is incredible. and so was your story. i think the to really mirror each other. this takes place in buffalo, new york, a lot of it. you're from there, argue? >> guest: that's right. i grew up there. like that and his wife still live there. i go back there fairly often and so i find my way in this world. >> host: you talk about a particular, many unsavory characters that are scrambling to make their own peace of the world and often have prison records and have been drug dealers and so forth. there's a fellow named jimmy that comes out here that seems

to be one of the main characters of this nonfiction story. to to talk to me about how you connected with him? >> guest: the way this got started was, i talked my mom years back and she told me she was hounded by debt collector. she said i don't owe the money he says i owe, but i think i'm going to pay them just so he will stop harassing me. which by mom is like -- i thought, this was bizarre. i started googling and so there was a lot of this kind of going on and that actually the epicenter debt collection in general in the united states was buffalo, or the state. i had in my head i had to do story actually from a collector's perspective and what's it like to collect debt, what are the challenges, what is your life like? i pitched the story to "the new yorker" just bare bones and what do you think about this. i'm from buffalo, i could probably get someone to talk to me. my editor said great, 5000

words. i panicked because i had nothing. i went to buffalo once and no one would talk to me basically. i want a second time and i still had nothing. so i started to panic because i was on hook for this story. i went on facebook and i sent messages to everyone i went to high school with. then everyone might rather want to high school with and i get one message back from this guy, jimmy's brother, i got you me on the phone and he said to me basically, you better get in a quick if you want to talk to me because my business has been struggling at a don't know how much longer i will be open. but if you can show folks how hard my day-to-day life is i would be satisfied. so i hopped down to buffalo, showed up, and gene was immediately one of these amazing characters, eloquent, and a driving around in his car with him and going to church with them in many his family. that becomes my entry point into

this world. >> host: he had a struggle. you knew him growing up as well. you knew him through a set of correspondence through facebook and so forth. what is your history in buffalo. what's the atmosphere, how it's changed from what you knew growing up and in your childhood to the kind of place that is one of the capitals, right, of debt collection in the united states? >> guest: yeah. soboba was once this big industrial powerhouse, had all the steel mills and industries starting in the late '70s and early '80s basically when i was a kid. that all starts to fall apart. unemployment goes through the roof. in place of a lot of these old industrial jobs, collections kind of fill that void. some adobe buffalo is so good at collections that even though the country been integrate recession since 2008, buffalo has been since 1979 and people can connect with people who are having hard times. when i was a teenager even, this was starting to kind of take

form, but a don't think i really knew about it. even though i went to high school with the jimmy, we went ahead same high school and is supposed been integrate high school. we came from opposite sides of the main street. i didn't have a sense of what really life live on the side of buffalo was like or what she was going through her even though we could talk but having the same english teacher. it was like we're from totally different worlds and it wasn't i started reporting this story, i learned in high school his father was heroin addict. after high school he became a cocaine dealer, have gone to jail on a gun possession and allies could not have been more of a diversion. >> host: he is the entry point into the rest of the story. he has an interesting component of this story for something you call a packet which seems to be the crux of what you are chasing and what the debt collectors are effectively chasing an evolving in the book. can you talk but his

relationship? what the packages and have it open up the rest of this amazing story? >> yes. that package is this one piece of debt that i follow through the book. itself leading to understand when i talk about debt that is being bought and sold, we're talking about an excel spreadsheet. yet the big banks or creditors and they try for six months to collect on the debt. when they can't it will typically sold off for pennies on the dollar to debt buyers. those debt buyers will collect whatever they can and sell to the next, the next and the next. what they're selling is a spreadsheet, bare bones. >> host: information on the balances, where they live? >> guest: you look at the spreadsheet will have the debtor's name, social security number, address, balance, date the account was opened to made one or two of the fields but that's basically about it. they are being bought and sold by e-mail, sent by thumb drive.

that is the paper to a college paper but that's all it is. if you can imagine it doesn't take much for something to go wrong, for some of fields to get mixed up, the amounts, editors name to get confused over someone to sell the same excel spreadsheet to multiple unsuspecting buyers who are all collecting on it at once. so when my book i follow the package, what i call the package, this one piece of debt that is about $48 million in its face value of which is bought for pennies on the dollar by aaron siegel. happens is this gets stolen. somehow erin finds out from his collector, they start calling and saying something weird is going on with these accounts. it appears somebody else has access this information and is collecting the money from the debtors on the package before we get to them. so at that point he called his

fixer who was a guy named brandon wilson, an unofficial partner who is a former bank robber got into this business, help them buy and sell debt but also helps them solve these sorts of problems and its brandon who then goes and tracks down the thieves who have gotten hold of this debt and retrieved it. we can talk about the crazy showdown with the guns and they get it back. but the world in which he must go to directory that debt, that's the world jimmy and habits which is this kind of gray area of legality, kind of underworld of buying and selling debt in a sketchy minute that exists in buffalo and in other places. >> host: this underworld has that hierarchy you mention. you have sort of former thugs to large extent at the bottom level getting some of this paper that is perhaps being sold and resold. you have to talk about how paper is being stolen as well and then have sort of a level up through

aaron. he seems an interesting character to me. i would like you to talk about how you got to him through june and also the package, and also he wasn't a thug. he grew up on the good side of buffalo, right? he had a wealthy family upbringing. lived in a mansion. how did he come into the same business? >> guest: the story, the way i tell the story in the book as it starts with this guy aaron siegel, and he grew up a wealthy and very well known and well respected family in buffalo. goes to wall street for a while as a banker. even does some time in london and decides he wants to come home to be closer to his family. he ends up working in an office for bank of america in buffalo. around the time he comes back what's happened is that throughout buffalo entrepreneur's are buying some debt, buying this paper, spreadsheets and opening a shop where they hire a bunch of collectors. the profit margin, this is right before the great recession

happened. his profit margins initially went through the roof. he is like buying a portfolio debt for 30 grand and in three months making 90 grand. he realizes he has found this amazing little niche of the finance world. and his supply, the key to much of his success is he has a supply who is supplying him with this paper at a really great price that's really lucrative. the weird thing about the supply is he's this former armed robber who has been 10 years in prison but has reinvented himself as a debt broker who has a genius for finding paper that is very collectible and isn't that expensive to buy. even though aaron comes from this more rarefied world and has this banking past, he understands in this sector the, it's not unusual to have some kind of shady or connections, so he and brandon on this unlikely

friendship, a partnership, and that's the starting point for the book and for the start. >> host: you talk about how when you're looking for this paper, looking for through brandon, he buys a port folio from his old firm, from bank of america that you talk about being not so great a portfolio but for reasons other than the fact it's been stolen and moved around the block many times. >> guest: the irony is aaron, the key to making a profit margin in this world is getting the paper. everyone is hunting for good paper. when he buys from his former employer, bank of america, you would think this would be a respectable and dependable as it could be. he feels the bank of america really pulls a fast one on you because he spends all this money, millions, buying this piece of that from bank of america and it turns out they are almost all senior citizens which of the smallest amount of disposable income. he thinks bank of america failed him by the former armed robber

brandon that he does business with china comes through for him anyway that his former employer doesn't. >> host: what does he do? >> guest: he's behind the eight ball when he buys his bank of america paper and it's all senior citizens. he feels he can't come he's not going to be able to turn a profit because he is invested all this money into. so he goes back to brandon and brandon special is finding what he calls crap, and crap in his definition of it is old debt that is when things is worthless because it's been around the block a few times, it's been bought and sold a bunch, 10 to 15 years old but it still pays because maybe he was sitting in a call-center in brazil for five years and no one was working it, or maybe it comes from a debt buyer it's about to go under and needs to sell it off cheaply. brandon would find these deals on this paper. so after aaron buys this stuff from bank of america that puts them into a ball, he turns to brandon and says you've got to come through for me and help me

find these deals on this crap and other stuff that you find. in the package which we talked about before which is this piece of data that gets stolen, the package is fantastic paper for aaron. it's really, really good. if he doesn't a lot for it. is paying off for him and then, of course, it gets stolen and he's like, all right, brandon, go fix this. >> host: how does aaron, put the money to buy the package? he did okay. yet a banking job. he went back to buffalo. who is behind the funding for initial purchases of some of these packages at the aaron level? >> guest: errands star asian he's a banker, india, comes back to buffalo, sets up his own small collection agency and with brandon self is getting his paper that is really paying huge dividends. like any good financier, but if i do this on a much larger scale? so he makes a few phone calls, finds eight investors to give

him $14 million to do it while run. the thinking is et continue with his $14 million what he's done with his own money, 300% returns and what not, then he will do it even bigger for the 14,000,014,000,000, a second round with 40 million bigger and bigger. the problem is that, there are severasober problems, one of whe great recession occurs, and then encounters many problems along the way including the theft of some of this paper, which i chronicled in the book. >> host: so basically before that o are while that's happenig he is in a hole. these out some about. he's got investors on the other side, they want their money back. you visited a couple of these investors. what was their stake in this and how much were they pressuring him and how much was it a portion of their own money? how much do they even care about what happened really? >> guest: it's funny because i did want to meet some of his

investors and get a sense for what their take on this was. i went out to dinner one night with one of them. the first thing you have to understand is there's this strange sequence of events. the debtors are owing brandon who is collecting on the brandon is getting the money he owes aaron who is organizing the fun. aaron owes the investors who gave him the money. everyone is beholden to -- i don't is connected. so when aaron goes to meet one of these investors, joseph, he's totally anxious because he feels he has failed the sky and owes him money. it turns out joseph gses this almost, he's just popped a million dollars but he's put money into tanning salons and bars. for him, aaron said, he was hoping it would pay off but it's almost like an amusement. when we are having dinner with joseph, i said do you ever think about basically the people whose debt you are buying? and he said, no. why should i?

they made bad financial choices. isn't my fault for wanting to profit on a? he makes the analogy to a baseball game to if a pitcher pitches a bad pitch and the batter knocks a triple, you know, is the batter some of wrong for taking advantage of the package? that was joseph's feeling about the whole situation. but it was kind of crazy to think that, i met some of the debtors and a poor single woman living in st. louis connected to this, former armed robber from boston connected to this, and all of their lives are connected by this chain of it that none of them really know one another. that whole aspect fascinated and. >> host: the way to write about it is so clear. it's like we are there in your writing. you're an excellent writer and that helps to bring alive these

characters and also vote locations of which are meeting some of these people. you have got around to meet some the top of the chain down to the bottom of the chain, the individuals that get really hurt and rolled over in this process. yet you talk at some specific individuals that are just numbers in this package. they have real lives and you went and investigated this book with some of the. he mentioned a woman named theresa, another woman named joanna who are at one point taking a credit and paying them. it. things can happen and they got involved in this whole for tex. what was that about? >> guest: you are right. what's being bought and sold, it's easy to think of it almost some sort of commodities like coffee sure something because you're looking at these strength iof numbers on the sheets and there's thousands investment made in this one didn't they. utah's and you think that this packet of several thousand lines of excel spreadsheet are basically several thousand stories, people whose lives are one reason or another have

fallen into financial ruins. i managed to get a hold of this spreadsheet, the package that got stolen and that's looking at it and thinking to myself, these are stories. these names and numbers represent something that's happened. i started kind of reaching out to some of these people and explaining, i'm a journalist, i'm looking into this particular piece of debt that will stolen and they want to get you store the most people just hung up on me, but i feel profiled in the book talked. what they said, theresa, the woman you mention, was a former marine. she defies whatever stereotype you have added a. she had worked right through high school. helped her parents pay off the mortgage. her life comes apart after she gets out of the marine corps. she finds out her husband is cheating on her but she kicks him out of the house. all of a sudden she goes from two incomes to one he can. she still in the hook for the vehicle pam and her mortgage and she falls behind on their bills. at that point she stops, the

fees start kicking in on this washington mutual card, which is the card that was connected to the package. late-season over the limit fees, and eventually she just can't pay anymore. unbeknownst to her washington mutual sells off this debt to debt buyer and ends up in aarons siegal sansone bubble and then ends up being stolen and in the hands of these guys that don't actually own it. so when they theresa did know but this one day she gets a call and says, you are this money and you need to pay this right now or they will be legal repercussions. this is your chance to do. the calls getting these life-threatening. meanwhile, trees has a job working affordable in the southwest and she doesn't have her credit in order, it's hard of a job like that because you could be blackmailed or there's liability, right? these things and going to lose my job, what am i going to do? i'm just going to pay. she agreed to pay $2700 off

several installments. she feels good about it that she's getting a top of it but when she makes the last time and she's expected to get some sort of receipt for what she paid, there's nothing. when she checks with the credit reporting agencies, there's no record. she has no idea. she essential thing -- by would you assume otherwise? they had all their information but she the people who stole her death. these are some of people that aaron and brandon realized are paying the wrong guy. you're right. each one of these names on this package of debt that gets stolen are real people and mistakes --h higher. >> host: is seems there are so few rules or regulators to cover all of these different points that you talk about, debt moving back and forth when it does. people like teresa don't know what's going on. they are just afraid. they're paying because of the phone call to what kind of

tactics are coming from the other side of the phone call? almost a third of americans are in debt right now, or in collection? so they may be getting these phone calls from some of these people that you talk about in your book. what is that like? >> guest: you're right, absolutely. about a third of americans on debt collection. when you get called by debt collector basically what you get is the talk off. the talk of the is the collector the one in trying to persuade you to open your wallet and pay your bill. so there's legal talk off, illegal talk off and disagree a bit illegal talk off is just talking but this is information, you of this month from this is your social security. how can we arrange this? you have to do this. the illegal tactics are when they're basically threatening and line to consumers saying we're going to take legal action, and that is not true. we're going to go arrest you. we will seize your property.

lies and coercion and threats like that are not legal, and that happens a fair amount if you think about and, it happens towards the bottom of the debt reaching. so you have this piece of debt that the banks sell off to a reputable debt buyer. they don't need to do that to get the money out of fairly quickly. it when that debt has been bought and sold six or seven times, what it has whittled down to the folks who haven't paid any of the previous six owners. the people who get that debt are usually the people at the very bottom of the food chain, and that's with almost feel they have to make these very threatening calls and illegal tactics in order to kind of squeeze the money out of folks. there's often, these are the small agencies that opened up. they do it and they close back down and open up somewhere else, he for the get caught by the authorities. i just want to make one other point, which is that there's not a lot of regulation and law enforcement. it's changing.

consumer financial protection bureau is to renew your more into this space but within last budget year was a bit much regulation. that helps explain why a banker of like aaron we came up with a former armed robber like brandon because not only is breaking getting that paper, brandon is offering a service that regulators and law enforcement can't, which is when something goes wrong, i will solve this problem for you. because calling the police and calling the state attorney general calling to see if pbs not going to get it done. you need me to straighten it out. i think aaron saw the truth in that. >> host: you make the comparison in fact, you have desperate people in one side are trying at the bottom of the food chain to collect debt and have desperate individuals who are getting phone calls and are paying because it sounds scary. there are little regulations of particularly at the bottom part of this chain. so what recourse do some of these individuals have, or what

can they do besides -- where did they complain? if they paid on the debt but it's gone too no one. it's gone the basically some of these people. >> guest: i was sitting in a shop, sitting in jimmy's shop onwithin buffalo, this was years ago and i was listening to the calls between the collectors and the debtors. that guy gets on the phone and jimmy is going to collect and says hey, you all money on this payday loan to the guy said i just paid this loan off three months ago. i paid $900. by the way, that's probably a $300 loan. jimmy said can you send me written proof with a receipt from that agency showing the proof? a guy said, i never got that. jimmy said, sir, i'm afraid you still of the money. he turned to me and said this is the only way i know that that guy is telling the truth. if i just forget every day that said they paid, i wouldn't be in business.

but you got a sense of the frantic this on the kind of into the line who sounded fairly earnest debate is often didn't sound like you have much recourse. i think the calls will continue into you pay kind of thing. there are one or two things that are helpful for consumers to know. one which is know what the statute of limitations in your state is for when the deck is no longer legally enforceable. it varies from three to six years. if you're getting a call on the debt that is four years old and the statute of limitations in your state is three years old, then you have no legal obligation to repay that debt. the other thing is after seven years, most negative reporting falls off your credit report. >> host: is it safe to say that's very interesting i think information for anyone out there getting these calls, is it safe to say if he did get a call on any level of the threatening after five or six years about the debt back then, is it safe to say you should ignore that all?

>> guest: you may be a moral obligation but i would be very, if it were me i would probably think twice about returning it if i know in a your typical of my credit report rating because it's been seven years, or if there's no legal recourse because it's beyond the statute of limitation to the other thing i would just say is i want to make sure the person on the other end of the phone actually owned the debt. the problem is there's not an easy way to figure that out but you could get the name of the company, check them out on the better business bureau website and get essential whether this seems like a reputable company or not. >> host: you actually were on a call as part of your research for this book. you are actually in one of these collection centers and got on the phone to sort of feel like what it was to be debt collector and have that conversation with the person at the other end of the phone. what was that like treachery i was at brandon's collection agency, i grew up in bangor,

maine, and i was just observing. he said to me, look, you've got to get on the phone. you can observe all you want but you will not understand what this job is like unless you collect. i was kind of reluctant for a few reasons, one of which i just didn't want to hound people. but the other collectors who worked for him kind of a rainy me and saying you've got to try this but i said all right. so they gave me headset. i sat in front of one of these terminals. they had it on autodialer so debtors whose content information has been verified, which was read to me. the first call came to me and it was a woman who owed i think like $400 on her cell phone bill. i said something like, ma'am, i see you owe this $900 with interest but we can give you a reduced rate to would you consider paying this? and i myself say, i thought, i wouldn't pay me. that such a weak opening gambit. and eventually we are talking and i'm trying -- brandon is

trying to marry the dead of which have have empathy, what's going on with you in your life? you are working, and we'll have some sort of connection that she will feel like she could open up and trust me. i'm trying to do this, and at one point she says, well, maybe i could write you a check, but i don't like seize on that right away because i'm trying to marry her. in she hangs up and brandon is right behind me playing coach, and he's like, look, you failed at this not because you didn't collect. he failed under because at the moment she offered to make that check, you should have said okay, so you're going to send me that check? yes. and you're going to sin in the middle of the month? yes. and brandon psychology the minute that she promised to make the payment, we had kind of gotten her. because she committed to this and now we could use of that the next time we called her.

into, so there's a few calls. i was a very bad collector but i realized at the end was i could afford to be a bad collector. like, i'm married to doctor. i make a decent living as a writer. that if i were desperate like some of these collectors, i would have gotten wise quick to what it would've had say to make folks they. >> host: they are desperate. they are like sharks. that is basically what you depicted here in a very clear manner. >> guest: there some collectors that do well for themselves and work it more these white glove customer service type places but a lot of collectors are pretty desperate. ..

>> you talk about this underworld in buffalo and getting on the phone and dealing with that sort of status kerrick yours. and you also talk about another pillar of debt collection world, which is las vegas. and you went there to do investigation therein to deal with some of these individuals and discover new things they are. what was that like quiet >> guest: right, so i wanted to see how brandon wilson was spotting this debt. brandon is the former armed robber who works for barrett and assigning these deals on paper in those deals are keyed of making the profit margin. in the course of talking to

brandon he said las vegas. every february there's a debt buyers convention and i go there and help for deals. i asked him can i tag along with? he said sure. in february 2013 effluent to vegas and spent several days with brandon as he was on the prowl for these deals. he wanted to get a few buckets of debt that he could then bring home with it either to work at his own collection agency or he could then flip himself to other folks. it was interesting because when we arrived there that year, the market for debt is changing for two reasons. one was the regulators were finally starting to crack down a little bit and that was make even some of the banks nervous about who was getting a hold of their debt. the other thing is certain the credit boom of 2000, everyone was getting a load. now all of a sudden after the recession, people are becoming -- predators are more careful about who they issue

credit due. the cost of buying the bad accounts that no one collects on goes out. so while this net brand and had to work that much harder to find these deals. when he was bair, he was hunting for this paper that he called the rink on paper. he wanted to tell you about that? post go yeah, that's a really interesting story. >> guest: the word on the hotel streaker lobbyist there is a parcel of debt that everyone is going to bring on paper. it is debt that belonged to an agency out of california that the federal trade commission shut down because they were doing all sorts of illegal stuff and collect a nonthreatening. after they shut down this agency, its assets went into a court-appointed receiver. the same way you would see a drug dealer's car and auction it off to raise revenue cover the same thing happened.

the asset of this company had were largely paper. the debt they were collecting on. but now basically this court-appointed receiver with auctioning off this paper and never was trying to figure out how much is this worth? is a big piece of that. so going with brandon and he's doing his intelligence, talking to folks. what is the word on this? how much did you pay for? would you pay 1 dollar, that kind of thing. i am within one day when he meets this woman who was another debt worker. brandon wants to talk to her because she used to sell debt and she was intimately familiar with the workings of the company. she said don't riot. brandon says i kind of -- i had a bad feeling about it, but why are you saying i shouldn't buy your? she said well, i have reliable information from the people that some of that data was stolen after the offices were shut

down. and what is more than some of the chains of title proven legitimate owner set up is not there. i have this information she claimed directly from people inside of rink on. if you buy the debt committee will be in a world of trouble because particularly if it was stolen, that means someone else could be working the same paper you own. so i eventually called up someone at the federal trade commission and they said is that possible some of this paper was stolen after the offices were shut down. they basically said to me i can't tell you 100% certainty is an employee didn't out the door before we shut that down. so then i went and i looked at the terms of sale that the court was saying. if you want to buy this paper, this is the agreement -- the contracts you have to agree. the contract said an pretty clear language, we are making no warranties or guarantees about the accuracy or the validity of this paper that is being sold.

so basically, to sum this, to somersaulting upcoming of the federal regulatory agency shutting down a bad actor in the business, handing over its assets, is paper and then there's an auction and they are selling off the. the reason to believe that at least possibly they are selling paper that's been stolen. it was kind of mind-boggling these are the people meant to be cracking down in solving problems by inadvertently creating problems. in the end, ran into side he just doesn't want to make a big on this paper owned and controlled by this court-appointed receiver. >> host: i find that horrifying that the is taking a paper, not doing anything with respect to the debtors that are involved on the other side of that paper because they don't know what is going on. they don't know what has been

shot and on to somewhere else. and they could conceivably, whether it's for that paper or other paper beginning calls from collection agencies the body, so it, whatever, that they've never heard of, never had a transaction with. you mentioned jason washington mutual as to banks at the top of the food chain florida have papers different from the ring comic sample. at some point, chase stops selling it that because of regulations that have come into effect after the financial crisis with the dog free at. how does that impact the other motives they could have been killing what i'm also to impact the whole chain of other characters that were bought and debt collection. >> guest: right. the title of the book is "bad paper." that paper is paper there's problems with it makes it hard

to collect. there's a lot of bad paper because washington mutual has now been out jay's or bank of america for years have put spreadsheets out and not a particularly careful organized by two debt buyers. the contracts that these banks create when they fell to the debt buyers clearly have these crazy warranties and i'm saying we make no guarantee about the accuracy of this information. there's all kinds of problems with it and i saw that firsthand with the people connected to the package in the book. just to give you one quick example, there was a woman connected to this package is debt after going through the whole circus on what happened in buffalo ends up in georgia. it appears that our credit report she's in danger of being sued over it. i meet with this woman and they say what is the story quiet she says i was hoping you could tell

me. i don't reckon i this washington mutual debt that i supposedly owe. so i said okay, there's got to be an easy solution here. a call chase bank, and i sent directly what is going on with this debt you don't recognize. so i call up a spokesman and i say i have this woman right here. her name is julie. she doesn't recognize the debt committee and outcome anything like that. can you help us clarify because the missus told us it it appears that was done in the mistakes are wet. he calls back and says jay, we decided we're going to write up julie's dad as fraud. we have the underlying documentation. there's some statements that they didn't have the original sign contractor proof was paying the debt.

he said well, when chase acquired a very rapid process and information was lost. that is one of the largest financial acquisitions in recent history and you're talking about a pillar of the financial world recently saying, you know what, we don't have paperwork. so the mistakes being made that makes this paperback aren't just happening at the very bottom of the food chain, where you have buffalo. there's reason to believe it's happening at the highest levels of finance and my assumption going into this is not necessarily assumption to make. >> you coming up at this entire story is one of the reasons the writing is so clear. you're coming not it from sort of financial component, but really from the ground up and the individual and how people

are impacted. the stories that surrounded the washington mutual chase merger and everything happening during the financial crisis during 2008 has come into focus with being about this frame happening with mortgages. with attachments to mortgage loan speed mosque, and all sorts of those kinds of things. you actually bring up this is going on and has been going on not just in mortgages, but throughout this entire credit spectrum with credit cards and other types of debt as well. >> that's right. at this point, people know that there is a lot of funny business going on with the way mortgages were issued, the way their the way there about and sold them for close upon and i think there's been a lot less attention to this idea of consumer debt, whether it's credit card debt or payday loan.

where you see this in some ways most strikingly is when we get to the court, where we get towards the end of the book. so basically all those folks that are calling, the debt collector saying you got to pay this are basically relying on the talk off to convince you to pay. if they can't do that, often it ends up in the hands of lawyers who didn't see one that debt. this is where it goes with the chord in many of the same issues they've had with robo signing of the mortgages, they are having similar issues in corporate credit cards. because basically, the lawyer suing on this debt, the evidence they have is fairly thin. there's problems with the excel spreadsheets. but what has happened is there's a 90% no-show rate with consumers in quarter. so if you think about it here, just to make a simple, i am a guy, jake, can pay my credit card. debt collectors call me up. they bought and sold my data.

i still can't pay it. eventually they bring in lawyers and the lawyer sammy for this amount. now most likely what they are saying is much harder than the original principal balance, three times higher because of the high interest rate. so if i go to court, i can challenge that is the word you get this number? what is the breakdown of the insurance principal? 90% of americans don't show up in court. they either don't understand what it means not to show up there or they feel there is no point. what happened is these numbers on the excel spreadsheet that are highly suspect to begin with then get scammed by the court and it becomes a judgment against you. and then come to your creditor cannot garnish your wages. they don't have to call you up and make you to pay. they can go to your bank account, clean it out. this is happening. there's a new study out by npr that shows that 10% of americans

between 35 and 45 are having their wages garnished every week. so that is what is happening. >> host: that is astonishing. so you basically given in this book in this interview to very important pieces of advice for consumers out there who are involved in this debt collection process. one of someone calls about a dead that is over a certain period of time time he should be very suspect about that call and likely ignore it. and also as you mentioned, you should show up in court because you have a much better chance of writing whatever wrong you've been involved in if you simply don't show up in it goes against you. >> guest: that is totally true. postcode data in yourself is the justice you provided in "bad paper" two i think the entire american public gets the thank you for that. so you were in quarter.

i'm the kind of history that georgia has in the tatters present and the tatters idea of reinstitution and all sorts of things. you actually stood by some of these people. >> yeah, interesting. the history was originally georgia was conceived as utopia that would rehabilitate debtors. they would come to the new world and get a fresh start and get out of the chains of dad and rebuild their lives. there is this kind of very upbeat, optimistic view of reinvention, but the irony is that it's really not the case in america these days. we hear a lot about about how americans can declare bankruptcy and get out of baghdad. but there's lots of people who just have horrible credit rating, and therefore pay higher rates on all kinds of loans they take out. they have their wages garnished,

checking accounts cleared out. it's quite a contrast to this utopian vision that originally founded the state of georgia. the other part of your question, which is going to court and there is a fairly funny thing that happened to me, which is i wanted to actually see what this process was like. so i followed a package of dead in the book and i went to the courthouse for some of the tatters of the package had been through. and it showed up just in trying to get it. so i'm waiting outside the courtroom and i start talking with this couple who is being sued over a credit card that and they don't recognize the people that claim to own the dead, but the creditor's name doesn't ring a bell for them in the amount doesn't make sense and there's no documentation about the breakdown of the amount. we are trying to figure it out and this guy calls out their name. the young lawyer outside of the courtroom calls out their name and a walk over there and he says to them, i represent the people that own your data.

luscious settle this right now we can work out an agreement. you can pay me and we don't need to go before the judge. he then reaches into his briefcase and pulled out the document that looks like a credit card statement, but a mockup of a credit card statement as the amount they owe, name, address and the bold print that says this is not an actual credit card statement. so they are kind of looking at this then they start talking to this lawyer and at some point along the way i pipe up and i say, do you have any documentation to prove that you do in fact on this debt or any further information that gives a breakdown of the debt? he says to me, are you a lawyer? i said no, i'm just writing a book. he said you can't represent them. in fact, as this escalates coming it says i will take you in front of the judge. so i returned to the courtroom at this couple and the judge

calls arrested and then the judge calls me up as well and we get sworn in together, and to kind of like we are co-defendants. so i was more name and the lawyer who is suing on this dead perceives of his opening argument and says, mr. halpern here is practicing law without a license and your honor, can you please tell him he can face criminal sanctions for doing it? i say your honor, i just asked the question. i'm trying to figure out the folks i met about 15 minutes ago. so this goes on back and forth for a little bit and finally the judge says to his lawyer, what do you want to do about the matter is that this woman knows? he said that may consult with my client. he makes a phone call, comes back of his your honor, we are going to drop the case. at this point, we are looking at each other like what just happened. we walk out into the hallway and there was the guy they are and

he says basically to us, i will tell you what just happened. you said the magic word and the magic words are cooed your case. in other words, this couple simply by showing up in court and pressing back just a little bit asking for the barest, thinnest amount of evidence of legitimacy of this debt in the detailed information of this debt was enough to make the person suing them back off and the whole thing kind of crumbled. and it was this moment where it was so funny. i've been chasing this excel spreadsheet through the streets of buffalo, down in the courts in georgia and the moment it comes even under the faintest bit of scrutiny it's like it just vanishes into nothing. postcode that is amazing. you mentioned earlier that the whole chasing of paper and the whole jealous myth of the debt collection got to a larger height during the great recession to the financial

crisis because people simply have less money to pay and more debts they had accumulated. you talk about returning the shadow for those people, which i find interesting. when we use the term shadow banking, usually it's about hedge funds and tax-sheltered tapings. the economy is something different. it is something you discuss with respect to the people in the bottom of this. i want to know if you can type it out for you think how that will evolve going forward from where we are now. >> host: the way we stumbled into this when i was in charge a been looking at these debtors who are basically been sued in court over this debt. i wanted to get a sense of what their lives were like. one of them told me that she bought her car from a special car dealership that offered -- catered almost exclusively to people with bad credit.

so i went out to this dealership in what became clear is that they were paying an enormous premium for their bad credit. in the words of this car dealer amid their money was worth about 70 cents on the dollar and the car they should've cost $9000 is going to cost $13,000. in fact, another debtor actually had his bank account cleaned out. he was one of these guys if there was a judgment imposed against them, they found him and cleaned out every cent he had in his savings account, which would then cause him to default on his car payment, which then could cause them to get to work in his particular situation if he had a device from a gps device on the engine of his car so the moment he went into default on this car loan he was paid his premium on, boom, the engine would shut off in his car would be stuck at the side of the road. so this is the world people

inhabit whoever loopback credit. i went and visited this housing complex for his basically all people who had very bad credit. they live in this world where they are paying the highest possible rates of interest. there's basically no trust. creditors don't trust they will pay the bills, so they get stuck with this. on the one hand, you can understand from a creditor's perspective it's also pretty hard to see people who are so poor having much of their income devoured by interest and they are the ones that are getting the most gouged by this. >> host: when you talk to the ftc or consumer protection board, have you gotten a sense that this is an issue whatsoever at all that they are trying to do some pain about helping other people on this side of the circuit and also just generally. the fact there are such heinous

interest rates and payday loans on credits cards that get imposed on people that have the least ability to pay. one instance, which was very logical where one of the people in your book says we haven't been hit with the extra charge, the extra rate. i would've been able to pay this. we could have negotiated your desk at a ball not the machine a shadowy underworld financial staff. do you sense any understanding of trying to get to the root of this matter is the washington mobile? >> guest: yes, the consumer protection bureau, which was kind of the brainchild of now senator elizabeth warren was a good move and they are starting to make a difference in this state. and they are going to have new rules coming in about a year that will affect that collection and they've been aggressive. i mean, if i were in charge of it gives them more funding. a lot of this is going to come down to how much resources a

half to kind of go after the bad act or spirit or consumer financial protection bureau might have a budget of four or $500 billion. to put this in his come if you look at the amount of money that jpmorgan chase set aside for litigation reserves in 2013, the money they put aside to defend themselves, the consumer financial protection bureau's budget is 2% of that. so you get the sense that they are doing good work, but they are kind of outgunned here. i think that, you know, hopefully if anything comes, i hope it is a call to arms to give him a shot in the arm. i was on the phone the other day with the justice department. they have this operation, this initiative called operation chokepoint. the idea behind this is it is hard to go after the payday lenders that do the worst fears

of what the justice department has threatened to do is go after the payment processors. so if i'm the payday collection agency and i'm doing bad stuff, i still have to rely on a payment processor to take your credit card or debit card information and the justice department has started to say, hey, payment processors, and if you are dealing with these unscrupulous payday lenders, we are going to go after you. there has been pushed back after that because there is a strong payday loan lobbying presence in debt that is pushing back against this. but i think that you need initiatives like that on a larger scale if you're going to see the change that is happening to clean up the industry. >> and hopefully yes, in reading your book, that change is made up well and that will kind of be a catalyst to at least increase the funding and look at these sorts of games. the end of your book and i guess the answer of how many years of

research? >> guest: in one fashion or another it's been about four years. >> host: at the end you go back to buffalo and kind into an applet on the characters come and individuals involved individuals involved on the debt collection side and kind of see where they are at the end of the most recent period of time. what was that like white >> guest: the most surprising thing i encountered in readiness that that that the epilogue was what i found for i found from teresa, who is the former marine if you remember and she's the one that paid the wrong collector, the collector that i'm how got a hold of her dad. so i was curious about how she was doing and just as the book was about ready to go with the final version, she called me up and said you're not going to believe this, but i just got a call from another collector on the same data, which was puzzling because when erin siegel, the rightful owner of it

had discovered there had been fraud, he did the right in, which was retire the debt. he didn't sell it. he put it on the hard drive and they rest in peace in theory. and yet, someone was collecting on this debt still. so i called the agency. i wrote them a letter actually that had contacted teresa and i said i am inquiring about this cause the ua sending to this woman because they are threatening to sue her. what is your claim to ownership of this debt? i didn't think i would hear from anyone. i thought if i did hear from someone, i would hear from someone at some chop shop in buffalo or something. turns out i talked to a guy, the owner lived in beverly hills. he's doing very well for himself. when i asked about his commie kindnesses let me look into this. oh yeah, this debt belongs to a portfolio debt that i purchased from a debt broker in florida

that was double sold and a lot of the numbers have been manipulated, all these problems with it. his attitude was not shot, the kind of like this is par for the course in this business. you are just purchasing data and you never know what you're purchasing. it was kind of a chilling and to the whole thing because of course you are not just purchasing data. you are purchasing the right to collect on people's deaths in a profoundly affect their lives. somehow or another whoever stole it from erin must have sold it to someone else as well in today's day day, teresa's dad is just floating around in cyberspace and someone else will buy it and try to collect on it. somehow that more than anything else just kind of seemed to speak to the chaos of the dysfunctionality of this

industry. >> host: so if you had to give one knife edge to consumers and to regulators to fix this, what is the take away? >> guest: i think the consumers is you have to be skeptical of who is calling you on the phone and you can't assume blindly they have legitimate claims and the debt they are asking for is in fact accurate and you have to do their homework and make sure they're so legal obligation to pay this debt. the equivalent of driving defensively with your financial reaction to these calls. on the larger level there's a few things that can happen. one is that there used to be better enforcement, more resources for places like this financial protection bureau. two is the banks had to be more careful about what they pass along to make sure the information is collected all the documentation is supposed to be. ..

>> that was afterwards, booktv signature program to which authors of the latest nonfiction books are interviewed by journalists, public policymakers and others familiar with the material. after words airs every weekend on booktv t