This week I interviewed Bethany McLean, co-author of the newly released book, All The Devils Are Here. As you may remember, Bethany is the one who broke open the Enron story in 2001 when she was working at Fortune, and followed up her groundbreaking story with a book on the scandal. For All The Devils Are Here, Bethany teamed with New York Times reporter Joe Nocera to tell the story of the financial crisis that took down Wall Street and significantly altered everyone’s lives in one way or another (you can read our review of the book here).
When speaking with Bethany it’s immediately apparent how knowledgeable she is about the financial crisis. She is quick to point out that the crisis has a very strong human element, both in the way it came about and its affects. As we continue to talk it becomes clear that one of Bethany’s most powerful tools is her voice – a mixture of kindness and humility – that could make even the most closed off person open up to her.
Here is a transcript of our conversation:
RaceTalk (Q): All the Devils Are Here seems like a natural progression from your first book, The Smartest Guys in the Room. How did that prior experience benefit you while researching and interviewing sources for your new book?
Bethany McLean (A): It benefited me in that I knew how hard it was and didn’t expect it to be any different. Working on the Enron book was really tough because there was a criminal investigation going and it was really hard to get people to talk. There were days and weeks even were you felt like you weren’t getting anywhere and that can be deeply frustrating. This book, at least certain parts of this book, was the same way where it was hard to get people to talk and hard to feel like you were making progress or learning things that you needed to learn and I knew that. I knew that eventually if you just keep pushing you’ll get enough to be able to put it together so I knew not to despair.
Q: Were there times when you thought that it just wasn’t going to happen?
A: Yes, definitely. This book I think was probably even harder than the Enron book because there were so many other good books that had come out already. So Joe, my co-author, and I definitely had moments of what are we doing, do we have anything fresh to say, and how do we structure this? You couldn’t tell the entire story of the crisis. By which I mean, you can’t write about Citigroup and Lehman and what went wrong overseas or you’d have a two-thousand page manual. So in some ways you had to pick and choose what the right way to tell the story was so we constantly had second guessing. Are we going down a path that isn’t going to take us anywhere? Should we really be telling the story through Merrill Lynch rather than Citigroup? That sort of second guessing in a book like Enron, it’s a story of Enron, so everything fits. Not that there wasn’t some second guessing about some rabbit holes on that book, but the second guessing wasn’t as extreme.
Q: Obviously you have a lot of connections based on your experience as a reporter and through Enron book, did you find that difficult to find some people to open up to you or were they willing to talk?
A: No, this book is the same as any investigative project which is that you can’t talk to everybody you want to talk to and you always wish you could because the more people you can talk to the more of a shot at truth you have. But as with any story or any book, there are people you want to talk to that simply aren’t going to want to talk to you. You have to try to make that work as best you can. Certain parts of this book were really hard too. Not all of it, but certain parts of it.
Q: Were there conversations you had with people that were only off the record so that they would give you information not to be used in the story, but just to be used in your research?
A: I guess there were a few of those. It’s far more common and there were a lot of background conversations where I could use things, but people didn’t want their names used. Not so much explicitly off the record stuff. I’m very hesitant about explicitly off the record stuff because you can’t set up a divide in your own mind. Once you know something then you know it. So how does that then inform the way you tell the story? In other words, people have to be very clear about what they mean by off the record and I don’t want you to use that. If they simply don’t want the words to appear in print then okay you can abide by that, but if somebody wants to tell you something but they don’t want it to shape your thinking in anyway, well, that’s kind of impossible.
Q: What was the most shocking thing that you discovered while writing the book?
A: I think for me the biggest surprise was that when I started the book [I had] far more of a bias toward the borrowers that were responsible. I guess it speaks to myself as a very independent, non-partisan, non-ideological [person], but if I’ve got an ideology, I suppose I’d say it’s a bias toward personal responsibility. I even wrote about that for the Times before we even really delve into the book. What about the borrowers? Let’s blame people who took out loans too. I still feel that way. I don’t mean to absolve borrowers without personal responsibility. I think that society is lost. But at the same time I was stunned to see how much people sold loans rather than bought them. And I’ll point to two distinct episodes. One was digging into the consumer activists of the 1990s and seeing how they were trying to stop this lending from the mid 1990s on and just weren’t being listened to. And that was a real turning point because I think the conventional viewpoint would probably be that consumer activists were out there saying ‘give people more credit! Provide Credit! Equal credit for all!’ and they weren’t. They were out there saying ‘we’ve got to stop this. People are getting loans they can’t pay back.’ I guess the second big turning point would be the internal Washington Mutual documents showing how Washington Mutual tried to convince people who had a 30 or 6th rate mortgage to take out an option arm instead because Washington Mutual could turn around and sell that product for money to Wall Street. That was another really telling moment.
Q: How did you and Joe come to the decision to collaborate on this book?
A: Basically it was his idea. We were sitting in Chicago, I think it might have been the weekend that Lehman went under, maybe the weekend before, but it was around that time. I had been talking to my publisher about doing another book that they wanted and I drafted a proposal, but it wasn’t really working. Joe said ‘why don’t you scrap that’ and ‘why don’t we do a book on the financial crisis together’. We were both immediately for it. I think Joe wanted to write a book about this and I wanted to work with Joe again so we both got what we wanted.
Q: When dealing with this type of monumental crisis that affects so many people in the U.S. and around the world, how important is the role of investigative journalism in providing the public with an accurate depiction of the events that occurred and the people behind it?
Q: I think it’s real important both for the reason you articulate that it sheds light on what went on behind the scenes and it makes it digestible and tells a story. There have been no shortage of academic journals written trying to explain the crisis, but even I can barely get through them. This is our world and its going to shape the world we live in and it’s really important for people to have an understanding of that. I guess I’d add a third layer to it which is that I think it’s really important for people to understand the human components of business stories. And that’s what I try to do in The Smartest Guys in the Room, and here again, I think some characters have sympathetic elements to them that people wouldn’t have predicted, but that’s human nature. There is rarely such a thing, there are some, but there is rarely such a thing as an absolute devil or an absolute angel. They are people who often find their fatal flaws brought out by circumstances and in the end, these are very human stories. I don’t think we do ourselves any favors by saying ‘oh only an absolute villain could have created a sub-prime lending empire like Countrywide’ because it’s never that simple.
Q: Given the information that was made public in your books and your new position at Slate, do you think sources might be hesitant to speak with you about certain topics moving forward?
A: That has not been my experience. I think most of the time people either want to talk or they don’t want to talk and it doesn’t have a hell of a lot to do with the personality of the journalist on the other end of the phone. Most of the time people either feel like they have a story and they want to tell it or they don’t want under any circumstances. I feel like the great majority of the people that you reach out to, your name is kind of incidental. I think and I hope and this might be kind of sectionalized because the people that choose to talk to me, but I’ve gotten a reputation for being fair through my work. People feel like they can trust me to be fair. Like I said, that may or may not be fair because it’s the people who choose to talk to me who tell me that stuff. I hope my work has made people more inclined to talk to me rather than less so.
Q: I have one more question for you and it’s a little bit lighter. I saw both of your guest spots on the Colbert Report and the Daily Show and we were wondering which one you enjoyed being on more?
A: That’s a tough question because it’s so flattering to be asked to be on to either one of them that your predominate emotion is gratitude. Thank you for being interested in me, and there are so many more interesting people in the world and you chose me. Wow! After that which I’d say is 95 percent of it, I guess Jon Stewart for me is, maybe easier isn’t really the right word, but I think Colbert’s humor is…I know how funny people find him, but I was literally tongue tied in that interview and I’m never tongue tied. I just couldn’t think of anything to say because he’s just so funny, but so strange that you don’t quite know what to do sometimes. And that’s awkward when its national television, right? It’s not that I don’t totally appreciate him and think he’s totally amazing, it’s just that I guess it was a little less comfortable experience then the Daily Show.