The Unwinding: An Inner History of the New America (43 page)

Weidner began blogging in 2009. At first he did it to drum up business, but before
long he found a voice—bombastic, canny, mischievous, outraged—and became a leader
in the foreclosure defense movement that had gotten started with a group of attorneys
in Jacksonville, led by a Legal Aid lawyer named April Charney, who introduced Weidner
to Sylvia Landis. Blogging under the slogan “Fighting for the American People, Speaking
Out As Long As Political Speech Remains Protected,” he wrote every day, in the early
morning or late at night, often at great length. The week of Martin Luther King’s
birthday he posted an essay to “My Dear Fellow Attorneys,” closely modeled on King’s
“Letter from a Birmingham Jail”:

While confined here in a foreclosure courtroom, I came across your recent statement
calling my present activities “unwise and untimely” … Perhaps it is easy for those
who have never felt the stinging darts of foreclosure to say “Wait.” But when you
have seen good families thrown into the street, when you have seen the banks kick
down doors and change the locks with no court order, when you have seen law enforcement
standing idly by and saying “it is a civil matter,” when you have seen court rulings
that are repugnant to fundamental laws, when you have seen the bank and corporate
executives reap unconscionable profits, when you have seen clients become sick and
die due to the stress and pain of foreclosure and their economic situation, when you
have seen single women who live in mortal fear that her front door may be kicked down
for the third time, when you see children who have only known their parents suffering—then
you will understand why we find it difficult to wait.

Weidner was reprimanded by the Sixth Judicial Circuit for disrupting courtroom proceedings
after he offered to help an old lady who was defending herself against foreclosure.
The court said that he was soliciting clients; he said that senior judges were trying
to punish him for calling on the federal government to take over the Florida rocket
dockets. He was also sued for libel by a Palm Harbor company that he’d accused of
robo-signing mortgage documents. Some reporters even credited him with popularizing
the term. He began to get calls from
The New York Times
and
The Wall Street Journal
and was often in the pages of the
St. Petersburg Times
. He liked talking to reporters—the press was the last best hope for his cause, the
only institution in which he still had faith, surpassing that of most of its practitioners.
Weidner remained, though, an everyday attorney, practicing out of a crappy office,
driving his white Cadillac the six blocks to the county courthouse. “I would love
to be like a Gloria Steinem,” he said, “because I’ve got a big mouth on me and for
some reason I can get people to listen. But I have to earn a living.” The one thought
that held off the imminent explosion in his head was of the millions of dollars in
legal fees that his office and his blog—where he posted the motions he filed for others
to use—were costing the big banks up in Gotham.

*   *   *

One day, Weidner got a call from an Indian woman named Usha Patel. A commercial lender,
Business Loan Express, was trying to take back the Comfort Inn that she owned in Pasco
County. Usha e-mailed Weidner a sheaf of documents, and he read them and heard her
out, but he declined to take her on—he was representing homeowners, and hers was a
highly convoluted commercial case. Later on, when the case went to court, he got involved
tangentially, and he was glad that he did, because Weidner never met a client like
Usha Patel, one who fought so hard, who held such a fervent belief in the American
dream that it was almost enough to restore his own.

Usha knew that she was responsible for the loan—after all, she had signed the note—and
in early 2010 she was trying to negotiate a new payment schedule with Business Loan
Express when she and her family traveled to London for a wedding. Upon their arrival
back at the Tampa airport, her son looked at his phone and said, “Mom, we have an
emergency hearing.”

Usha’s emergency hearing was a small sideshow in the great spectacle of frauds and
failures that opened the new millennium. Business Loan Express, rebranded Ciena, was
in bankruptcy and being sued by the Justice Department for fraudulent lending practices.
A bankruptcy up on Wall Street was a threat to Usha’s failing motel down in Pasco
County as Ciena searched for ways to pay off its creditors. Weidner said, “The titans
of finance are up there in Gotham fighting over the carcass of Ciena, while at the
same time Ciena’s tentacles are down here wrapped around Usha’s neck.” The lender
had deceived Usha—it had no intention of working out a new payment schedule—and at
the emergency hearing on March 19, the Pasco County circuit court ordered the motel
into which Usha Patel had poured her whole life to be put into receivership, which
meant stripping away its revenues on behalf of bankrupt Ciena and its creditors, leaving
Usha without a business. In court she wept. Her son told her, “No—I have money, and
I’m going to pay an attorney before the judge signs the order.” That same day, Usha
filed for Chapter 11 protection for her company, Aum Shree of Tampa, in the federal
bankruptcy court downtown. The motel was granted a stay. Then things got complicated.

At the first bankruptcy hearing, Usha found that the plaintiff was no longer Ciena,
or Business Loan Express, or any other name she’d ever heard since taking out the
loan. Her new adversary was HSBC, the second-largest bank in the world—the “indenture
trustee” of the mortgage-backed security that included Usha’s loan. Suddenly documents
were filed showing the mortgage assigned to HSBC, documents without a notary seal,
documents without witnesses or dates, documents with suspicious signatures of supposed
vice presidents, and Usha’s case joined the great foreclosure mess that was sweeping
across the country. Unable to force the bank to settle with her, Usha seized the paperwork
as her only weapon to save her motel.

For almost two years, Usha fought HSBC and its army of lawyers. She read every document
that entered and left her lawyer’s office, learning everything she could about bankruptcy
and property law. As the docket lengthened, the documents filled up box after box,
which she loaded into the back of her Toyota RAV4, where she stored them and drove
them between the motel, her house, and her son’s computer shop. When her first attorney
had to drop the case, she hired another, and when he stepped down, she hired a third,
and then a fourth, and Matt Weidner came on as an adviser representing one of Aum
Shree’s shareholders, but Usha knew the case better than any of them—it was Usha who
pushed her lawyers to keep fighting, not the other way around. Eventually her legal
bills reached two hundred thousand dollars. Long before that, she ran out of money,
and her son and the rest of her family, in the United States, England, and Gujarat,
sustained Usha in her fight—because unlike Mike Ross, Sylvia Landis, and Jack Hamersma,
Usha Patel was not a native-born American, which is to say, she wasn’t alone.

“This is my bread and butter,” she said. “My heart and money. If I don’t fight I’ll
be on the street, after twenty years of hard work.”

In the weeks before the trial, Usha, Weidner, and her latest attorney stayed up well
past midnight at her son’s computer shop, night after night, and went over every word
of the case. Two days before the trial, HSBC, confronted with the possibility of losing,
suddenly agreed to settle. Usha accepted a new schedule of payments, with $150,000
down and $10,000 a month at 6 percent interest. It hardly felt like a victory, but
she spent several thousand more dollars celebrating with her many lawyers and other
supporters at the oldest restaurant in Tampa.

Fighting a global financial services company to an exhausting draw caused Usha to
revise her view of her adopted country. Justice, she concluded, was for rich people,
not her. The bankers and lawyers benefited while she went broke. The banks made their
money by bullying little people, first trying to intimidate her into surrender, and
then, when she fought back, burying her in paperwork, hiring appraisers and inspectors
who filed false reports about the condition of her motel, smearing her name. When
she talked about HSBC, her nose scrunched up and her mouth turned down and her eyes
narrowed in the same look of disgust with which she described the work habits of native-born
Americans.

All the same, Usha hadn’t reached the same conclusion as Weidner. She didn’t believe
that America was going down. She still saw a bright future, for her children if not
herself. “Right now,” she said when her case was over, “God bless America. I believe
that.”

PART III

JEFF CONNAUGHTON

Early every morning in 2009 and 2010, Connaughton drove his shitty American car down
Massachusetts Avenue to his job on Capitol Hill, pissed off. He was angry at Wall
Street for more reasons than he could name, bankers, lawyers, accountants—especially
for kicking aside the laws and rules and institutional checks and codes of behavior
that he had studied in business school and law school and naïvely believed in. He
was angry at Washington—both parties—for letting it happen. He was angry at the regulators,
the SEC, OTS, OCC, the ratings agencies, and the other enablers who hadn’t done their
jobs. He was angry on behalf of the American people—not the poor, to be honest, who
were always with us, but the people in the middle who had (Clinton’s words) worked
hard and played by the rules and saw half their 401(k)s disappear in their late fifties
just when they thought they’d saved for retirement and now were fucked. He was angry
on behalf of his friends from school, men around fifty years old in Tampa, Austin,
Madison, suddenly wondering if they could hold on to the house. And finally, he was
angry on his own behalf. No one was going to cry for him, but he had lost a lot just
when he had a lot for the first time in his life. “Maybe I felt it so much because
I had so much personally at stake,” he said. “I was just coming into huge bucks as
the whole system falls apart. If you can’t trust Republicans to protect wealth, what
good are they?” He was surprised that more people weren’t as pissed off as he was.
Connaughton, a moderate Democrat, was in the process of being “radicalized by a stunning
realization that our government has been taken over by a financial elite that runs
the government for the plutocracy.”

When Biden got the vice presidential nomination in the summer of 2008, Connaughton
had suddenly found himself on the outer edge of the inner circle of the biggest game
in America. It was so big that he didn’t give a second thought to reopening the Biden
ledger. The jockeying resumed, the nauseating ride of up and down, out and in, but
this time much faster, dizzying. At the convention in Denver, he went from exile in
a hotel fifteen miles outside town, with no role at all, to vetting the guest list
for the Thursday night VIP party in the Biden hotel suite—letting other former staffers
know that he could get them in, or keeping out people who pretended to bleed Biden
blue. At the party, he waited his turn and received an arm around the shoulder. “We
did it, pal,” Biden said.

The ride continued in the fall campaign. He was nowhere; then he was helping Kaufman,
who served as cochair of the vice presidential pretransition (two months compiling
a massive VP bible on every aspect of the job, down to the office space); then, after
the election, he was off the transition because lobbyists were summarily banned from
the new administration for two years (except those who weren’t), and it didn’t matter
that he’d never asked Joe Biden for a favor. It was a little cynical of Obama to single
out Connaughton’s particular subclass of the permanent class—most everyone he was
hiring had made a ton of corporate money one way or another. Connaughton ended up
with a lousy blue ticket to the inauguration, entry to a standing-only viewing area
hundreds of yards from the stage, and even that was impossible because of the crowds,
so he watched the swearing in of President Obama and Vice President Biden on television
with another former Biden staffer at the Hawk ’n’ Dove, one of his Capitol Hill haunts
from his early days as a Biden guy.

Whenever Connaughton started slipping toward outer darkness, a call on his cell phone
brought him back, and it was always Ted Kaufman, his indispensable ally in Washington.
When Kaufman inherited the first two years of Biden’s next Senate term, he asked Connaughton
to be his chief of staff—or rather, he asked another Biden insider to ask Connaughton
if he would say yes were the job to be offered, because nobody wanted to be told no
at that level in Washington. Connaughton would have preferred a White House job like
deputy counsel, but he bore the stigma of a registered lobbyist, and Biden was hardly
using his scant influence to get his people into top positions. So he thought about
it over a weekend, then informed Jack Quinn that he was going to leave the firm where
he’d had his greatest success and made some of his closest friends. Just short of
fifty and facing a huge salary cut, Connaughton went back to the Senate.

The financial crisis was the biggest issue in the country, and Connaughton and Kaufman
saw it in similar terms. First, it represented a breakdown of the legal system. How
else, other than unchecked fraud, could those banks have been “technically insolvent,”
with only a handful of insiders knowing the truth? But there were deeper causes—the
dismantling of the rules that had kept banking stable for half a century. Connaughton
saw Kaufman—seventy years old, with a musty MBA from Wharton—as Rip Van Winkle, waking
up in the age of “synthetic collateralized debt obligations” and “naked credit default
swaps.” What the hell happened to Glass-Steagall, which maintained a wall between
commercial and investment banking? (Passed by Congress in 1933, repealed by Congress
in 1999, bipartisan vote, Clinton’s signature.) What about the “uptick rule,” which
required investors to wait until a stock rose in price before selling it short? (Instated
by the SEC in 1938, abolished by the SEC in 2007.) It was easy to overlook this denuded
free-market landscape during the long boom years—Connaughton had done just that—but
when the storms blew in and there were no walls to keep out the gale or trees to hold
down the eroded earth, everyone howled.