Mailbag: Ron Paul in 2012, Middle East Upheavals, Student Loans - Rolling Stone
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Mailbag: Ron Paul in 2012, Middle East Upheavals, Student Loans

By the time this mailbag goes online, I’ll be sunning myself in the Caribbean, on vacation for the week – so if the blog is dark thru Friday or so, that’s why!

Lots of excellent letters this week, and thanks to all those who wrote in about the “Why Isn’t Wall Street in Jail?” story. There were a number of people who asked what they can do about the problem, and while I don’t have too many concrete ideas on that score, I can offer one: Write to Vermont Senator Pat Leahy and tell him you demand that his Senate Judiciary Committee hold hearings on the issue and demand action. As one former Senate aide wrote to me this week, “Where is Pat Leahy, and why isn’t he holding Eric Holder’s nuts over a roasting fire?” My understanding of this issue is that the two main avenues for congressional action on the problem of regulatory capture with regard to Wall Street are Leahy’s committee in the Senate and Darrell Issa’s Government Reform Committee in the House. The early reviews on Issa are mixed, and since he’s a new chairman of a new Republican spate of committee leaders, it’s hard to imagine that too much will get done there. But Leahy has been weirdly intransigent on this problem and I would imagine an outpouring of anger from Democratic voters to his office might freak him out enough to get moving.

Now for more serious matters: Fantastic dunk contest, and I’m really not sure that Blake Griffin should have won that thing. None of the three best dunks in the contest came from Griffin. Javale McGee’s three-ball dunk, DeMarr Derozan’s “Showstopper” jam and Serge Ibaka’s foul-line job were all legit 50 dunks. Also, Griffin’s winning choir-and-KIA-Sorrento dunk was just revoltingly too far in the product-placement direction (Charles Barkley twice mentioning what a “great looking car” the prop vehicle was was a low point in the history of sports announcer product-pimping). Also, the danger factor was really unpleasant: given the history of the Clippers, I was genuinely shocked when Griffin didn’t hit his knee on the “great-looking” car hood on the way up and then fall to the ground with a C3 vertebra fracture. I was already visualizing all the cheerleaders and Dr. J and Brent Barry and Cheryl Miller and little Spike Lee and all those people kneeling down in the “everybody pray until he moves his fingers” routine. Props for nailing that one on the first try, though.

Anyway, on to this week’s mail:


I’d love to hear your answer and opinion on this. In light of the enormous disappointment that was Barack Obama, would you vote for Ron Paul over Barack Obama in 2012?

Nick Lekas


After extended exposure to Ron Paul’s son earlier this year, which led me to believe that there are certain highly obnoxious beliefs that run in that family that Paul pere hasn’t copped to publicly, I’d have a hard time voting for him.


Why are so many Middle Eastern autocracies boiling over? Anyone see it coming? Is there cross-coordination or shared inspiration, Alinsky or Gene Sharp, say? I disregard the Gladwell presumption that social media are trivial catalysts of shared outrage, surely they serve as oxygen fueling the flames, why else would Internet censorship be a first-line panic attacktic [sic]? None of us know what’s fermenting beneath the mass media version of their real lives…do you know anyone who does?     Yours in amazement…

Bobby Ad Vance  

P.S. Why not the Saudis? Or (unthinkably) peacelovin’ Israelis?


I don’t know enough about what’s causing these upheavals to answer that question… if this were Ukraine or Georgia or Azerbaidjan I’d strongly suspect a planned, U.S.-inspired covert operation, but that doesn’t seem to be the deal here. This looks to me like a few hundred million people who all collectively got tired of being stomped at the same time.


Thank you for explaining things that I would not otherwise understand about our financial (sector? industry? syndicate?). Far too often we’re fed the black or white headlines or blurbs, and I always felt there was more to the stories than just the headlines or the talking points.

After reading your most recent article, I looked up to see how the Countrywide case was going, and it followed exactly what you described. There was one article I found though, that mentioned investors, including TIAA CREF, New York Life and others suing Countrywide that got me thinking. How has the systemic banking fraud not been curbed by other corporations that (I’m assuming) were victims? I’m thinking also of the auto companies being locked out of credit and loan money from the banks while the banks were demanding ransom from the Fed. Are non-banking companies not defending themselves, or were they not affected?




That’s a great question and in fact that’s a subject I was planning on taking up sometime in the next year. To take one example from my last piece: Here we had a case in which the Pequot hedge fund seemed to be trading on inside information about the planned acquisition of a company called Heller capital by GE. In advance of the takeover, insiders bought the hell out of Heller and shorted the hell out of GE, costing GE buttloads of money. So why isn’t GE screaming bloody murder? Where have they been all of these years? I was unable to get a good answer to that question before the piece came out; I couldn’t find anyone willing to comment on or off the record. There are clearly similar cases all over the map: Pension funds sold mountains of fraudulent/toxic MBS, clients who’ve seen their stock and commodities orders front-run … where’s the outrage? There are some lawsuits, like for instance the one filed on behalf of the estate of Lehman Brothers, who charge that Lehman execs conspired with Barclays to shovel billions of dollars out of Lehman and into Barclays just before Lehman collapsed – they did this by essentially allowing Barclays to overcharge the dying company by $5 billion on a $45 billion securities deal. Some of those same Lehman execs who signed off on that deal soon after went to work for Barclays; one former Lehman lawyer described it to me as “the biggest bank robbery in history.” So, great, yes, the shareholders of the dead company are trying to claw that money back, but the civil route is the only way that’s going to be addressed, because the government has elected not to pursue cases against people like former Lehman CFO Ian Lowitt (who moved from Lehman to Barclays after doing the deal). But even these civil cases are too few and far between; you’re right, you’d think there would be more, and why there have not been is a mystery and an interesting one.


Considering all the slicing and dicing, speculation, gambling and all that jazz that went on in the mortgage arena – I’m wondering if it’s possible that something along those same lines is going on with student loans – are the two issues mutually exclusive or could there be some kind of symmetry between them?  I’ve been reading about the enormity of student loans floating out there across the country – billions and billions worth, and the rising rate of defaults by the borrowers.  Now, in my own neck of the woods, my daughters have been getting notices of their Stafford loans changing hands from one bank to the other or to the Dept. of Education and then back to another bank.  It’s like a pinball game.  Is this just business as usual or is there some other kind of deal going on behind the scenes that us wee folk aren’t privy to?

Kate Flannery


Yes, student loans can be sliced and diced and sold off using the securitization process in the same way that mortgages were marketed. The beauty of instruments like the Collateralized Debt Obligation is that it can take any kind of loan – mortgages, credit card debt, aircraft leases, and even student loans – and chop them up and tranche them and so on. Amusingly, securitized student-loan products are called SLABS (Student Loan Asset-Backed Secutities). I don’t know a whole lot about this world, but I imagine the dynamic is the same as it is for mortgages – the actual owners of your daughter’s loan are probably thousands of disparate investors in whatever securitized asset structure it was chopped up and put into, and it’s probably the servicers of the loans that are changing from month to month. If there’s someone out there who can answer Kate’s question more thoroughly, please write in.

Hello Matt,
Scott Walker: Asshole?

Madison, WI


Good question for the court. I’ll reserve judgment until I render judgment – let me ask the rest of the crew.

Hi Matt,

Wanted to get your thoughts on why George W. Bush has been so quiet in regards to the developments in Egypt. I’m sure part of it has to do with the fact that he knows everyone still hates his guts and that his opinion is about as educated/as valued as Sarah Palin’s. But still. He was the leader of the free world who invaded a foreign country (Iraq) with the idea of forming a Democracy there that the rest of the Middle Eastern could model. Now it seems that the people of (some) Middle Eastern countries are fighting for freedom, democracy etc. why keep quiet? Bill Maher said it right the other night on Real Time, it would be kind of funny (in an ironic way) if all other countries in the Middle East became democracies EXCEPT for Iraq and Afghanistan. 



The supreme irony of all of this, of course, is that the United States has always been painfully anxious to avoid the spread of true democracy in the region, because it would result in the establishment of a series of nativist or Islamicist regimes who would almost certainly be hostile to U.S. policy and, more importantly, would demand full control over their countries’ natural resources. And now, because we worked so hard to keep dickheads like Mubarak in power for so long, the resulting real democratic movements will almost certainly end up being even more hostile toward us than they would have been had we been true champions of human rights and democracy all along. We would almost have been better off openly conquering the region by force – this business of pretending to be pro-democracy and pro-freedom while backing monsters like Mubarak and the Saudi royals has left us with no credibility at all.

Just in case you haven’t seen it yet, I figured you’d really appreciate it. Deadspin was able to get access to the script for ESPN blowhard Colin Cowherd’s pilot sitcom. The uberdouche recycles every stale sitcom cliche. Can’t wait to see all four episodes.

Andrew Scheid, Cleveland State University


I read this and was literally paralyzed with laughter – it’s the most awesome thing anyone’s ever come up with for television. I liked Matt Yoder’s take on a Cowherd show at “I think I’d rather watch a continuous 24 hour loop of Dick Vitale calling Duke basketball games.  I’d rather watch Matt Millen and Joe Theismann break down the Egyptian crisis.  I’d rather watch Emmitt Smith read Pride and Prejudice!” Actually, I don’t think Yoder went far enough. How about, “I’d rather watch Janet Reno suck a pound of rancid cream cheese from the ass of a gas-filled, heavily-decomposing 400-pound corpse that just floated to the surface after six months feeding leeches on the Hudson River bottom?” Or how about: “I’d rather coat myself in calf blood and dunk my head in a cage full of rabid vampire bats while simultaneously getting ass-fucked by the Oakland Raiders?” You could go on and on with this. I was particularly amused to see that there’s a section in the proposed script where “Nick Herd” complains that there’s nothing wrong with the size of his nostrils. Anyway, I think you’re selling the show short – I’m betting he gets at least six shows. Curious to see where readers place the over/under.  


I know you are busy but would you please take a look at this analogy and see if it works for the recent/current mortgage bubble?  I am trying to find a way to communicate with people, my members, who do not grasp the concepts of CDOs and shorting mortgage securities. I have read The Big Short and am reading your book now and I’m not sure I get it and my background is in finance.  So, if you would, thanks.

Let’s say you just finished a garage sale.  You are left with a bunch of stuff you don’t want anymore and no one was willing to even pay the pittance you were asking for the stuff.  Now suppose that you put it in a box.  You brought it to an appraiser and got them to appraise the junk as if it were rare heirlooms.  You then sold this box of junk to an antique store for an incredibly inflated price.  Next you went to every garage sale you could find and bought all the stuff they couldn’t sell for next to nothing and did the same thing.  You sold it to the same store.  You would have made a ton of money selling junk as if it had actual value!  Then, because one can never have enough money, you went out and bought insurance on the store going out of business.  The store naturally does because it has overpaid for a bunch of junk that no one wants so you cash in on the insurance policy too!

Martin O’Connor


Your analogy is right on the money. As with mortgages, the key here is getting the appraiser – i.e. the ratings agencies – to assert publicly that your crap is valuable. Then you go off and sell it en masse, and you make a fortune, etc.

The only reason most people don’t view what happened prior to 2008 as crime is that the guilty parties were banks and it’s hard for many people to understand what went on – selling a risky subprime mortgages as an AAA-rated security sounds a lot less criminal than, say, selling some crappy old tin pocketwatch as Ulysses S. Grant’s battlefield timepiece.

Another analogy I like to use is car companies: Imagine that instead of mortgages, we’re talking about cars. Now imagine that the big three auto makers in the years before 2008 knowingly sold about a trillion dollars’ worth of defective automobiles. Then they went out and bought a few trillion more dollars of insurance on those already-sold cars. Of course, when the cars started going off the road and the policies started coming due, this would stress out the insurance system, which is exactly what happened, as the “insurers,” i.e. AIG, went out of business. The banks would have been screwed, but they got the taxpayer, i.e. you and me, to pay off those policies for them via the bailout. So they ripped us off twice: They sold the defective cars to us, then they got us to pay off the bets against those cars via our tax dollars. How it is that some canny politician has not made more hay with this with middle American voters boggles my mind.

Email your questions to, or leave them in the comments below.

In This Article: Ron Paul


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