Silver Justice (34 page)

They pulled into the garage next to the office, and Silver stared at Richard for a few beats.

“How come I’ve never heard about any of this before this case?”

“Who’s going to risk their livelihood telling people the truth? The media isn’t. And the regulators and politicians are going to swear that they’re honest as the day is long. The banks are just going to sneer and act like anyone telling the truth is crazy, and the entire machine will go along with their spin. For most people, reality is whatever the headlines say is reality.”

“Now you’re starting to make it sound like
The Matrix
.”

“I know. Believe me, I keep this stuff to myself most of the time. But you asked. The truth is that the system pretends to be honest, but isn’t. And it probably never has been. I think that’s a comfortable lie that makes it easier to sleep at night. Trust me – I’ve seen things that would make you question how much of any of our perception of the truth is actually real. Sounds like our killer may have taken the red pill. I hear that can drive you crazy.”

She studied his profile as they rolled to a stop. “How do you go to work every day, Richard, if that’s how it is?”

“Simple. What’s the alternative?”

They both absorbed that.

“Speaking of which, we have an interview to conduct.” Silver drew a few deep breaths, her head reeling, and mentally prepared for her interrogation with the man who had kidnapped her daughter and taken the lives of at least six men.

Chapter 26

Silver moved uneasily in her chair and glanced at Richard before returning to regard Howard, who sat opposite, his face a picture of calm. The last hour had involved a painstakingly detailed description of each killing, filled with information only the killer could know. They now had enough to bury him under the jail.

Silver took a sip of water and then reviewed her notes. “Howard, you mentioned you’re not well. Is that correct?” she asked.

“I did? No, I think I mentioned I am dying. Not well to dying is like comparing a paper cut to being fed into a wood chipper.”

“What’s wrong with you?”

“Three months ago I was diagnosed with stage four pancreatic cancer. It’s inoperable. They tried dabbling with chemo, but I didn’t do well with it and decided to abort the treatment – the doctor leveled with me and told me that it wouldn’t change my survival outcome, and I didn’t want to spend my last days on the planet with poison running through my veins.”

“How long do you have to live?”

“What time is it?” Howard cackled a dry hack. “Seriously? If I’m lucky, maybe two months. I feel like shit most days, but I’m still strong. As long as I can keep swinging, I guess there’s some fight left in me.”

“Would it be fair to say that your illness played a large part in your decision to become The Regulator?” Richard asked.

He sneered. “Is this stupid question day? Of course it did. I watched my wife, my daughter, my friends and neighbors, everyone I knew or cared about get flattened by the financial destruction perpetrated by this group, and then I find out I’ll be dead in under six months…you bet your ass it played a part. I did the math. Nobody would ever prosecute any of them. They’re untouchable. So I decided to make a difference. To punish those who thought themselves above dealing with the consequences of their actions.”

“That’s why the methodology of the killings changed,” Silver observed, “because of the significance of the deaths to your loved ones.”

“Asked and answered. We already covered that.”

Silver shifted gears. “Howard, can we go through the stuff we discussed about the crashing of the system? I’ve already taken Richard here through what I could remember, but I wanted him to hear the finer details from you.”

Silver and Richard had agreed that they would pretend ignorance during the interrogation so they could hear Howard’s story.

Richard regarded him. “Silver told me your theory – that the crisis was deliberately caused by a group of like-minded interests working together. And I understand that the mechanism to make the money as the market tanked was credit default swaps and naked short selling – I’m more than familiar with the massive bailouts the government stepped in and gave to AIG and others who wrote the swaps and couldn’t pay them. I remember the debate at the time – that all the government would have had to do was declare all swaps null and void, and there would have been no need for the bailouts – but the big banks would then have not made their windfall profits, so that was shouted down. But there are a few gaps, and I’m interested in hearing how the crash was achieved – the nuts and bolts.”

Howard nodded. “How much do you know about the 1929 crash?”

“A fair amount. I studied it in school. Market manipulation was one of my areas of interest.”

“So you know that it and the ensuing Great Depression were the greatest transfers of wealth in history.”

“I know that a lot of money was made by a small number concentrated in New York and Europe, and the majority of the planet lost almost everything.”

“Right. But it’s not like that wealth disappeared. It went somewhere. As an interesting data point, did you know that the federal government emerged from the Great Depression four times wealthier than when it started? Put simply, at a time when twenty-five percent of the population was starving, the government quadrupled its wealth – in just its gold holdings alone. Doesn’t that strike you as odd – that the government made windfall profits at a time when mothers were feeding their babies from the teats of dogs because they were too starved to do it themselves?”

“Roosevelt made some horrendous mistakes. That’s historical fact.”

“But were they mistakes? Why is it that when I make a mistake I lose, but when the banks and government make a mistake, their wealth multiplies exponentially? Ever wonder about that? Ever wonder how, at the start of the Depression the government had limited power, and by the time it ended it had become a massive social engineering machine that regulated every aspect of an individual’s life?”

“Roosevelt was trying to build a social net for the disadvantaged.”

“Really? He wouldn’t have needed to if he hadn’t devalued the currency forty percent overnight after confiscating all the population’s gold, tightened margin requirements for banks to the point where there was no cash in the system, and insisted on tariffs that made necessary goods incredibly expensive for a population that was starving. You sure those mistakes weren’t so his buddies could steal the nation’s wealth? Most don’t know that he grew up with the wealthiest aristocracy in New York – I’m talking the Astors and the Rockefellers. He despised the common man, but publicly he was their champion. Isn’t it awfully coincidental that his social circle increased its riches unimaginably from his ‘mistakes’ at the direct expense of those he detested? And that his government increased its power in ways that a decade earlier would have been impossible?”

Richard wanted to steer the discussion back to specifics of the 2008 crash. “I won’t argue history with you – this could go on all day. Why don’t you walk me through the exact mechanism that was used to crash the system this time? Because that’s what’s unclear. Let’s say I buy the idea that it was orchestrated. I understand anything can be, in theory. But how, specifically, was it done?”

“Like I said, you get all the biggest banks to create batches of mortgages – securities – and create derivatives based on their performance. They made fortunes selling the securities to the world as AAA-rated paper, so they were delighted to do it.”

“I get that. They take nice, safe mortgages and create pools of them, where they’re intermingled, then sell securities backed by the performance of those mortgages.”

“Right. So what they did was create a mechanism to create garbage loans to pour into that soup of good ones, which is step one. They had their mob-controlled lending companies stuff the pipeline full of crap nobody sane would want – but because the securities were rated investment grade, nobody cared. The pools were performing well even with the junk in them because the terms on the first few years of the loans were ludicrously easy for any borrower to pay – they basically gave borrowers free money on home values that were double their true worth. The mob set up tons of appraisers who committed fraud by inflating values and encouraged the mortgage brokerage industry to commit fraud by lying about everything, using the logic that everyone was doing it. Within a few years, the entire real estate industry was one big fraud, and property values were doubling as if by magic.”

“But how did they crash it?”

“Easy. They own the company that rated the mortgage securities. When it decided to drop the ratings one day to where the AAA paper was suddenly no longer investment grade, that triggered a massive landslide of demands for alternative collateral, and the whole dirty system collapsed in a matter of weeks, because everyone was using the same crap paper for assets and had leveraged themselves through the roof.”

“I don’t understand,” Silver said. “How do you control the rating of an entire class of holdings like mortgages?”

“Can’t you guess? Your broker buddies create an index that trades based on the value of a basket of mortgage securities. One morning your rating agency downgrades the rating of the securities, and kaboom. Instant crisis. Your rating agency decides the twenty-eight securities comprising the index are junk instead of AAA, and simultaneous to that anonymous parties start short selling the hell out of the same twenty-eight securities on the index, and within two weeks the value of all real estate securities are down thirty to forty percent. Or maybe someone at the rating agency just lets slip to you what the securities in the index are, and you short them into the ground, tanking the ratings. In the end the sequence is meaningless. It's the result that counts. The banks that used the suddenly worthless paper to collateralize all their borrowing are insolvent. Nobody wants the toxic securities, even if most are actually good. Because the ratings now say they aren’t. You know the outcome…”

Richard’s face changed. He got it.

“Oh my…That would work. If you controlled the rating agency and knew when it was going to downgrade, you could short sell like mad and take huge positions in advance with credit default swaps…”

“Or you could short the specific securities and cause the ratings to drop, creating plausible deniability. That’s exactly what happened. Did you know the index used to rate mortgage-backed securities was created in 2007 by the same broker that allowed the hedge funds to create toxic pools guaranteed to fail – just in time for the index to get established as the weighing machine for the whole market? And did you also know that the company that rated those securities is based in England, and is privately owned by nobody knows who?”

“I can’t believe you discovered all this, but nobody in law enforcement has,” Silver said.

“Now you’re sounding like me,” Howard said, leaning back in his chair.

The discussion went on another ten minutes, by which time Howard looked drawn. Richard exchanged a troubled glance with Silver, and she decided to move to their final agenda item.

“Howard. There’s one thing I don’t get here. You mentioned that you’ve killed seven people. I count six. Here’s my question. Who’s the seventh victim?”

Howard’s eyes danced with merriment. “Ah. I was wondering when you’d ask. Take down this address and get a hazmat team there as soon as possible.” He recited an address in mid-town Manhattan. “The penthouse.”

Silver stared at the note she’d scribbled. “What will we find? A body?”

Howard laughed. “Nothing that dramatic. You’ll also need to instruct the team to bring a Geiger counter and radioactive material handling equipment.”

“Radioactive material?” Silver’s mouth dropped open, and she shook her head. “Howard. What have you done?”

“Don’t worry. It’s not a suitcase nuke or anything like that. What I did was go to work at my part-time job yesterday after I shot victim number six to death – the miserable prick blubbered like a baby and pissed his pants when he saw the gun, by the way. All of these masters of the universe are the same – ruthless and brave until it’s their own asses in the balance, then they mewl like kittens about to go into the river. Anyway, I went to work, and ran a morning errand I’d been planning for a long time. Left a present for one of my favorite people.”

“What present, Howard?” Silver asked again.

“You’ll see. I waited until after the maid had finished with the bedroom, and then slipped in and left something under the master of the house’s bed. He sleeps there every weeknight. I know. I’ve been working there for almost a year. All cash under the table. Not a bad gig – maintenance and custodial work, mostly. Anyhow, by now it’s done its job, so might as well get it out of there before anyone else gets hurt.”

“What is it, Howard?” Richard asked.

“Cobalt, Richard. Radioactive material. Prolonged exposure is lethal for humans. It’s in an open lead box I made myself. Put the lid back on, and there should be no leakage.”

“Cobalt. Where did you get cobalt in New York?” Silver demanded.

Howard chuckled. “Don’t be silly. You can’t get cobalt in New York.” He coughed twice. “I had to go to Jersey for that.”

“What are you talking about?”

“There’s a hospital in New Jersey that I read about closing down a year ago. Then I saw a few months back that they were auctioning off the equipment and furniture, so I went during the preview days and look around. I got to talking to one of the security guards from the auction company and asked him about the machines in the basement – big machines. Linear accelerators. CT scanners. An MRI. And some other goodies. He said that they would be sold off separately, but that some of the systems required special handling because they had radioactive material in them. Which was music to my ears.”

“Music? Why?”

“I’d been trying to figure out how to kill the final victim – the head of one of the big banks that created the crisis and profited. I couldn’t imagine any sort of death that was bad enough. Then, coincidentally, at my last exam, the doctor told me what my final weeks and days would be like, and a light went on. I knew whose death to use as the model for his.” Howard shifted his gaze to Silver. “Mine.”