The Fannie Scandal: The 'Financiopaths' Did It.

When Ken Lay died of a heart attack in early July, two questions about the Enron scandal once again floated through my brain: why did Mr. Lay perpetrate one of largest corporate frauds in U.S. history, and secondly, why did he think he could get away with?

I'm not the only person in the nation wondering these great mysteries. The questions are obvious and should be asked. As for receiving a satisfactory answer, well, that's a different matter.

The men (and women) who commit white-collar crime in this nation are creations of the 20th century. Since the caveman era it's been a basic human instinct to hold a club over another human's head and say, "Give me that coconut. I want it." As for playing games with accounting rules, and creating phantom income, well that's relatively new - which brings me to the strange case of Fannie Mae and its accounting shenanigans.

Some 15 years ago I co-authored a book on the savings and loan crisis, called "Inside Job, the Looting of America's S&Ls." During my research - before and after the book - I got to know quite a few FBI agents, assistant U.S. attorneys and others involved in the criminal justice system.

When talking about these cases with investigators one question I kept asking was this: why did these executives think they could get away with it? Not too many prosecutors had an answer. They knew about motive - which is the easy part. Crooked S&L operators like Charlie Keating and David Paul looted their thrifts for money. They saw an opportunity and they exploited it, even if their means were illegal.

All through their trials and tribulations, both Keating and Paul maintained their innocence. Both men were convicted and did jail time. (Some of the counts against Keating were overturned on appeal.) How could these two men - who collectively were responsible for about $5 billion in taxpayer losses - think of themselves as innocent?

My "Inside Job" co-author Stephen Pizzo coined a term to describe white-collar executives who believe in their own innocence despite the overwhelming abundance of evidence to the contrary. The word is this: "financiopath" - which is an amalgam of the words "psychopath" and "financial executive." In other words - to borrow a quote from punk rocker Johnny Rotten - they believe in their own bulls-t.