Amid The Chaos Of Debt Collection, 'Bad Paper' Offers A Riveting Roadmap

Outside a corner storefront in Buffalo, six men tumble from a parked Mercedes. Most of them are ex-cons, some of them are armed and one of them — the polygamist — is packing his machete, to be ready, in his words, "when I run out of bullets." Not one of them weighs less than 240 pounds, and they're all keyed up for a confrontation with a suspected crook — which, as it turns out, goes down in a small storage closet. (Don't worry: No one gets injured.)

Now, I'll be frank: Scenes such as these weren't quite what I'd expected when I opened up Jake Halpern's Bad Paper, a book-length work of journalism on debt brokers and the failings of financial regulation. Something more orderly came to mind. Something with tailored suits, Wall Street power lunches and hearty laughs shared at the expense of the gullible American taxpayer — something, in other words, that Hollywood's taught me to expect.

Turns out I was wrong. The world that Halpern unearths — where debt is bought and sold as a commodity, and collectors often come with rap sheets — is altogether more compelling and unsettling than the standard movie tropes.

Halpern starts investigating precisely where most banks give up. As he explains, "When a debtor stops paying his or her credit-card bill, the banks count the balance as an asset for 180 days, during which time the bank's collectors try their very best to collect on what's owed." After this period, if a debt still hasn't been collected, a bank's required by law to count it as a loss — at which point, banks typically sell the debt in packages (called "paper") to the highest bidder, who then tries to collect or sell it in turn. The debt need not be from a credit card; virtually any unpaid loan follows a similar pattern. But whatever the details, debt tends to pass from hand to hand, down past the marble towers of Manhattan and into the shady underside of the economy.

Past a certain point, things begin looking a little like the Wild West. With only minimal government oversight, Halpern argues, brokers, collectors and, distressingly, even debtors find they must fend for themselves. Threats are exchanged as part of the trade, and at the lower levels, there's not much to distinguish debt deals from a more notorious sort.

"It's just like drugs, man," says Jimmy, a collector Halpern speaks to at length. "It's a hustle — only it's a legal hustle. That's why guys on the street, like me, we call debt the 'white man's dope.'" But instead of dope, it's the personal and financial information of thousands of debtors that often gets exchanged on thumb drives in parked cars on street corners.

Amid this chaos, Halpern finds his lead characters: Aaron Siegel, a wealthy first-time debt broker, and Siegel's associate, Brandon Wilson, a former bank robber who's got a knack for finding profitable paper — and who leads the occasional armed brigade to protect his investments. They make for a strange pair, and Halpern revels in their complex chemistry. "The core of their relationship was a mutual curiosity, distrust, and need," Halpern writes. "Each of them was deeply fascinated by the other's world. Neither of them was so naïve as to trust the other fully." The book's at its best when reporting their sometimes-surreal conversations, which play much like fencing matches, if the competitors occasionally paused mid-round to exchange love notes.

For the most part, the narrative gathers energy by bouncing between opposites such as these — not just Aaron and Brandon, but also between New York City and Buffalo, its impoverished counterpart, and between Aaron's thick-walleted investors and desperate collectors like Jimmy.

Yet this also makes for some moments of whiplash. Halpern struggles to decide what exactly he'd like his book to be — splitting his weight between a character study and a straight-up expose — before finally abandoning the narrative in order to just follow where the debt leads. Despite his attempts to ease these transitions, they remain abrupt, a strain on the thread holding the book's jumble of anecdotes and set pieces together.

That said, I'd be hard-pressed myself to say what ought to be cut. The book teems with eccentric characters and scenes that made my skin crawl. Where there could have been bland data and financial reports, Halpern's managed to make a buddy comedy and a horror story joined at the hip. Explained simply, read easily, Bad Paper defies expectations. It should also raise quite a few alarms.

Colin Dwyer is a contributor to NPR.

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