'Deception Detector' Hunts for Wall Street’s Secrets
By: JP Morgan'sJamie Dimon doesn't want to take a pay cut. The Fed's Ben Bernanke doesn't think the Europeans will solve their financial problems correctly.
In retrospect, Nasdaq's Bob Greifeld doesn't think he should have been on an airplane when the Facebook IPO was going on. And Jon Corzine was potentially involved in the transfer of missing money at MFGlobal.
Those are all conclusions of a veteran CIA "deception detector" asked to review videotapes of interviews and testimony of some of the highest profile financial figures under scrutiny in recent months — based on his years of experience drawing confessions out of spies for the US intelligence agency.
Philip Houston was once the CIA's leading expert in "deception detection," or the fine art of telling when people are lying or hiding the truth. In fact, Houston was one of the lead specialists who created CIA techniques designed to spot lies and interviewing strategies to get people to confess.
Over the course of his career in the CIA's Office of Security, he sat across the interrogation table from CIA employees he interviewed for security clearances as well as foreign agents he was probing for lies. But now, he sells his lie detection expertise to financial firms, corporate executives and other private clients who are trying to understand whether people they are doing business with are telling the truth.
And Houston has written a book designed to make his CIA deception detection techniques understandable to average people, called: "Spy the Lie: Former CIA Officers Teach You How to Detect Deception."
We thought the best way to learn how Houston detects deception was to see how it works in the real world. In an interview with CNBC, Houston reviewed videos of prominent people in the financial world to spot the indicators he says show deception, and to tell us what he thought they really meant.
Note: His analysis, of course, is just one man's opinion. There's no conclusive way to tell if someone is being deceptive if you don't know the underlying facts of the case. Houston's hypothesis about each case is just that — an interesting, but not definitive, way of looking at the meaning behind the answers.
Jamie Dimon CEO, JP Morgan
Jamie Dimon CEO, JP Morgan Interviewed by CNBC's Mary Thompson, June 13.
The CNBC Interview:
Thompson: Tell us how bad it can get. Some estimates say the loss could total $5 billion. Can it get any bigger?
Dimon: I've consistently told you I'm not going to tell you. On July 13th we'll tell the shareholders what it was in the quarter. I think in the testimony we made today we said that the risk has been reduced such that it could still lose money from today forward but the probability is less and magnitude is less.
The CIA-Style Analysis:
In this exchange, Houston focused on Dimon's aggressive response and tone of voice when he responded to Thompson's question about the size of the recent JPMorgan trading loss.
"That can reflect what we call aggression behavior, and we see that when we start getting close to issues that are really important, really significant, then we as humans often feel compelled to go on the offensive, to try to get you to back off a little bit," Houston said.
"And that's what he's trying to do here. He doesn't want to answer this. He doesn't want to pursue it."
The CNBC Interview:
Thompson: Will you give back pay? You said the buck stops with you. You acknowledged complacency will you be giving back any of your compensation.
Dimon: My comp is completely set by the board of directors. 100 percent is set, I assume they will incorporate this in how they evaluate me. But I'll leave that to them. I think it would be inappropriate for me to tell you what the board will do.
The CIA-Style Analysis:
Houston said Dimon didn't like this question — and that it doesn't appear Dimon believes he should have to turn over any of his own pay as a result of the trading debacle.
"He doesn't want to answer the question," Houston said. "He's clearly not going to voluntarily, you know give up any of his compensation. I think he, in the nature of his answer, the way he puts off on the board, he's also suggesting, behaviorally, that he doesn't think that he should have to perhaps."
Bob Greifeld, CEO, NASDAQ
Bob Greifeld CEO, NASDAQ Interviewed by CNBC's Maria Bartiromo, June 6.
The CNBC Interview:
Bartiromo: Where were you physically? Were you on a plane back to New York?
Greifeld: Not at that time. At 11:30 we obviously did the opening which you've pointed on and then we were on an open call. And at 11:30 when it was happening I was obviously on the phone.
The CIA-Style Analysis:
This was the second time Maria Bartiromo asked the question of where Greifeld was personally during the Facebook IPO during this the interview, and Houston pointed out that circling back can be an effective way to pull out new information.
