Thomas Schiff was a paranoid schizophrentic and former resident of Arkham Asylum.
History
After his release by Ra's al Ghul, Schiff came under the "employment" of the Joker. The Joker used Schiff as a calling card in his scheme to harm Rachel Dawes and Harvey Dent. He disguised himself as an Honor Guard during the funeral of Commissioner Loeb and was shot in the leg when he attempted to escape. Dent saw Schiff had a name tag which read Rachel Dawes and kidnapped and threatened to shoot him if Schiff wouldn't give up what was going to happen to Rachel.
Batman interceded, fully believing that Dent may kill Schiff if he flipped a coin in favor of it. Batman didn't realize the coin was a misprint, and had two head sides. Dent used it only to scare a confession from Schiff, but wasn't planning to actually murder him. Batman informed Harvey that Thomas was a paranoid schizophrenic, and probably couldn't reveal anything.
Psychological Profile
Schiff's laughter in a life-threatening situation--an inappropriate emotional response--is a characteristic of diagnosed paranoid schizophrenia [1]. Another symptom that may be inferred from his brief appearance is disorganized speech, which can occur in psychotic disorders.
Behind the scenes
- Thomas Schiff is featured in Mad Magazine's spoof of The Dark Knight.