My Chat With Matt Taibbi

By Carl Gibson, Reader Supported News

13 June 13

arl Gibson: So I'm Carl Gibson of readersupportednews.org, and I'm sitting here with Matt Taibbi of Rolling Stone magazine, author of several books and all-around storyteller of the financial finagling of our system. And Matt, you have a unique gift, I gotta say, of taking abstract concepts like the financial and banking system, and making it really simple in a way that people can understand. Now, with public banking, do you see this as a way for people to understand this concept in simple, concrete terms?

Matt Taibbi: Yeah, first I think it's critical that people understand the financial system. Now a lot of the problems we've had with corruption over the last couple of decades, a lot of that stems from the fact that people just don't know how the system works. And a lot of the Wall Street companies and businesses in general, I think they keep it intentionally difficult and obscure and obtuse. It's kind of like there was a reason back in the old days why they didn't allow slaves to be literate. They didn't want people to be educated about the political system they lived in. I think there's – I'm obviously stretching the metaphor a lot – but there's something similar at work here. People at Wall Street don't want ordinary people to know how all this works. I think public banking is an idea, a great one, because it forces people to take control over their economic destiny. Whereas what we've been doing for decades now is just saying, "You guys take care of it." And they've just made it increasingly complicated and inaccessible and difficult, and that's led to all of this shenanigans and corruption.

CG: Speaking of shenanigans and corruption, Elizabeth Warren has done a really great job recently of exposing the fact that the whole regulatory apparatus set up by our government to regulate the banks and our financial system is just a joke. And it's run by the same people we're trying to police. So as Elizabeth Warren has proved, this is a totally corrupt system. So my question is, is it time for the people to do some Marie Antoinette-type shit?

MT: (laughing) You mean like lopping heads off?

CG: Maybe not to that extent. But you know, pitchforks, torches, the whole deal.

MT: I mean, something has to happen. She's absolutely right. There's a huge problem with the regulatory system, which is that we have this revolving door situation where it's not cops vs. white-collar criminals, it's basically the same group of like-minded Washington and NY lawyers who all went to school with each other, they've all been part of the system, they all worked for the same companies. People who worked for the regulatory system, they usually grew out of the same corporate defense firms that represent these companies. And when they leave the regulatory system, they go back to these same corporate defense firms and they know they have 2 and 3 million dollar partnerships waiting for them. So it's a little like, you know, if you can imagine a college basketball star, who knows that next year he's going to be playing in the NBA, how much is he going to really offend an NBA organization while he's still in college? He wants to still get that contract. That's kind of the way our regulators think right now. Even though technically they're there to regulate JPMorgan Chase and Goldman Sachs and all those companies, they know that in a couple of years when they get out of the SEC, or the CFTC, or the OCC, or the Fed or whatever it is, they're gonna get that 2 or 3 million dollar a year job, and they're not really gonna want to screw it up. And that's, even though it's not an overt thing, psychologically, it's a major factor in the way this business has been regulated.

CG: You talk about the revolving door, which is so interesting because, you see Phil Gramm of Texas, who went on to be vice president at UBS, and so—

MT: And his wife was at Enron.

CG: And his wife was at Enron. And so it just kind of encourages these public officials to not do anything like you were just talking about. Now, you talked about almost writing an identical story last year when financial lobbyists went in to deregulate financial reform and now they just did it again very recently—

MT: Right.

CG: Now you've said the holy grail of activism is breaking up the big banks, but do you think before we get to that point, the holy grail of activism should be to shut down these corporate lobbyists and the people who make these laws impossible to enforce?

MT: That's a great goal. I still think it's breaking up the banks for a bunch of reasons. The biggest reason is it's simple. It's easy for people to understand. These companies, if they're too big to fail, they're too big to exist. And this is an issue that has enormous resonance on both the left and the right. If you think about it, on the right, you have these people that don't want to bail out anybody. They don't want to spend their tax dollars rescuing anybody who is being irresponsible, whether that's the small homebuyer who takes out too big a loan to buy too much house he can't afford, or whether it's Goldman Sachs or Citigroup who behave irresponsibly and come to the taxpayer and ask for a bailout later on. So those people don't want to bail out those companies. And of course, on the left, on the progressive side, we're deeply concerned about the corruption, the comingling of government and corporate power. So this is an issue that is unstoppable if it's put before actual voters. And I think it's totally achievable. The only thing stopping it right now is that it's not going to a vote. If we could actually get it to a vote, I think it would have a great chance to succeed, and that would cure all kinds of ills if they could break up just a couple of companies.

CG: Well, leading to public banking, say, if we succeed in breaking up those big companies, if we get a new Glass-Steagall together, which— and I've talked to Tea Party organizers and activists who totally agree with people on the Occupy Wall Street side of things and say, yeah, we need to have a new Glass-Steagall. I mean, it seems like an attainable goal. So my question is, after we break up these banks, and as the same time we're calling for these banks to be broken up, if we call for solutions like public banking, if we call for something like the Bank of North Dakota on a national scale, like nationalizing the Federal Reserve, is that something that could naturally come about after we break these banks up?

MT: I think if you could establish those kinds of institutions, I think they would do very well. Because these other companies, these Wall Street companies, have lost the ability to compete honestly. I don't think they have any interest in making money the old fashioned way, which is investing in businesses, growing jobs, growing the economy. They are completely addicted to what we call the financialization movement, which is just moving money around, it's fancy gambling schemes, it's derivatives, it's everything but building businesses and investing in the economy. There's actually plenty of liquidity in Wall Street, but we're not creating jobs with it, it's all plunging into these secondary money-making schemes. And I think these companies, they don't know how to do that anymore. And if you could establish functioning public banks, either at the state or the national level, I think they would be tremendously successful for that reason, and also for the reason that people would trust them. I think people would naturally put their money in those companies and those institutions because they've lost faith in these big banks and don't trust them to take care of their money.

CG: And you know, because you're talking about people investing their money where they believe it will be put to good use, we've seen a rise in cooperative economics, like the Mondragon co-op in Spain has 83,000 employees, workers own their labor. You know, I live in a housing cooperative in Madison, Wisconsin, right now – we all pretty much own our housing, we're each other's landlords. Do you feel this emerging co-op movement could be a replacement for the corporate capitalist model which is kind of falling apart right in front of our faces?

MT: It could be, but let's not underestimate how powerful the corporate capitalist model still is. They still have a massive stranglehold on the economy. They have an enormous amount of money. They still have virtually complete control over both houses of Congress and the presidential election process. They still have access to both parties. These kinds of movements that you're talking about won't happen for a long time. So it'll be awhile before you can rid yourself of that other kind of autonomy. But I think ultimately, down the line, yeah, people want to have control over their economic futures. And it is definitely the way to go, it's just a question of how to get there.

CG: And talking about how to get there, we're here talking about public banking, but this is kind of a whole— I've noticed it's a whole converging of movements. You've got people here from all aspects of the economic justice movement. From co-ops, public banking, progressively owned business structures. It seems like there's a whole cacophony of movements going on right now, and I've been noticing in your writing that while a lot of times you focus on the financial system and the corruption in our government, you've been focusing on some other issues like basic social justice too. So do you feel like we're at or near a boiling point where all of these movements are collectively making enough noise to force something big?

MT: Well, the reason I've been focusing on things like the Three Strikes program here in California is because I don't think you can really tell the full story of the impunity of Wall Street without also focusing on the flipside of that, which is what happens to other people who are caught up in the justice system. We have this thing, I'll be talking about this tonight, this idea of "collateral consequences." This is what Eric Holder and the Justice Department have come up with, this idea that if you have a really big company that employs a lot of people, that maybe you shouldn't criminally indict it, you shouldn't criminally indict its officers because it might result in lost jobs. And these people, when they came up with this doctrine, they were trying to avoid things like the collapse of Arthur Andersen, which happened in the early 2000s. But what they didn't realize is that when they made a definition of those who were too big to prosecute, they were also simultaneously creating a definition of people who were small enough to prosecute. And that's what we're seeing now. We're seeing more and more aggressive prosecutions and jailings of a certain class of people and less and less of it on the other side. So I think these two things are connected and I think that's part of the reason why all these movements are coalescing – because they all have kind of a common genesis, basically.

CG: Well, and we saw countries, from Germany to Iceland, to a lot of Latin-American countries go so far as to not just criminally prosecute bankers but jail them.  Even in Iran, when some bankers embezzled money from the public they were hanged. Likewise in the United States, we have a completely polar opposite view of how those criminals are treated. They get federal appointments, they get jobs in the treasury—

MT: It's a new development though. I mean, let's be fair about this. Remember, 20, 25 years ago, when we had the S&L crisis, we took like 1800 people to court, we roped people from the branch manager all the way up to people like Charles Keating, 800 people were convicted and jailed in that scandal. As recently as a dozen years ago or ten years ago, we had Tyco, Worldcom, Adelphia, Enron, you know – we dragged the CEO of Adelphia, a 78-year-old man, out of his bed at 9 o'clock in the morning and perp-walked him in front of the cameras. We've just had this sea change in our attitude toward corporate leaders in the last ten years, and it's this weird, undefinable thing that's just new in this country. It's not like it's always been true that bankers have been above the law in this country. It's a relatively new phenomenon. And it's a dangerous problem that has to be addressed.

CG: And it kind of goes back to the lobbyist question, because these people are so influential, they're seen as titans of industry, they're our 21st century leaders, and everybody wants to aspire to be these people. I mean, is it gonna take a cultural shift for us to see these people as criminals just like the guy who robs the grocery store? What's it gonna take for us to get angry at these people?

MT: Well, I think people are already angry. But it's important because that's what we elect our leaders to do. We elect them to make these difficult choices to move forward with these politically difficult prosecutions. I mean, you have to give somebody like even George Bush credit, it was very very important, symbolically, to go after just a few people in  these corporate accounting scandals in the early 2000s, like Bernie Evers, like Ken Lay from Enron. That is exactly what we have government leaders in office for. We have them there to send the message and let people in the business world know that nobody's above the law. And this is exactly what we haven't done in the last 5, 6, 7 years. It's just been this failure of will, politically, all over on both sides of the aisle. Again, it's a new thing. I think we have to find a way to get people, maybe like Elizabeth Warren, into office who will appoint the right people to run the justice department, and the OCC, and the SEC, and start making cases again. It doesn't have to be a lot of them, just some of them.

CG: I wanted to ask you about Elizabeth Warren, because her name has come up for 2016. I think it's still way too early to talk about this, but I think a lot of people are growing tired of the DNC choices of guys like Cuomo or RNC choices like Rubio or Christie. People are starting to see how complicit our government is in this corruption. So do you think Elizabeth Warren truly has a shot at challenging the establishment, and if she does get in, is she capable of being bought off like Obama was?

MT: I don't think she can be bought off. First of all, I'd like to point that I was the first mainstream journalist to propose that Elizabeth Warren run for the presidency. I did it a long time ago, years and years and years ago. I think she would be great at it, I think she is for real, absolutely, on these issues, and I don't think she's doing it to get into higher office where she can sell out. I think she's absolutely literate on these issues. I think she's like the new model for our politicians in the future. In the old days, politicians didn't really understand the issues like banking, they didn't understand Wall Street, they didn't understand the stock market, credit, the Fed, none of that stuff. Nowadays, politicians have to be literate on all that. Warren is one of the few. Ted Kaufman is another. Jeff Merkley is another one. But we need these leaders who don't need to rely on aides that tell them what these issues are all about. And I think she'd be a great choice.

CG: I wanted to ask, because I know we're running out of time, if there were one particular concept that you feel is really important that people need to understand, what concept would that be, and what would be the best way to get that point across?

MT: Wow. I mean, what I really spent the last 5 years doing is just trying to explain how the mortgage crisis worked. I think that's still something people don't understand if you ask. If you go travel around middle America and you ask them what happened in 2008, most people will still answer, you know, it's the fault of janitors and low-income people who borrowed too much money to buy houses they couldn't afford. They still don't understand it was the availability of that credit that was part of a scam that transcended all of Wall Street. They created these masses of subprime mortgages— these cheap, risky mortgages—

CG: You talked about a dealer selling a bag of oregano as, like, grade A weed.

MT: Exactly. That's exactly what it is. They were throwing tons of oregano and they were using the securitization process that turned it into high-grade weed, and they were selling it all over the world to unions and pension funds, you know, as basically Humboldt County weed. That's what it was. It's the same as seeing guys selling the fake Rolex watches and Prada bags. Except it was turning mortgages into triple-A rated bonds. And it's an extremely difficult concept for people to understand, but years later, they still don't quite— people don't get it. And if you could just get that one thing across, that would do wonders to help people understand the crisis.

CG: And, I know you're doing a panel tonight. You just recently wrote a book. But what's gonna be the focus of your talk tonight? What are you gonna try to get across in your message?

MT: I'm gonna talk a lot about the criminal justice disparity, this whole "collateral consequences" thing, and I've been working on this for a book for the last 2 and a half years. Last week I interviewed the leaders of the only bank that's been indicted since the financial crisis, and it's the Abacus Federal Savings Bank, which is this small, family-owned bank in Chinatown. The only bank to be indicted since 2008. And it's sort of a graphic demonstration of the "collateral consequences" because they were, essentially, this is how small you have to be to be prosecuted in the new America. You've gotta be a six-story building in Chinatown running a mom-and-pop bank, otherwise you can't be indicted. That's what I really want to talk about. That, and this disparity, and how dangerous that is for everybody. How wide it is between the two classes.

CG: Do we still have more time left? Just a little more time for questions? Okay, cool. I wanted to know, man, what is your take on ... there's a revolution going on in Turkey right now. And it's very similar to the Occupy movement, where they're taking a public space, the government is violently repressing, I mean, do you think the action that's happening in Europe ?– Spain, Germany, Turkey – I mean, do you think there's a great revolution against capitalism right now?

MT: Yes, I do. But you also have to remember that there's a much broader tradition of that kind of politics in Europe than there ever has been here. I lived in Russia for ten years. In Europe and Eastern Europe, there has always been a very real conflict between capitalism and socialism and other forms of government and there's never really been an alternative idea in the United States. It's always been predominantly capitalist. It'll take something pretty extreme in this country to move people beyond the paradigm that we're used to in this country. But I think we're closer to that moment, because of the abuse of the system right now.

CG: Well, the Arab Spring was fueled by high food prices, high fuel prices, and stagnant wages that really drove people to the streets. I feel like it's happening here. Productivity is at record highs, Wall Street is hitting new highs almost every other week, and wages, I think for a minimum wage worker, have been at their lowest ever in 51 years. It seems like we're getting close.

MT: Right. Of course. But there's a major problem with that. One of the problems is a press corps that doesn't really report the fact that the economy still sucks. It's amazing to me. I'm a little guilty here. I was one of the ones that, you know, in the cream of the American political press, that basically knows nothing about how economics works. They basically hand us statistics on the stock market, on unemployment. If [the stock market] is rising, we assume that the economy is good, most of our press is out of touch with the way people live. And so this gigantic story, that the real economy has not grown while the financial economy is exploding, it's going unreported. And so we don't have this widespread sense of crisis that we should have, which is kind of a shame. But eventually, I think, it's not that the anger isn't there, it's just that coalescing public debate about it is missing.

CG: Because you talk about the media, I think the corporate-owned media, I feel like their job is to suppress news of any kind of revolt against the system itself, against the status quo. I mean, being a professional journalist, and I've been a journalist myself, is the need to protect one's own career and livelihood, is that kind of taking precedent over reporting the actual truth, and upsetting the people who own the news?

MT: See, I think this is a little bit of a misconception about how the media works. It's not like you have news directors and editors telling reporters that they can't report on this and that. It's just there's sort of a community of like-minded, upper-class people who man journalism these days. I mean, my father was a journalist. I grew up around reporters. Back in the sixties and seventies, with reporters, it was more like a trade than a profession. You entered as a teenager, you probably didn't go to college. It was like becoming a plumber or an electrician. The standards for someone like Seymour Hersh, who started when he was 16, you know, working in the newspaper, and they all had, reporters all had this desire to kind of stick it to the man, it was built into their personality, we were all ornery, difficult people. And that thing is gone from our profession. There's a new class of reporter. They're very in bed with the same kinds of people who are running the government, they're very educated, often upper-class, and they just don't see the problems. And it's not like they're consciously not reporting it, they're blindfolded. So it's an organic, weird sort of dysfunctional problem in our press corps.

Carl Gibson, 26, is co-founder of US Uncut, a nationwide creative direct-action movement that mobilized tens of thousands of activists against corporate tax avoidance and budget cuts in the months leading up to the Occupy Wall Street movement. Carl and other US Uncut activists are featured in the documentary "We're Not Broke," which premiered at the 2012 Sundance Film Festival. He currently lives in Madison, Wisconsin. You can contact him at This e-mail address is being protected from spambots. You need JavaScript enabled to view it , and follow him on twitter at @uncutCG.

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