When the US economy collapsed a couple of years ago, large swaths of the media landscape dealt with the financial institutions at the root of the debacle with something like equanimity. One of the harsher critics of the crisis' major players was Rolling Stone's contributing editor, Matt Taibbi, who developed a sort of loose cannon appeal to the disgruntled, downtrodden, and degraded.
His reporting and editorializing often overlap, and his deliberately opinionated prose bubbles with invective aimed at the villains in his stories. At the same time, his clear and concise descriptions and his ability to streamline information have made him required reading on the subject of Wall Street perfidy.
His most recent article explores the Levin Report, a 650-page guide on how to steal money from unsuspecting citizens, also known as a rehashing of the inner workings of Goldman Sachs pre-2008, which was released by the Senior Senator from Michigan, Carl Levin.
In person Taibbi is quiet and self-aware, a sharp contrast to his acerbic and biting prose. We met for coffee in Midtown Manhattan.
VICE: You’re known for your analogies—how badly did Goldman Sachs fuck us?
Taibbi: [laughs] I’d have to sit down and think about that. It was definitely a serious, all day thragging, though.
In your focus on the financial crisis, why did you decide to really zero in on Goldman Sachs?
After the 2008 presidential election we at Rolling Stone kind of collectively decided to do a story about the financial crisis. I did the first story, which was about the AIG bailout. When I was interviewing people for that story I noticed that every single person I talked to was like, “Those motherfuckers at Goldman Sachs…” and then, when I looked at it more broadly, it seemed like Goldman was a major player in something that had gone terribly wrong in every sphere of business that we were looking at. For instance, in the commodities business they were the first company to get these crazy exemptions that allowed speculators to act like consumers. The Internet stock bubble and mortgages—they were everywhere. So we decided doing a story on them would be good because it would allow us to kind of use one bank as a symbol for everything that had gone wrong on Wall Street. Plus, they have a sort of “we’re better than you” attitude that makes them a very attractive literary subject.
Would you consider them the biggest perpetrator from the era?
Well they’re the most successful investment bank. They’re the richest and the most politically influential. If you go back pre-crash there were five major investment banks: Goldman Sachs, Morgan Stanley, Bear Stearns, Lehman Brothers, and Merrill Lynch. Three of them don’t exist anymore. Goldman and Morgan Stanley are the only ones left, and you could make the argument that Goldman’s fingers were in more pies. Morgan Stanley’s former chief wasn’t the Treasury Secretary twice over [Robert Rubin and Hank Paulson].
Was what they did illegal?
Absolutely. It was definitely illegal. And if you read the Levin Report—and Goldman’s going to argue about this—companies are required to disclose adverse pertinent information to their clients. They cannot lie and make representations that aren’t true. If you read this report they did that. For instance, in one deal they told their clients they had “sourced” their assets from the street. In other words they had gone out on the open market and bought the assets to sell to their clients. In fact, it was coming straight out of their own inventory. In other words: they had bad inventory. Think of it as a car dealership. They had a lot full of cars with bad breaks and they told the client they went out and bought these cars somewhere else, when in fact they were coming right off their lot. That’s fraud. That’s lying. And there’s not just one instance of that. There are dozens and dozens of instances. We’re talking billions and billions in client losses. I think there’s a lot of information in the Levin Report alone that could put those guys on trial.
Why aren’t they being held accountable?
There are a lot of theories on that. The first thing you have to look at is that this is a very powerful, politically connected company. For decades they’ve been one of the top campaign contributors to the winning president. They have a number of their people serving in government—the number two guy in the Treasury right now is a Goldman guy. There’s also the fact that prosecutors are gun shy. You know there are probably five regulatory agencies that should have done this. You have your primary banking regulators like The Office of Thrift Supervision, The Office of the Comptroller of the Currency, The Fed, The SEC, and The Justice Department. All of them should have been doing this work and they haven’t, so obviously there’s something systemically wrong.
This is all seems so amorphous. Who exactly, can we point the finger of blame at?
You have to understand this is a decades long process. This has been a gradual wearing away at the ability to regulate. There have been huge changes in the financial services industry. There’s been a gradual move towards self-regulation. And so if you want to get angry the fact is that everybody shares a little bit of the blame. That’s kind of characteristic of this whole problem with the financial services industry. It’s fractional crime. Instead of stealing a trillion dollars from one person they steal 30 cents from everybody.
I feel like you’re one of the few journalists digging deep into this issue right now.
Well I think a lot of business journalists either worked for investment banks or hedge funds, or they want to be working for them.
They don’t necessarily want to be writing about people whose job is to make money.
Right, they want the actual job. And you know, it’s sort of like political journalism. If you’re going to go down the path of being a bomb tosser you’re not going to get invited to the party. So the difficulty in obtaining good sources is a factor. The other thing is that it’s a really, really complicated subject that’s very hard to make interesting. I think producers and editors are really reluctant—I mean how many magazines are really going to do an 8,000 word piece on CDOs [collateralized debt obligation]? Also, a lot of news organizations have this fear of rocking the boat. It’s just as easy to sell ads when you’re publishing pictures of cute puppies.
So one could argue that this is Exhibit A on how the culture of journalism in America has morphed into a very cosmetic institution.
Absolutely. The entire instinct of modern journalism is short, brief, loud headlines, right?
Getting maximum clicks. There’s not even really a focus on producing original content.
Exactly. Just go and take it from somebody else. Minimal amount of effort to sell the maximum amount of advertising. So the absolute opposite of that model is hiring a journalist to work on one story for two months and then put out a ten thousand-word article. The way I look at it is that this isn’t really a financial story, it’s a political story. It’s about how power works in America. They’ve figured out a way to hide power in these little regulations and the minutiae and it’s like a gigantic bulwark that separates ordinary people from those of influence. So in order to be a journalist you have to go through that whole maze. You need space and you need time, and nobody has it anymore.
You’re probably the highest profile writer at Rolling Stone right now. Has that helped or hurt your ability to report?
Well, I should point out that I’m definitely sharing in some of the success that Rolling Stone generally has; like Michael Hastings and everything. But take for instance this Goldman Sachs story that I just did with the Senate report. People in government who have a story to tell want to get the maximum possible impact, so it only helps when you can argue that you’re going to reach a lot of eyeballs and get a lot of people interested.
When you started reporting on the financial crisis, how well-versed were you in the nomenclature?
I didn’t really know anything at all. I had absolutely no background in the financial services industry. However, as it turned out it was very similar to a Russian corruption story I covered for The Exile in the 90s. It was a story about a small group of special interests that were co-mingled with state power. So even though I didn’t know the nomenclature, the story was familiar.
You write in your recent book Griftopia: Bubble Machines, Vampire Squids and the Long Con That Is Breaking America, that Ayn Rand really propagated a lot of the deregulatory ideas that Alan Greenspan then adopted and implemented. Does her legacy as a great writer overcome the legacy of her ideas?
Absolutely not. I tried reading The Fountainhead and I couldn’t get through it. I didn’t get it. It’s just not a fun book. But the followers of her ideas are definitely embedded in that whole world and it’s really weird. There’s something weird about how America has this reflexive instinct to apologize for the rich and powerful.
You also have a chapter in the book about Alan Greenspan titled “The Biggest Asshole in the Universe.” He was head of the Fed when a lot of the deregulation took effect. Do you stand by your description?
[laughs] Well, there might be bigger assholes… Osama Bin Laden was one, for example. But, after all that’s happened he came out and said, “Maybe I was a little bit wrong.” That’s another element of this modern media thing—it doesn’t matter whether you’re right or wrong, what matters is whether you can get away with what you’re saying for a long enough period of time. And if you have to issue a correction it doesn’t matter, the damage is already done. I think a lot of really smart people realize they can manipulate public opinion in this way and they just forge ahead saying what they say, confidently and loudly, and then worry about the consequences later.
Rolling Stone is basically a music magazine. Is it difficult to get your ideas to print?
Not at all. The three main people I work with are Deputy Managing Editor Eric Bates, Managing Editor Will Dana, and Publisher Jann Wenner. I don’t think people realize that the type of articles I do are really more of a group effort. From start to finish we talk about what we want to say, and sometimes it’s really not even my ideas. I mean, I’m the one who executes the final product, but in some ways they’ve sort of shaped my opinions about some things.
In one of your articles you wrote that Goldman Sachs was a “great vampire squid wrapped around the face of humanity.” Do you get tired of people quoting that in basically every article written about you?
[laughs] The worst part is that whenever I write a piece now my editors are always like, “we need a vampire squid line.” But it’s fun—I mean, that’s what you try to do when you write, you try to get someone to adopt a catchphrase.
You were in Russia for several years working for The Exile. Are we beginning to resemble the Russian class system? The wealthy oligarchs who rule everyone yet no one does anything about it?
I think there’s an argument to be made that we’re heading in that direction. That’s certainly not an idea that’s original to me.
It’s just more apparent now.
Sure, sure. There’s a guy at MIT, Simon Johnson, who used to be an IMF executive. He worked with developing third world economies and dealt with the whole issue of third world corruption for a long time. He wrote—from personal experience—about what he saw then and what he sees now with the financial services industry, and he basically says that we’re going down the same path. He sees a lot of the same things happening, such as the co-opting of the mainstream media and the corporate regulatory capture where you have former financial services industry employees running the regulatory agencies. I don’t think it’s on the same scale, but there are characteristics of it for sure.
Your opinion and, quite frankly, your distaste with your subjects comes through very strongly in your writing.
Right. Some journalists think you shouldn’t bring your personal feelings to a story. I definitely see that point of view and that approach, but I don’t follow it. I think one of the ways you can help a reader understand a topic is by first letting them know who you are and what your values are, and then showing them how you respond to the material. So me writing about how much X, Y, or Z pisses me off helps readers understand what’s important and what isn’t.
Do you still follow Russian politics? They’re gearing up for an election. I tend to envision Putin placing Medvedev on a platter and eating him on live television, or something of the sort.
They’re just your basic third-world kleptocracy—which is where everybody is headed. Well, everybody who still has a functioning government.
I think people are going to realize what a blip on the radar American-style democracy in the 20th century was. A big middle class that had a huge powerbase, financial interests, bosses giving benefits… all those things. It’s just a little blip in history. For the most part, concentrated wealth will make all the decisions and everybody else is dictated to. It’s going to be like that to varying degrees. The more corrupt it is the more it’s heading in that direction, and clearly a place like Russia is a very corrupt place.
I like how Russian oligarch Mikhail Prokhorov bought the New Jersey Nets.
I know. When I heard that I called an old friend who I knew in Russia and he said, “They let him in the country?” That’s what we thought of the guy.
NBA commissioner David Stern said there was a background check done on him, but they couldn’t find anything, which begs the question: Who did the background check?!
[laughs] I know, I mean he stole a 15 billion dollar company, which also happens to be the cause of one of the worst environmental disasters in the world. Norilsk Nickel—within a 50 mile radius of the mine the snow is yellow year round from the sulfur fumes and the average lifespan is something like 52.
What do you tell people who come to you and say they want to study journalism and become an investigative reporter doing long form stories like you?
I tell them to go to medical school. Seriously, journalism school is a waste. You can learn the whole gig in three days. It’s all about life experience, knowing something really well, and luck.