15-04-2014, 07:56 PM
AARON MATÉ: Well, we are speaking with Matt Taibbi, the award-winning journalist formerly with Rolling Stone magazine, now with First Look Media. His book is The Divide: American Injustice in the Age of the Wealth Gap. Now, turning to the banksor the bank that was prosecuted, Abacus Bank, last May it became the first bank to be indicted in Manhattan in over two decades. Manhattan District Attorney Cyrus Vance Jr. announced the indictment.
MATT TAIBBI: So, this isI mean, it's almost humorous. It's not humorous for the bank involved, obviously. But here he is holding this grand press conference. They actually had a chain gang, where they chained 19 of the defendants together and hauled them into court for thisfor this exercise.
AMY GOODMAN: All working for Abacus?
MATT TAIBBI: All working for Abacus. And these are working-class Chinese immigrants, basically. The highest-ranking official in this entire case made $90,000 a year. Many of them didn't speak English. This is a small bank wedged between two noodle shops in Chinatown. And this was the target they chose to go against as a symbol of the financial crisis? In the chain gang incident, actually, three of thethree of the defendants had actually already been arraigned, but they asked them to volunteer to come down to the courthouse for the photo op that day, brought them in, chained them up to the rest of the defendants so they could be re-arraigned for the benefit of the cameras.
But the point of this whole thing is that Abacus Federal Savings Bank, which is a small, community, minority bank in Manhattan, this was the sole target of any reprisal by the federalby the government in the wake of the financial crisis. And they're a stone's throw from all these gigantic skyscrapers, you know, housing all of these other major banks that committed crimes that were hundreds of times worse than Abacus was even accused of. And it was such a visually striking contrast for me that that's where I wanted to start the book, because here you have this bank being arraigned in downtown Manhattan, and they looked northward towards Chinatown for their target as opposed to, you know, a few blocks south, where they could have foundyou know, walked in any direction and found an appropriate target.
AMY GOODMAN: Contrast that with Jamie Dimon testifying beforewhat was itthe Senate Judiciary Committee, the head of JPMorgan Chase. And talk about what his bank was fined for and what he ultimatelywhat happened to him.
MATT TAIBBI: So, Jamie Dimon is the CEO of JPMorgan Chase, and theylast year that bank paid $20 billion in fines, which is an extraordinary number. Think about it. I think it beats by a factor of five the record for the largest amount of regulatory fines in a single year, which was previously held by BP for their Deepwater Horizon incident. They were accused of an extraordinary array of things, everything from being Bernie Madoff's banker and not raising red flags early enough, to manipulating energy prices in Michigan and California, to failing to disclose to investors the extent of losses in the London Whale episode, to abuses during the subprime mortgage period by some of their subsidiaries. The list of things goes on and on and on and on. And
AMY GOODMAN: I mean, if this were translated into common criminal law
MATT TAIBBI: Right.
AMY GOODMAN: this isthis is sort of replacing hundreds of years in prison for many different people.
MATT TAIBBI: Oh, yeah, absolutely. I mean, I made the point in another casethere was another case involving a company called General Reinsurance where a bunch of executives were charged with a $750 million stock fraud, that that amount of fraud that year was more than the total value of all the cars stolen in the American Northeast that same year. So you think about everybody who's doing time for a stolen car that year, and, you know, these guys ultimately got off on a technicality.
So, again, going back to Chase, they paid $20 billion in fines. And what the government always says in response to the question of why aren't these guys in jail, they always say, "Well, we don't have enough evidence. These cases are hard to make." But my question is, over and over again, they somehow seem to have enough leverage to get billions of dollars of fines out of these companies, but not enough leverage to get even a day in jail for any of their executives? It doesn't add up. Logically, it's a total non sequitur. There's no way you can have a company paying that much money and not have somebody guilty of a crime. It's justit's not possible.
AARON MATÉ: And Jamie Dimon, of course, gets a 74 percent raise.
MATT TAIBBI: Yeah, exactly. I mean, that's the punchline to this whole thing, right? I mean, if you were, you know, the head of any other businessAlex Pareene of Salon.com made this point, that if he were running a restaurant and he got the biggest fine in the history of restaurants, there is no way that he would be kept in, kept on the job as the head of the company. But he was not only not fired, not only not prosecuted, but he was kept in the job, and he got a 74 percent raise. And they essentially paid for $20 billion fines by laying off 7,500 lower-level workers that year, and so that's where the pain came from.
AMY GOODMAN: Let's go to Richard Fuld, the final chair and chief executive officer of Lehman Brothers. In 2008, he spoke before the House of Representatives Oversight Committee and was grilled about his own exorbitant earnings as the bank went under. This is Committee Chair Henry Waxman questioning Fuld.
MATT TAIBBI: Well, first of all, there was a whistleblower within Lehman Brothers who wrote to the SEC before Lehman Brothers collapsed, talking about how Fuld had actually earned a significantly larger amount of money than he represented there in Congress. It's quite possible that if the SEC had followed up on some of those complaints by that whistleblower, that they might have uncovered some of the corruption at Lehman Brothers ahead of time and maybe, possibly even headed off that disaster.
But what's interestingwhat's symbolic about Richard Fuld is that here's a guy who nearly blew up the planet by, you know, loading up his company with deadly leverage and making a string of irresponsible decisions to over-invest in subprime mortgages, and the collapse of the company resulted in all of us having to pay these enormous bailouts. But Fuld walked away with, by his count, $300 million, maybe $350 [million], but by the count of some others, more closer to half-a-billion dollars, and he kept the money. And that is a consistent theme of the financial crisis. Not only were these guys not prosecuted, they got to keep all of their money, all of the ill-gotten gains that they made during these periods.
AMY GOODMAN: You call that chapter "The Greatest Bank Robbery You Never Heard Of."
MATT TAIBBI: Right, yeah. No, there was something that happened at Lehman Brothers at the end of theyou know, when the company went out of business. It wasthere was essentially a merger with the British bank, Barclays, and there was an incredibly interesting episode where a series of Lehman insiders agreed to take upwards of $300 million in compensationin future compensation from Barclays, before they did the process of valuating the company for sale to Barclays. I know that sounds complicated, but basically they took jobs at Barclays, and then they basically marked down the price of Barclays so that the Lehman creditors got less money in the end. So, if you wereif you lost money in the Lehman debacle, you can probably lay some of the blame at the feet of those executives.
AARON MATÉ: And it was so shady that didn't most of this happen in the middle of the night?
MATT TAIBBI: Yeah, actually, they madethey struck many of the deals with these Lehman insiders before dawn on the day of the last board meeting. Literally before dawn, you had emails going back and forth between some of these Lehman Brothers executives saying, "Well, how much did you get? You know, I got $15 million," and, you know, etc., etc.
AMY GOODMAN: You know, the way the media covers, and the prosecutors go after or don't, these institutions, it's all from the perspective of those who would be or should be charged. When it comes to people on the street, it's always from the perspective of the victim.
MATT TAIBBI: Right.
AMY GOODMAN: Which, by the way, it should be.
MATT TAIBBI: Right.
AMY GOODMAN: I mean, if someone is raped or murdered, you should hear their story, their name
MATT TAIBBI: Absolutely.
AMY GOODMAN: and a person should be held responsible. But in this case, you never hear about the victims.
MATT TAIBBI: That's right.
AMY GOODMAN: Instead, you are identifying with those who are charged. They say they have families; they're really a wonderful person.
MATT TAIBBI: Right.
AMY GOODMAN: Talk about the victims of these crimes that JPMorgan Chase was fined for.
MATT TAIBBI: Well, I mean, we're all victims of these crimes. I mean, that's the difficult thing about this new era of financial corruption is that, you know, these crimes are executed on such a massive scale that we can all be victimized and basically not know it. If you think about something like the Libor scandal, right, where the world's biggest banks got together and colluded to monkey around with world interest rates, well, that crime affected anybody who held a variable rate investment of any kind. So if you have a floating rate credit card or a floating mortgage, or if you're a town that has swaps, you may be paying more, you may be paying less. It doesn't knowyou don't know, but they've been affecting the amounts of your holdings. There have recently been charges that some of the banks have been monkeying around with the prices of things like metals, like aluminum and tin and zinc and copper. So if you go to buy a can of soda, you may be paying more than you would have otherwise.
In the subprime mortgage crisis, typically the victims were people who held pensions, because what would happen often was the banks would create these gigantic masses of essentially phony subprime loans. They would disguise them as AAA-rated investments. Then they would sell them to an institutional investor like a pension fund. So you're some, you know, working stiff, a toll booth operator in Minnesota. You've got a state pension. And you wake up one morning, and 30 percent of your pension fund is gone. Well, you're a victim of this stuff.
But it's very hard to trace that back to these people. And it's hardand journalists don't want to do the work of identifying who the victims are in these scandals, because it's too complicated. And that's why you often see these crimes described from the point of view of the perpetrator and not from the victim, because we're all the victims. These crimes are ethereal. They're existential. They're on such a gigantic scope that it's difficult for us to get awrap our heads around. And that's aso that's a very good question to ask.
AARON MATÉ: You mentioned earlier people who are targeted for welfare fraud. In one case, you went to San Diego and profiled a woman who was targeted by this program P100
MATT TAIBBI: Right.
AARON MATÉ: a very invasive action in her home. Can you talk to us about that case?
MATT TAIBBI: Yeah, they have this program in San Diego where if you apply for welfare, the state gets to pre-emptively search your house to make sure that you're not lying about, for instance, having a boyfriend. You know, so you're a single mom. You go to the welfare office. You need financial assistance. You represent on the form that you're not cohabiting with anybody. And just to check, they tell you to go sit tight in your house. And I've heard stories of people who waited, literally sitting in their house for a week, not knowing when the inspector is going to come, because if you're not there when they come, you don't get your welfare.
So, the person comes finally. It's not a social worker. It's very often a law enforcement official. They go in, and they search your house. I talked to a number of women who have recounted the experience of having their underwear drawers rifled through. You know, one woman talked about an inspector sticking his pencil end into the underwear drawer and picking out a pair of sexy panties and saying, you know, "Who do you need these for? If you don't have a boyfriend, what's this for?" And this is the kind of thing that people have to go through.
And I understand that, to many middle Americans, you know, welfare recipients are notare perhaps not the most sympathetic people. But it's very striking that, for instance, the recipients of bailouts, we don't have the right to go in and check their books, but somebody who applies for federal assistance to feed their kids, we have the right to go through their underwear drawer. And I thought that was a striking comparison.
AMY GOODMAN: Matt, the cover of The Divide, of your book, American Injustice in the Age of the Wealth Gap, is very striking. And you have this artwork throughout your book. Explain who did this.
MATT TAIBBI: So this is Molly Crabapple. She's a great artist. I met her during the Occupy protests. We hadwe have a mutual friend, and Molly had done these amazing posters for the Occupy protests that werethat were basedsome of them were based on my work, because there was a vampire squid theme to some of them.
AMY GOODMAN: Explain vampire squid.
MATT TAIBBI: Well, I had referred to Goldman Sachs as a great vampire squid wrapped around the face of humanity. So she had done these series of posters that were like, you know, "starve the vampire squid," "stop the vampire squid." So we got together, and she wasshe ended up becoming sort of famous as like the semi-official artist of Occupy. And we decided to work together on this project. And what's so perfect about her is that she really specializes in doing these kind of grotesque, horrifying, Boschian portraits of dysfunction, you know, like the cover. It actually looks quite beautiful from a distance, but if you look at it closely, it's this horrifying image of people being ground up in this mindless justice machine. So it's beautiful stuff, and Molly should getshe gets all the credit in the world, I think. They're incredible images.
AARON MATÉ: At sentencing hearings, you have sometimes family members and friends coming to plead to the judge for leniency. And you sort of contrast this in your book. You have one scene where you have executives bringing in hundreds of people.
MATT TAIBBI: Mm-hmm.
AARON MATÉ: Can you compare what happens there to what happens to people on the bottom?
MATT TAIBBI: So this is interesting. Again, this is that same Gen Re case I talked about, the $750 million stock fraud where these guys all got off. And what was so interesting about that isso, if you go to court, the judges almost never are from the same neighborhoods as the accused. But when you do have a case where it's, you know, somebody from the suburbs who lives in Connecticut and the judge is also somebody who's from the suburbs and lives in Connecticut, and he has members of the local PTA come out and say that, you know, "This guy is somebody who wouldn't even jaywalk. You know, he's a God-fearing person. Yes, maybe he might have committed a $750 million stock fraud, but he's a very decent person," they will very frequentlylike, bail is never an issue for this kind of defendant, which is very, very important. You know, theseand beyond that, in that particular case, after they were convicted, all of these defendants were allowed to remain free pending appeal, which removed all of the leverage the state might have had to roll up these defendants up into higher targets, whereas that's exactly the opposite of what happens to poor defendants, who are frequently thrown in jail. Their, you know, bail is set at a level that's higher than they can afford. And then, while you're in jail waiting for trial, you start to do the math, and you realize that you could stay in jail longer in bail than you would do if you were sentenced. And that's one of the reasons why people plead out, even when they're innocent, because the math just works in the state's favor. They have all these tricks they can use to keep you in jail longer than you're supposed to be.
AMY GOODMAN: Who was tougher on corporate America, President Obama or President Bush?
MATT TAIBBI: Oh, Bush, hands down. And this is an important point to make, because if you go back to the early 2000s, think about all these high-profile cases: Adelphia, Enron, Tyco, WorldCom, Arthur Andersen. All of these companies were swept up by the Bush Justice Department. And what's interesting about this is that you can see a progression. If you go back to the savings and loan crisis in the late '80s, which was an enormous fraud problem, but it paled in comparison to the subprime mortgage crisis, we put about 800 people in jail duringin the aftermath of that crisis. You fast-forward 10 or 15 years to the accounting scandals, like Enron and Alelphia and Tyco, we went after the heads of some of those companies. It wasn't as vigorous as the S&L prosecutions, but we at least did it. At least George Bush recognized the symbolic importance of showing ordinary Americans that justice is blind, right?
Fast-forward again to the next big crisis, and how many people have we gothave we actually put in jail? Zero. And this was a crisis that was much huger in scope than the S&L crisis or the accounting crisis. I mean, it wiped out 40 percent of the world's wealth, and nobody went to jail, so that we're now in a place where we don't even recognize the importance of keeping up appearances when it comes to making things look equal.
AMY GOODMAN: Can you end with the story of Patrick? And we just have a minute.
MATT TAIBBI: Sure, yeah. There was a saxophonist named Patrick Ocean Jewell who was assaulted by police here in New York City. They mistook a hand-rolled cigarette for a joint.
AMY GOODMAN: He had brought his girlfriend to the subway, liked to walk with her every morning.
MATT TAIBBI: Right.
AMY GOODMAN: He actually did not know who attacked him.
MATT TAIBBI: Right, yeah. No, the police can be anyone these days. That's another thing that most people don't know about. They don't always come in uniform, and they don't always come in those unmarked Plymouths that they used to drive. They can drive fancy cars. They can drive beaters. They can be dressed in plainclothes. They can be black, white. You don't even know who the cops are anymore. And this guy was just sitting there at a train station smoking a hand-rolled cigarette, and all of a sudden he's being beaten up by all these people, you know, and he only later figured out that they were cops.
AMY GOODMAN: When he called to a police officer, started crying for help.
MATT TAIBBI: Yeah, he's crying for help, and a uniformed police officer comes and tells him to shut up. And that's when he realizes that they were cops. But this isthis is sort of stop-and-frisk expanding its universe of targets. So, you know, now, even if you're white and middle-class, you know, now you, too, can be part of this whole process. And that's
AMY GOODMAN: And your point in bringingputting this in The Divide?
MATT TAIBBI: Is thatyou know, is that this is now beginning to affect everybody. I think one of the problems that the increasing wealth gap is bringing to us is that there's a smaller and smaller group of untouchables, and then there's a sort of widening group of everybody else, and we all have the same lack of respect from the law enforcement.
CYRUS VANCE JR.: Today we are announcing the indictment or guilty pleas of 19 individuals on charges including mortgage fraud, securities fraud and conspiracy, as well as the indictment of Abacus Federal Savings Bank, a federally chartered bank that has been catering to the Chinese immigrant community since 1984. Now, these defendantsthe bank and former employees and managers from its loan departmentare charged with engaging in a systematic scheme to falsify and fabricate loan applications to the Federal National Mortgage Association, commonly known as Fannie Mae, so that borrowers who would otherwise not legally qualify for Fannie Mae's mortgages could obtain them unlawfully. This is a large-scale mortgage fraud case that we estimate to include hundreds of millions of dollars' worth of falsified loan applications. If we have learned anything from the recent mortgage crisis, it's that at some point these schemes unravel, and taxpayers can be left holding the bag. Financial institutions, in short, have to obey the law and follow the rules. Our financial system is predicated on this basic concept.
AARON MATÉ: That's Manhattan DA Cyrus Vance Jr. Matt Taibbi, you were at this trial. You heard Prosecutor Vance there suggesting some link here to the financial crisis, but that wasn't the case.MATT TAIBBI: So, this isI mean, it's almost humorous. It's not humorous for the bank involved, obviously. But here he is holding this grand press conference. They actually had a chain gang, where they chained 19 of the defendants together and hauled them into court for thisfor this exercise.
AMY GOODMAN: All working for Abacus?
MATT TAIBBI: All working for Abacus. And these are working-class Chinese immigrants, basically. The highest-ranking official in this entire case made $90,000 a year. Many of them didn't speak English. This is a small bank wedged between two noodle shops in Chinatown. And this was the target they chose to go against as a symbol of the financial crisis? In the chain gang incident, actually, three of thethree of the defendants had actually already been arraigned, but they asked them to volunteer to come down to the courthouse for the photo op that day, brought them in, chained them up to the rest of the defendants so they could be re-arraigned for the benefit of the cameras.
But the point of this whole thing is that Abacus Federal Savings Bank, which is a small, community, minority bank in Manhattan, this was the sole target of any reprisal by the federalby the government in the wake of the financial crisis. And they're a stone's throw from all these gigantic skyscrapers, you know, housing all of these other major banks that committed crimes that were hundreds of times worse than Abacus was even accused of. And it was such a visually striking contrast for me that that's where I wanted to start the book, because here you have this bank being arraigned in downtown Manhattan, and they looked northward towards Chinatown for their target as opposed to, you know, a few blocks south, where they could have foundyou know, walked in any direction and found an appropriate target.
AMY GOODMAN: Contrast that with Jamie Dimon testifying beforewhat was itthe Senate Judiciary Committee, the head of JPMorgan Chase. And talk about what his bank was fined for and what he ultimatelywhat happened to him.
MATT TAIBBI: So, Jamie Dimon is the CEO of JPMorgan Chase, and theylast year that bank paid $20 billion in fines, which is an extraordinary number. Think about it. I think it beats by a factor of five the record for the largest amount of regulatory fines in a single year, which was previously held by BP for their Deepwater Horizon incident. They were accused of an extraordinary array of things, everything from being Bernie Madoff's banker and not raising red flags early enough, to manipulating energy prices in Michigan and California, to failing to disclose to investors the extent of losses in the London Whale episode, to abuses during the subprime mortgage period by some of their subsidiaries. The list of things goes on and on and on and on. And
AMY GOODMAN: I mean, if this were translated into common criminal law
MATT TAIBBI: Right.
AMY GOODMAN: this isthis is sort of replacing hundreds of years in prison for many different people.
MATT TAIBBI: Oh, yeah, absolutely. I mean, I made the point in another casethere was another case involving a company called General Reinsurance where a bunch of executives were charged with a $750 million stock fraud, that that amount of fraud that year was more than the total value of all the cars stolen in the American Northeast that same year. So you think about everybody who's doing time for a stolen car that year, and, you know, these guys ultimately got off on a technicality.
So, again, going back to Chase, they paid $20 billion in fines. And what the government always says in response to the question of why aren't these guys in jail, they always say, "Well, we don't have enough evidence. These cases are hard to make." But my question is, over and over again, they somehow seem to have enough leverage to get billions of dollars of fines out of these companies, but not enough leverage to get even a day in jail for any of their executives? It doesn't add up. Logically, it's a total non sequitur. There's no way you can have a company paying that much money and not have somebody guilty of a crime. It's justit's not possible.
AARON MATÉ: And Jamie Dimon, of course, gets a 74 percent raise.
MATT TAIBBI: Yeah, exactly. I mean, that's the punchline to this whole thing, right? I mean, if you were, you know, the head of any other businessAlex Pareene of Salon.com made this point, that if he were running a restaurant and he got the biggest fine in the history of restaurants, there is no way that he would be kept in, kept on the job as the head of the company. But he was not only not fired, not only not prosecuted, but he was kept in the job, and he got a 74 percent raise. And they essentially paid for $20 billion fines by laying off 7,500 lower-level workers that year, and so that's where the pain came from.
AMY GOODMAN: Let's go to Richard Fuld, the final chair and chief executive officer of Lehman Brothers. In 2008, he spoke before the House of Representatives Oversight Committee and was grilled about his own exorbitant earnings as the bank went under. This is Committee Chair Henry Waxman questioning Fuld.
REP. HENRY WAXMAN: You've been able to pocket close to half-a-million dollars. And my question to you is, a lot of people ask: Is that fair for the CEO of a company that's now bankrupt to have made that kind of money? It's just unimaginable to so many people.
RICHARD FULD: I would say to you the 500 number is not accurate. I would say to you that although it's still a large number, I think, for the years that you're talking about here, I believe my cash compensation was close to $60 million, which you have indicated here. And I believe the amount that I took out of the company over and above that was, I believe, a little bit less than $250 million.
AMY GOODMAN: Your response to the last head of Lehman Brothers talking about his salary?MATT TAIBBI: Well, first of all, there was a whistleblower within Lehman Brothers who wrote to the SEC before Lehman Brothers collapsed, talking about how Fuld had actually earned a significantly larger amount of money than he represented there in Congress. It's quite possible that if the SEC had followed up on some of those complaints by that whistleblower, that they might have uncovered some of the corruption at Lehman Brothers ahead of time and maybe, possibly even headed off that disaster.
But what's interestingwhat's symbolic about Richard Fuld is that here's a guy who nearly blew up the planet by, you know, loading up his company with deadly leverage and making a string of irresponsible decisions to over-invest in subprime mortgages, and the collapse of the company resulted in all of us having to pay these enormous bailouts. But Fuld walked away with, by his count, $300 million, maybe $350 [million], but by the count of some others, more closer to half-a-billion dollars, and he kept the money. And that is a consistent theme of the financial crisis. Not only were these guys not prosecuted, they got to keep all of their money, all of the ill-gotten gains that they made during these periods.
AMY GOODMAN: You call that chapter "The Greatest Bank Robbery You Never Heard Of."
MATT TAIBBI: Right, yeah. No, there was something that happened at Lehman Brothers at the end of theyou know, when the company went out of business. It wasthere was essentially a merger with the British bank, Barclays, and there was an incredibly interesting episode where a series of Lehman insiders agreed to take upwards of $300 million in compensationin future compensation from Barclays, before they did the process of valuating the company for sale to Barclays. I know that sounds complicated, but basically they took jobs at Barclays, and then they basically marked down the price of Barclays so that the Lehman creditors got less money in the end. So, if you wereif you lost money in the Lehman debacle, you can probably lay some of the blame at the feet of those executives.
AARON MATÉ: And it was so shady that didn't most of this happen in the middle of the night?
MATT TAIBBI: Yeah, actually, they madethey struck many of the deals with these Lehman insiders before dawn on the day of the last board meeting. Literally before dawn, you had emails going back and forth between some of these Lehman Brothers executives saying, "Well, how much did you get? You know, I got $15 million," and, you know, etc., etc.
AMY GOODMAN: You know, the way the media covers, and the prosecutors go after or don't, these institutions, it's all from the perspective of those who would be or should be charged. When it comes to people on the street, it's always from the perspective of the victim.
MATT TAIBBI: Right.
AMY GOODMAN: Which, by the way, it should be.
MATT TAIBBI: Right.
AMY GOODMAN: I mean, if someone is raped or murdered, you should hear their story, their name
MATT TAIBBI: Absolutely.
AMY GOODMAN: and a person should be held responsible. But in this case, you never hear about the victims.
MATT TAIBBI: That's right.
AMY GOODMAN: Instead, you are identifying with those who are charged. They say they have families; they're really a wonderful person.
MATT TAIBBI: Right.
AMY GOODMAN: Talk about the victims of these crimes that JPMorgan Chase was fined for.
MATT TAIBBI: Well, I mean, we're all victims of these crimes. I mean, that's the difficult thing about this new era of financial corruption is that, you know, these crimes are executed on such a massive scale that we can all be victimized and basically not know it. If you think about something like the Libor scandal, right, where the world's biggest banks got together and colluded to monkey around with world interest rates, well, that crime affected anybody who held a variable rate investment of any kind. So if you have a floating rate credit card or a floating mortgage, or if you're a town that has swaps, you may be paying more, you may be paying less. It doesn't knowyou don't know, but they've been affecting the amounts of your holdings. There have recently been charges that some of the banks have been monkeying around with the prices of things like metals, like aluminum and tin and zinc and copper. So if you go to buy a can of soda, you may be paying more than you would have otherwise.
In the subprime mortgage crisis, typically the victims were people who held pensions, because what would happen often was the banks would create these gigantic masses of essentially phony subprime loans. They would disguise them as AAA-rated investments. Then they would sell them to an institutional investor like a pension fund. So you're some, you know, working stiff, a toll booth operator in Minnesota. You've got a state pension. And you wake up one morning, and 30 percent of your pension fund is gone. Well, you're a victim of this stuff.
But it's very hard to trace that back to these people. And it's hardand journalists don't want to do the work of identifying who the victims are in these scandals, because it's too complicated. And that's why you often see these crimes described from the point of view of the perpetrator and not from the victim, because we're all the victims. These crimes are ethereal. They're existential. They're on such a gigantic scope that it's difficult for us to get awrap our heads around. And that's aso that's a very good question to ask.
AARON MATÉ: You mentioned earlier people who are targeted for welfare fraud. In one case, you went to San Diego and profiled a woman who was targeted by this program P100
MATT TAIBBI: Right.
AARON MATÉ: a very invasive action in her home. Can you talk to us about that case?
MATT TAIBBI: Yeah, they have this program in San Diego where if you apply for welfare, the state gets to pre-emptively search your house to make sure that you're not lying about, for instance, having a boyfriend. You know, so you're a single mom. You go to the welfare office. You need financial assistance. You represent on the form that you're not cohabiting with anybody. And just to check, they tell you to go sit tight in your house. And I've heard stories of people who waited, literally sitting in their house for a week, not knowing when the inspector is going to come, because if you're not there when they come, you don't get your welfare.
So, the person comes finally. It's not a social worker. It's very often a law enforcement official. They go in, and they search your house. I talked to a number of women who have recounted the experience of having their underwear drawers rifled through. You know, one woman talked about an inspector sticking his pencil end into the underwear drawer and picking out a pair of sexy panties and saying, you know, "Who do you need these for? If you don't have a boyfriend, what's this for?" And this is the kind of thing that people have to go through.
And I understand that, to many middle Americans, you know, welfare recipients are notare perhaps not the most sympathetic people. But it's very striking that, for instance, the recipients of bailouts, we don't have the right to go in and check their books, but somebody who applies for federal assistance to feed their kids, we have the right to go through their underwear drawer. And I thought that was a striking comparison.
AMY GOODMAN: Matt, the cover of The Divide, of your book, American Injustice in the Age of the Wealth Gap, is very striking. And you have this artwork throughout your book. Explain who did this.
MATT TAIBBI: So this is Molly Crabapple. She's a great artist. I met her during the Occupy protests. We hadwe have a mutual friend, and Molly had done these amazing posters for the Occupy protests that werethat were basedsome of them were based on my work, because there was a vampire squid theme to some of them.
AMY GOODMAN: Explain vampire squid.
MATT TAIBBI: Well, I had referred to Goldman Sachs as a great vampire squid wrapped around the face of humanity. So she had done these series of posters that were like, you know, "starve the vampire squid," "stop the vampire squid." So we got together, and she wasshe ended up becoming sort of famous as like the semi-official artist of Occupy. And we decided to work together on this project. And what's so perfect about her is that she really specializes in doing these kind of grotesque, horrifying, Boschian portraits of dysfunction, you know, like the cover. It actually looks quite beautiful from a distance, but if you look at it closely, it's this horrifying image of people being ground up in this mindless justice machine. So it's beautiful stuff, and Molly should getshe gets all the credit in the world, I think. They're incredible images.
AARON MATÉ: At sentencing hearings, you have sometimes family members and friends coming to plead to the judge for leniency. And you sort of contrast this in your book. You have one scene where you have executives bringing in hundreds of people.
MATT TAIBBI: Mm-hmm.
AARON MATÉ: Can you compare what happens there to what happens to people on the bottom?
MATT TAIBBI: So this is interesting. Again, this is that same Gen Re case I talked about, the $750 million stock fraud where these guys all got off. And what was so interesting about that isso, if you go to court, the judges almost never are from the same neighborhoods as the accused. But when you do have a case where it's, you know, somebody from the suburbs who lives in Connecticut and the judge is also somebody who's from the suburbs and lives in Connecticut, and he has members of the local PTA come out and say that, you know, "This guy is somebody who wouldn't even jaywalk. You know, he's a God-fearing person. Yes, maybe he might have committed a $750 million stock fraud, but he's a very decent person," they will very frequentlylike, bail is never an issue for this kind of defendant, which is very, very important. You know, theseand beyond that, in that particular case, after they were convicted, all of these defendants were allowed to remain free pending appeal, which removed all of the leverage the state might have had to roll up these defendants up into higher targets, whereas that's exactly the opposite of what happens to poor defendants, who are frequently thrown in jail. Their, you know, bail is set at a level that's higher than they can afford. And then, while you're in jail waiting for trial, you start to do the math, and you realize that you could stay in jail longer in bail than you would do if you were sentenced. And that's one of the reasons why people plead out, even when they're innocent, because the math just works in the state's favor. They have all these tricks they can use to keep you in jail longer than you're supposed to be.
AMY GOODMAN: Who was tougher on corporate America, President Obama or President Bush?
MATT TAIBBI: Oh, Bush, hands down. And this is an important point to make, because if you go back to the early 2000s, think about all these high-profile cases: Adelphia, Enron, Tyco, WorldCom, Arthur Andersen. All of these companies were swept up by the Bush Justice Department. And what's interesting about this is that you can see a progression. If you go back to the savings and loan crisis in the late '80s, which was an enormous fraud problem, but it paled in comparison to the subprime mortgage crisis, we put about 800 people in jail duringin the aftermath of that crisis. You fast-forward 10 or 15 years to the accounting scandals, like Enron and Alelphia and Tyco, we went after the heads of some of those companies. It wasn't as vigorous as the S&L prosecutions, but we at least did it. At least George Bush recognized the symbolic importance of showing ordinary Americans that justice is blind, right?
Fast-forward again to the next big crisis, and how many people have we gothave we actually put in jail? Zero. And this was a crisis that was much huger in scope than the S&L crisis or the accounting crisis. I mean, it wiped out 40 percent of the world's wealth, and nobody went to jail, so that we're now in a place where we don't even recognize the importance of keeping up appearances when it comes to making things look equal.
AMY GOODMAN: Can you end with the story of Patrick? And we just have a minute.
MATT TAIBBI: Sure, yeah. There was a saxophonist named Patrick Ocean Jewell who was assaulted by police here in New York City. They mistook a hand-rolled cigarette for a joint.
AMY GOODMAN: He had brought his girlfriend to the subway, liked to walk with her every morning.
MATT TAIBBI: Right.
AMY GOODMAN: He actually did not know who attacked him.
MATT TAIBBI: Right, yeah. No, the police can be anyone these days. That's another thing that most people don't know about. They don't always come in uniform, and they don't always come in those unmarked Plymouths that they used to drive. They can drive fancy cars. They can drive beaters. They can be dressed in plainclothes. They can be black, white. You don't even know who the cops are anymore. And this guy was just sitting there at a train station smoking a hand-rolled cigarette, and all of a sudden he's being beaten up by all these people, you know, and he only later figured out that they were cops.
AMY GOODMAN: When he called to a police officer, started crying for help.
MATT TAIBBI: Yeah, he's crying for help, and a uniformed police officer comes and tells him to shut up. And that's when he realizes that they were cops. But this isthis is sort of stop-and-frisk expanding its universe of targets. So, you know, now, even if you're white and middle-class, you know, now you, too, can be part of this whole process. And that's
AMY GOODMAN: And your point in bringingputting this in The Divide?
MATT TAIBBI: Is thatyou know, is that this is now beginning to affect everybody. I think one of the problems that the increasing wealth gap is bringing to us is that there's a smaller and smaller group of untouchables, and then there's a sort of widening group of everybody else, and we all have the same lack of respect from the law enforcement.
"Let me issue and control a nation's money and I care not who writes the laws. - Mayer Rothschild
"Civil disobedience is not our problem. Our problem is civil obedience! People are obedient in the face of poverty, starvation, stupidity, war, and cruelty. Our problem is that grand thieves are running the country. That's our problem!" - Howard Zinn
"If there is no struggle there is no progress. Power concedes nothing without a demand. It never did and never will" - Frederick Douglass
"Civil disobedience is not our problem. Our problem is civil obedience! People are obedient in the face of poverty, starvation, stupidity, war, and cruelty. Our problem is that grand thieves are running the country. That's our problem!" - Howard Zinn
"If there is no struggle there is no progress. Power concedes nothing without a demand. It never did and never will" - Frederick Douglass