Posted 6 months ago on April 24, 2014, 7:21 p.m. EST by flip
This content is user submitted and not an official statement
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 during—in 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 got—have 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: 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 had—we have a mutual friend, and Molly had done these amazing posters for the Occupy protests that were—that were based—some 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 was—she 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 get—she gets all the credit in the world, I think. They’re incredible images.......................................AMY GOODMAN: That’s Lanny Breuer in 2012, who was like number two in the Justice Department.
MATT TAIBBI: He was the head of the Criminal Division, so he’s basically the top cop in America at the time.
AMY GOODMAN: He was at the Justice Department; of course, Eric Holder is the attorney general—both from the same company. Respond to what he said, and then talk about Covington & Burling.
MATT TAIBBI: Well, first of all, his—that whole thing about the innocent white-collar employees perhaps losing their livelihoods keeping him up at night, I want to know what his response is to, you know, the idea that maybe a single mother on welfare is going to lose her kids because she’s going to lose custody in an $800 welfare fraud case. You know, I saw so many of these cases that it was—that is was just overwhelming to me. Those are the kinds of things that would keep me up at night if I were the attorney general, thinking about the consequences that ordinary people feel—suffer when they are caught up in the criminal justice system.
People—for instance, again, going back to welfare fraud, your relatives can lose their Section 8 housing. So, you know, if you’re—again, if you’re on welfare and you get caught in a fraud case, that may just involve checking the wrong box or having somebody, one of your neighbors, say that you have a boyfriend living in your house, when you really don’t, your mother or your grandmother can lose their housing because of something like that. That would be the stuff that would keep me up at night. I mean, I wouldn’t be worried about millionaire and billionaire executives, you know, who are working at these banks, if I were Lanny Breuer. So that tells you a lot about the priorities of somebody like him.
AMY GOODMAN: And talk about Lanny Breuer, Eric Holder, where they come from, where they go back to.
MATT TAIBBI: So they both came from a law firm called Covington & Burling, which in the 2000s represented basically every single one of the too-big-to-fail banks. They were also involved in the setting up of the electronic mortgage registry, so they played an enormous role in the subprime mortgage crisis.
But here’s the key thing about the presence of these two people at the head of the attorney—of the Justice Department. Prosecutors, by and large—and I interviewed a lot of prosecutors for this book—they basically all have the same personality, the old-school prosecutors. They’re just—if you think of somebody like Eliot Spitzer, they’re all like bulldogs. They just want to get their—you know, get their target; by hook or crook, it doesn’t really matter. They have this ferocious aspect to their personalities. And it’s an admirable quality in a prosecutor. They’re all kind of the same, in a certain way. Cops are the same way. But in the 2000s, that kind of person started to be replaced in the regulatory system by a new kind of figure who tended to come from the corporate defense community. And their attitude was not, you know, get their target at all costs; it was more: "Let’s bring a bunch of people in a room and hammer out a solution where all the sides are going to end up walking out happy." And that’s why we end up with settlements, like the $13 billion Chase settlement last year or the $1.9 billion HSBC settlement, instead of prosecutions.
AMY GOODMAN: Covington & Burling represented JPMorgan Chase.
MATT TAIBBI: They did, yeah, and a host of other banks that also were involved in nonprosecutions during this time. So, I mean, it’s—you have a whole bunch of people sort of at the top of the regulatory agencies, whether it’s Justice, the SEC, the CFTC, maybe the Enforcement Division of the SEC, who all came from these big banks or from law firms that represented these big banks. And it’s a very incestuous community. And just like you talked about with James Kidney, the SEC official who left, as a result of this kind of merry-go-round of people who all work for the same companies—and they’re going to go to government for a while, then they’re going to go back to the corporate defense community after they leave and make millions of dollars—they’re very, very reluctant to be aggressive against these companies, because it’s their—culturally, they’re the same people as their targets, whereas there isn’t that same simpatico with the very poor. And I think that’s a very—it’s an important distinction to make, and people don’t understand it...............................................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 is—I 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 this—for 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 the—three 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 federal—by 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 found—you know, walked in any direction and found an appropriate target.