11.24.10 1:00 AM ET
Wall Street's Most Hated Journalist
In July 2009, the financial bailout was ongoing, Tea Party outrage was just beginning to boil, unemployment was well over nine percent and rising. That month, Rolling Stone published the following sentence.
“The world's most powerful investment bank is a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money.”
The line soon reverberated across the American cultural landscape. Its author, Matt Taibbi, has just released a book on the financial meltdown, Griftopia: Bubble Machines, Vampire Squids and the Long Con That Is Breaking America. The Daily Beast’s Denver Nicks talked to Taibbi about vampire squids (they almost never were), Tea Partiers (they aren’t stupid), Michele Bachmann (but she might be), and life in general in the United States of Griftopia.
Vampire squid. Do you remember writing that?
It was originally much lower in the piece, I remember that. The other thing I remember is the fact checkers coming to me at one point and they almost killed the line because squids don’t have blood funnels. I was trying to explain that was part of what made it funny, but they were very insistent. I had to go over their heads on that one.
As the economy was collapsing you realized that most reporters didn’t understand anything about it, and the ones who do didn’t care to explain it to the rest of us. Someone needed to explain this stuff, and you decided to be that guy. How did you go about becoming that guy? You’re not an economist.
No, I’m definitely not. It was a really, really long process. At the beginning I didn’t even know what questions to ask, so I was literally just calling people up and saying “Tell me something about anything.” It took about two or three months before I was able to focus on some kind of theme, and it wasn’t really until after the Goldman Sachs piece that I started to feel really comfortable about the material.
I think most of these people don’t see the consequences of their actions, they’re just punching in numbers on a computer and I think if they thought about it.
Who are the great villains of the media from the last three years of turmoil?
You know, I’ve already done enough of that—pointing my finger. I will say, a lot of the people I talked to in the first couple of stories that I wrote were complaining incessantly about CNBC in particular. I had a lot of people calling me up and saying “these people are getting it wrong,” or “I’m talking to journalists who cover this stuff for a living and they’re not listening to me—that’s why I’m talking to a music magazine.” That was actually one of the first things that I detected about this story was that there was a very high level of frustration among financial professionals with the media that covers their business.
It is interesting that, for a lot of people, one of the preeminent voices of reason on finance is a writer for a music magazine.
When we were doing this story, it was kind of an implicit indictment of everyone else. We were doing these eight, nine thousand word pieces. It was sort of like saying, “If you guys haven’t done it, then we gotta do it.”
Do elections matter?
I think they do a little bit, but the point I was trying to make in this book is that, when it comes to a lot of this stuff, a lot of these financial regulatory issues, they matter, but not too terribly much, because the Democrats and the Republicans are largely simpatico on a lot of this stuff. Certainly the Republicans have been more unapologetically in line with Wall Street’s longings on a lot of these issues, but the Democrats, if anything, were worse than Republicans in the last 10, 15 years. A lot of the really serious mistakes were made on the Democrats’ watch.
How did you feel on November 3, 2010?
I thought it was really telling that the day after the election the Republicans started talking about repealing the Volcker rule, which was the thing that got passed over the summer that banned proprietary trading by the banks. That perfectly encapsulated everything the Tea Party was about. The Tea Party was all this political energy that was directed at the bailouts. It was a lot of people that were angry about government spending. The Volcker Rule was specifically designed to prevent bailouts. The whole idea is to prevent federally insured banks from engaging in risky gambling behavior. So the day after all this anti-bailout fervor wins an election, the first thing they do is give this big favor to Wall Street, or at least they tried to. I think that summed up perfectly what the Tea Party was all about. They captured the anger, but they’re going to use it for the opposite of what these people think they’re getting.
So are they just getting the wool pulled over their eyes? Are these people stupid? What’s going on here?
A lot of people that I’ve talked to in the Tea Party, their experience with government regulation is something like: they own a hardware store and they have to deal with a building inspector, or a tax collector, or an EPA inspector or something like that. It’s some minor financial nuisance, and that’s what their idea of regulation is, and they see it as just something taking money out of the pockets of ordinary people. So they conflate that with the idea of policing Wall Street. They just think that it’s the same thing, and they’re completely different universes. I just don’t think they understand it, because the one thing that’s easy to understand is that it’s incredibly hard to understand.
Who was the biggest charlatan to win in 2010?
Ooh. Wow. For me, Rand Paul is the guy that really drives me crazy. Just because I know his father a little bit, and I like his father. I think his father’s honest. I think Rand Paul and a lot of these guys are going to end up being basically agents of Wall Street. They’re out there campaigning as libertarians who are pure capitalists, and I just know that’s not what it’s going to end up. It’s going to end up being this thing where they’re against spending when it’s for poor people and minority home owners, but be OK with bailouts for banks.
Michelle Bachmann looks like she might be in a position of pseudo power as chair of the Tea Party Caucus. Where’s that going?
Isn’t she the one that says carbon dioxide isn’t dangerous because it’s a naturally occurring substance? I mean, again, it’s funny that these people are such dingbats, but the anti-intellectualism of a lot of these candidates is kind of a key factor, because this is our modern financial services industry. You need to be smart, you need to be committed to the idea that the answers to things are difficult, in order to really understand it. And a lot of these people are putting forward this idea that the answer to everything is simple. “You don’t need to be a genius to figure things out, look at me I’m not a genius, I’m not even half bright, and I’m a US Congressman.” And I think that’s where a lot of real danger lies. They’re seducing people with this idea that you don’t need to be smart in order to figure a lot of this stuff out. Well you do need to be smart. It’s hard!
Is the president a fraud?
I actually never thought that Barack Obama was anything but a typical Democratic party politician, which to me meant that he was probably in bed with Wall Street. I did think that he was a smart guy, and his heart was in the right place. I was disappointed at the extent to which he went overboard to be a pal of Wall Street after he got elected, but I wasn’t that terribly surprised. His number one campaign contributor was Goldman Sachs. When he got elected, he immediately brought in a whole army of people who had been close to Bob Rubin, Citigroup officials, Goldman Sachs guys. So it’s not surprising that we got the economic policies out of him that we got. I think a lot of people had expectations for him that were unreasonable.
Have you ever been punched by Lloyd Blankfein?
(Laughter) I’ve never met Lloyd Blankfein. I’ve actually had, believe it or not, a few Goldman people kind of surreptitiously call me up over the years. I even had one guy call me up and hand me a whole stack of internal memoranda from the company, which I ended up not using. Even within the company, there’s some dissatisfaction with the way they operate. But on the whole, obviously, I’m sure they hate my guts. And I understand that. I think one thing that’s interesting about Goldman is that they’re consistent. They’re unrepentant and they really do believe that they’re doing the right thing. At least they’re not cynical about it. They really do think that I’m wrong and that people like me are wrong about them.
Do you believe they’re consistently making moral calls, or this like Hannah Arendt’s banality of evil, where one guy fills in one dot, and another guy crunches a number?
Yea that’s basically the idea. I think most of these people don’t see the consequences of their actions, they’re just punching in numbers on a computer and I think if they thought about it—it’s not hard to think about. When you sell a whole bundle with worthless mortgage backed securities to some pension fund in Minnesota, well how much thought does it really take to realize that you’ve just wiped out the life savings of a whole bunch of janitors and teachers and firemen.
What’s next Matt?
I think I’m going to be doing this for awhile. I really enjoy it. I hated it at first, but I’ve learned to really, really like doing the finance stuff. I just find it fascinating, and gross, and very, very dark.
Denver Nicks is an editorial assistant at The Daily Beast.