Matt Taibbi: Why Isn’t Wall Street in Jail?

Amy Goodman interviews Rolling Stone’s Matt Taibbi about his new article, “Why Isn’t Wall Street in Jail?”

These are excerpts from the interview, but the whole thing is worth reading.

MATT TAIBBI: …It was essentially a gigantic criminal fraud scheme where all the banks were taking mismarked mortgage-backed securities, very, very dangerous, toxic subprime loans, they were chopping them up and then packaging them as AAA-rated investments, and then selling them to state pension funds, to insurance companies, to Chinese banks and Dutch banks and Icelandic banks. And, of course, these things were blowing up, and all those funds were going broke. But what they’re doing now is they’re blaming the people who were collecting these pensions—they’re blaming the workers, they’re blaming the firemen, they’re blaming the policemen—whereas, in reality, they were actually the victims of this fraud scheme. And the only reason that people aren’t angrier about this, I think, is because they don’t really understand what happened. If these were car companies that had sold a trillion dollars’ worth of defective cars to the citizens of the United States, there would be riots right now. But these were mortgage-backed securities, it’s complicated, people don’t understand it, and they’re only now, I think, beginning to realize that they were defrauded.

Well, the most important thing to get from the Obama administration is that its economic policy represented absolute continuity with the policy of the previous administration. Timothy Geithner was the principal architect of Bush’s bailouts, and he was retained. Ben Bernanke, who was the head of the Fed under Bush, stayed on under Obama.

And they essentially continued the same bailout policy, which, again, was essentially to tell Wall Street that we’re going to make you whole again. You know, after they flooded the entire international economy with all these toxic debt instruments, their policy was to get Wall Street well again, and ostensibly they were supposed to reinvest in the economy and put people back to work. But instead, they just kept the money. And, I mean, they literally went from being completely insolvent to, you know, making $150 billion bonus pools every year, and that money is all public money. It’s pure bailout gift from the taxpayer.

Nobody gets criminally prosecuted. No individuals ever get fined. They pay these fines, and they almost always have a little section in there that says that they do not admit wrongdoing. So, they don’t even have to say they’re sorry, essentially. These companies go and they pay their fines. No individuals have to suffer at all. And it’s all done in a very collegial way.

Every single former investigator or current investigator that I talked to said the same thing: Madoff went to jail because the wrong people suffered. You know, it was famous actors. It was, you know, the glitterati in New York. If these were teachers and firemen and all the usual suspects—you know, look at the—we have a million people in foreclosure in this country right now, and a lot of them are there because of predatory lending and because of this fraud scheme, but there are no criminal prosecutions. I think that’s the reality now, is that we don’t see anybody being criminally targeted unless their victims were powerful people themselves.

You know, it’s incredible. I mean, there was a case in Ohio that somebody forwarded to me, where a woman, a single—a black single mother of two children, she lied about where she was living so that her two kids could get into a better school system. And the state of Ohio actually prosecuted her for fraud, and the judge in that case insisted—they sentenced her to, actually, I think it was five years in jail, but they insisted that she actually do 15 days. And the judge’s quote in that case was that if she didn’t do real jail time, that would demean the seriousness of the offense. And so, I mean, the case was ultimately commuted because of the public outcry, but this, to me, is symptomatic of what we’re dealing with here.
You have people in this country who—we have two-and-a-half million people in jail this country, you know, more than a million who are in jail for nonviolent crimes. And yet, we couldn’t find a single person on Wall Street to do even a day in jail for losing 40 percent of the world’s wealth in a criminal fraud scheme?

AMY GOODMAN: If you were president, what would you do right now?

MATT TAIBBI: Well, I would certainly get rid of all those guys, you know, from Wall Street. I think there needs to be a freeze on foreclosures. I mean, there’s all kinds of things that need to be done. But the most important thing is we have to, you know, get the right people into bodies like the SEC and the Justice Department. Everybody I talked to said the same thing. The existing laws we have, you know, they’re not perfect, but they’re probably good enough to do some real good. It’s just that we don’t have the right people in the jobs, and the will isn’t there to do these prosecutions. So, I think we’ve just got to get the right people in the right jobs.

UPDATE: Carl Gibson, the founder of US Uncut, points out:

“I have one dollar in my wallet. That’s more than the combined income tax liability of GE, ExxonMobil, Citibank, and the Bank of America. That means somebody is gaming the system.”

Yet the media go on incessantly day after day about how public employees are costing the taxpayers too much!

  1. #1 by cav on February 26, 2011 - 4:57 pm

    I finished reading that just this morning.

    Taibbi has this wacked out idea there are no “governments” only henchmen who work for the international cartel of banksters and warmongers going ‘do-si-do’ through revolving doors, getting richer and richer with each pass.

    Of course he’s absolutely correct.

    The real problem is Joe the plumber installed the trickle-down control mechanism too high – out of reach of any not already standing atop the carnage of a once great society.

  2. #2 by shane on February 26, 2011 - 7:04 pm

    “I have one dollar in my wallet. That’s more than the combined income tax liability of GE, ExxonMobil, Citibank, and the Bank of America. That means somebody is gaming the system.”

    If you guys would just lower that tax rate for those poor companies we wouldn’t be in this depression….

  3. #3 by cav on February 26, 2011 - 7:58 pm

    Another thing Taibbi said that I’m pretty certain would be effective: Were the Justice Department to prosecute, and jail just one of the bankster fraud perps, there’d be such a fear run through the rest that reregulating and perhaps even recovering a solid chunk of the bonus-funding tax-payer-provided-bailout-entitlements might be possible.

  4. #4 by brewski on February 26, 2011 - 10:20 pm

    Just trying to be factual:
    In 2010, ExxonMobil paid $1.224B in income taxes to the US Treasury, $6.182B in excise taxes to the US Treasury, $340MM in US-state income taxes, and $1.978B in other taxes and duties in the US. ExxonMobil’s combined effective tax rate in 2010 was 45%. They also have “open” tax returns in the US going back to 1998. Meaning, the IRS has not given their final ok for the last 12 years of returns.
    http://www.sec.gov/Archives/edgar/data/34088/000119312511047394/d10k.htm#fin121382_43

    Yes, they are gaming the system. Worse, the system is very open to being gamed. Also, as Mr. Geithner has pointed out this week, both the incentives and the means for shifting income to other OECD countries (not the Caribbean) exist. Yes we should remove the ability to do so, but we also should remove the incentive to do so.

    I listened to Taibbi’s interview on the ironically-named “Democracy Now!” and I think he gets about 95% of it right with regard to the misdeeds of the bankers. It is pretty amazing no one has gone to jail. At a minimum, just fired. And since the government essentially controlled these banks as part of the bailouts, they certainly were in position to do so. There are several good books on this topic including “The Big Short”.

  5. #5 by shane on February 26, 2011 - 10:51 pm

    …and in 2009 they paid nothing in federal income taxes.

    ExxonMobil didn’t have a zero-tax liability in 2009; it was actually owed 26 million by the IRS, against $15.1 billion in foreign taxes owed. As Jeffers says, that may not be the case; but it’s what ExxonMobil told the SEC, its shareholders, and the world. And since the firm refuses to share its actual tax numbers with the public, it’s all we have to go by.

    Just trying to be factual.

    But what’s more interesting about this story is Exxon’s effective income tax rate. Exxon has over the past couple years paid a U.S. federal income tax that is about 10 percent lower than its non-U.S. effective tax rate. Other oil companies also pay less, and in some years this difference has approached 50 percentage points.

    Oil companies pay less in U.S. taxes in part because they receive generous tax subsidies. These subsidies will cost the U.S. government about $3 billion next year in lost revenue and nearly $20 billion over the next five years.

    Damn shame how we pick on those big companies and make them suffer like that, isn’t it?

    I, for one, welcome our big oil overlords.

  6. #6 by cav on February 27, 2011 - 9:00 am

    Danny Schechter gets it.

    Criminal minds

    Convicted financial criminal Sam Antar who appears in my film Plunder is contemptuous of how government tends to proceed in these cases, in part because they don’t seem to understand how calculated these crimes and their cover-ups are. “Our laws—innocent until proven guilty, the codes of ethics that journalists like you abide by limit your behavior and give the white-collar criminal freedom to commit their crimes, and also to cover up their crimes,” he said.

    “We have no respect for the laws. We consider your codes of ethics, and your laws, weaknesses to be exploited in the execution of our crimes. So the prosecutors, hopefully most prosecutors, are honest if they’re playing by the set of the rules; they’re hampered by the illegal constraints. The white-collar criminal has no legal constraints. You subpoena documents, we destroy documents; you subpoena witnesses, we lie. So you are at a disadvantage when it comes to the white-collared criminal. In effect, we’re economic predators. We’re serial economic predators; we impose a collective harm on society, time is always on our side, not on, not on the side of justice, unfortunately.”
    ——
    http://english.aljazeera.net/indepth/opinion/2011/02/2011226131635826806.html#

  7. #7 by cav on February 27, 2011 - 9:01 am

    Criminal minds

    Convicted financial criminal Sam Antar who appears in my film Plunder is contemptuous of how government tends to proceed in these cases, in part because they don’t seem to understand how calculated these crimes and their cover-ups are. “Our laws—innocent until proven guilty, the codes of ethics that journalists like you abide by limit your behavior and give the white-collar criminal freedom to commit their crimes, and also to cover up their crimes,” he said.

    “We have no respect for the laws. We consider your codes of ethics, and your laws, weaknesses to be exploited in the execution of our crimes. So the prosecutors, hopefully most prosecutors, are honest if they’re playing by the set of the rules; they’re hampered by the illegal constraints. The white-collar criminal has no legal constraints. You subpoena documents, we destroy documents; you subpoena witnesses, we lie. So you are at a disadvantage when it comes to the white-collared criminal. In effect, we’re economic predators. We’re serial economic predators; we impose a collective harm on society, time is always on our side, not on, not on the side of justice, unfortunately.”
    ——
    http://english.aljazeera.net/indepth/opinion/2011/02/2011226131635826806.html#
    Danny Schechter gets it

  8. #8 by brewski on February 27, 2011 - 9:58 am

    Shane,
    I have stated many times here that I am against special gimmies to companies, and pretty much anyone else. So I am all in favor of getting rid of special tax provisions for oil companies. I see that during the Pelosi, Reid, Obama oligarchy period these provisions were not removed.

    In 2009 while it was true that Exxon Mobil did not pay any Federal income taxes, they did pay $6.271B in excise taxes and $1.477B in other taxes. Also in 2008 they paid $3.005B in Federal income taxes in addition to all the excise taxes and other taxes. Also, part of the reason their 2009 US tax was zero was that their US-sourced taxable income was very low. Since companies only pay income tax when they have income, it should not be much of a shock that they had no US income tax liability in a year when they have very little US based income, combined with the congressionally granted special gimmies.

  9. #9 by shane on February 27, 2011 - 7:42 pm

    Doesn’t stop you from regularly telling us how the poor companies and super rich need tax breaks, does it? Talking out both sides of your mouth is a talent…

    Tell me, do those gimmes count before or after you declare they pay the highest taxes in the world?

    Ya know, just to be factual.

  10. #10 by brewski on February 27, 2011 - 9:09 pm

    Never once have I said poor companies need tax breaks.
    Never once have I said all white people are victims.
    Doesn’t stop you from continually lying like a lying liar who lies and fabricating things that I never said once.

    I never said we pay the highest taxes in the world. I said we have the highest marginal rate which results in marginal income being shifted to other countries which lower the amount that the US collects. I understand that this is too complicated for you to understand.

  11. #11 by Larry Bergan on February 27, 2011 - 9:58 pm

    When accepting the Oscar tonight for best documentary, (Inside Job), the winner took the opportunity to tells us that not a single person has gone to jail for these crimes.

  12. #12 by brewski on February 28, 2011 - 11:34 am

    I wonder how many of the uber-rich in that room think all the banksters should go to jail, meanwhile they hire armies of lawyers and accountants themselves to hide their money offshore, avoid taxes, deduct their personal chef a business expense, etc. It’s the same culture…the culture that the rules apply to other people, not to me.

  13. #13 by Richard Warnick on February 28, 2011 - 11:40 am

    When you’re a special person, you should not be treated as an ordinary human. Just ask Charlie Sheen about “tiger blood” and “Adonis DNA.”

  14. #14 by brewski on February 28, 2011 - 11:48 am

    That’s right. And special people should not be expected to fly on commercial aircraft. I mean, it is ok for Michael Moore to have the personal carbon footprint of a small country, because he is special.

  15. #15 by Richard Warnick on February 28, 2011 - 1:13 pm

    I’m prepared to believe that Michael Moore flies around in a private jet, but only if you have facts to back up your claim. What I do know is that in his last movie he highlighted the exploitation of commercial airline pilots.

  16. #17 by cav on February 28, 2011 - 2:59 pm

    Am I to assume the issue really has nothing to do with the uses of airplanes, large houses, and suvs – but, in the end hinges more on the causes one is flying to and fro to promote?

    Koch bros, Dick Cheney, gallivant in pursuit of ??? > OK

    Moore, Al Gore, doing what they do in pursuit of ??? > Crime of the most hypocritical sort.

    Wait a minute, I seem to have misplaced my rationality detection packet…it should turn up momentarily.

  17. #18 by brewski on February 28, 2011 - 3:26 pm

  18. #19 by cav on February 28, 2011 - 3:48 pm

    If there were a way to use supertrains to bankrupt the middle class, you’d be able to take a fricking maglev train from Boston to LA and get there in 3 hours.

  19. #20 by Larry Bergan on February 28, 2011 - 5:31 pm

    Very well put in both your last comments, cav!

    Maybe Dave Matthews can explain it to you brewski:

  20. #21 by Shangri La on February 28, 2011 - 5:41 pm

    He still has an enormous footprint. Dave is quite a dummy, his biofuels and support are causing food prices to rise and then ensuing malnutrition and starvation.

    All so this guy can go and play music to folks who are likely as self indulgent as any non enviro. This is ludicrous.

    He wants to save the planet, yet that won’t cause him to change his lifestyle in any real way. Fill that bus up with food oil, rather than diesel. Idiocy.

  21. #22 by Larry Bergan on February 28, 2011 - 6:22 pm

    What depressing info do you have on the use of algae, glenn? Go ahead, we’re used to it.

  22. #23 by cav on February 28, 2011 - 6:29 pm

    You’ll laugh Larry, when the algea slithers up from beneath the bed and sets to work on your little toe!

  23. #24 by james farmer on February 28, 2011 - 6:57 pm

    glenn:

    So you are saying why not just fill up with diesel?

    Thought so. Funny, how you are a mirror image of those you criticize so intently.

  24. #25 by Shangri La on February 28, 2011 - 9:43 pm

    Of course diesel, so people don’t starve knotheads, there is plenty, and it is cheaper, it all makes carbon for those of you still convinced in the AGW fraud… and food should not be made into ICE fuel. It is totally subsidized by the government, and the actual return in fuel calories is less than the energy required to produce it. It is sham boondoggle defined.

    Well Jim, I don’t own any buses nor do I drive anything 10′s of thousands of miles a year in order to satisfy the whims of people’s auditory desires for profit. Read up on bio fuels. For that matter read up on anything.

    As for algae, it’s all still going to make CO2 Larry, no way round it. Unless we see fuel cells, but they will still make CO2, albeit we will get more miles out of our cars per gallon of fuel.

    The challenges http://news.cnet.com/8301-10784_3-9765452-7.html

    http://newenergyandfuel.com/http:/newenergyandfuel/com/2008/12/22/the-algae-problems/

    At this point it was not economically viable with oil at 147 dollars a barrel. In America, that is a problem unless like the corn boondoggle of biofuels you can finagle getting the taxpayer to subsidize your production, and sell the crap to federally subsidized users.

  25. #26 by Shangri La on February 28, 2011 - 10:46 pm

    Speaking of the AGW fraud, this is some interesting news what with winter and ice and snow predicted by AGW fraudsters to be a thing of the past.

    http://www.baltic-course.com/eng/transport/?doc=37726

  26. #27 by Richard Warnick on March 1, 2011 - 8:36 am

    Glenn–

    There’s no fraud. Climate change is happening. Or do you think David Copperfield made the water disappear in Lake Mead and Lake Powell?

  27. #28 by Shangri La on March 1, 2011 - 8:51 am

    It is AGW fraud, by now the proof of the fraud is piling up so high that nay remaining support is laughable. You can be the last to turn the lights out on it Richard, I’m ok with that.

    Climate change has been happening since this ball of rock coalesced, the AGW fraud claims human produced CO2 is the reason. It isn’t. Fraud.

    Here is the latest on where we are headed in panacea.

    http://www.dailymail.co.uk/sciencetech/article-1360062/Watchdog-says-electric-cars-dirty-diesel.html

  28. #29 by Uncle Rico on March 1, 2011 - 8:56 am

    In America, that is a problem unless like the corn boondoggle of biofuels you can finagle getting the taxpayer to subsidize your production

    Cost of production is no problem when the invisible hand of government is slipping dollars into the back pocket of those who most loudly and vociferously decry and condemn the welfare state. The American way.

  29. #30 by Richard Warnick on March 1, 2011 - 2:57 pm

    Glenn–

    My favorite blogger, Jane Stillwater, is returning from Antarctica(!) She writes:

    “An ice shelf is a glacier that extends out into the sea. Glaciers in Antarctica are 100 times larger than glaciers in Alaska and after they reach the edge of the land, they continue on out into the ocean and create enormous ice shelves the size of New Jersey. And two of these gigantic ice shelves have recently broken off from their bases as a result of pressures on them caused by global warming.”

    And these two huge ice shelves the size of New Jersey are now happily melting and floating our way. Why? Because in the last ten years alone, global temperatures have spiked up more than 800 percent higher than from their original documented baseline, set approximately 150 years ago when temperatures first started getting recorded.

    And as a result of these gigantic new post-industrial temperature increases, Antarctica is melting, water levels all over the world are rising and Americans are all stuck in what Elisabeth Kubler-Ross calls the “First Stage of Death — Denial”. And instead of trying to bail out our poor planetary ship before it’s too late, we just sit around on our hands while our global Titanic goes down — hit by an iceberg.

    I think the Titanic analogy is apt. As you may recall, for the first hour or so the passengers didn’t really believe the ship was going to sink. That’s why so many lifeboats left only half-loaded.

  30. #31 by Shangri La on March 1, 2011 - 3:04 pm

    Bring it on. Natural causes. AGW is a fraud. The world’s sea level rose 400 FEET in 13k years and humans went from a nominal population to 7 billion. That is called THRIVING! We will adapt, as we did then.

    Jane Stillwater is a sky is falling AGW boob.

    The real facts are that the continental pack of Antarctica is GROWING. The data is irrefutable. As it grows and spreads, into the sea, at some point it can no longer be supported by the attachment to the landmass and breaks off. No worries as there will be more where that came from.

    Uh Richard, ice floating in water has already raised sea level, the melting of it won’t rise sea level at all. This has gone past humor into stupid and is fun to watch.

  31. #32 by Shangri La on March 1, 2011 - 3:11 pm

    Stick with an expert, not some blogger boob when discussing sea level.

    Have fun with this.

    http://www.21stcenturysciencetech.com/Articles%202007/MornerInterview.pdf

  32. #33 by Shangri La on March 1, 2011 - 3:20 pm

    Here is Stillwater’s CV.

    “The self-confessed hippy grandmother from California”.

    Yeah, she certainly has it over Morner. Yeah, I’m laughing Richard.

  33. #34 by cav on March 1, 2011 - 3:24 pm

    People caused or not, some people think they have the ‘solution’. In the interest of not ruffling the disparite feathers to be found on this kinky bird, I won’t speculate on just which wing this notion might be coming from. But here it is:

    “Small Nuclear War Could Reverse Global Warming for Years”

    http://news.nationalgeographic.com/news/2011/02/110223-nuclear-war-winter-global-warming-environment-science-climate-change/

  34. #35 by Shangri La on March 1, 2011 - 3:39 pm

    As it stands as fact, 80 million cubic kilometers of ice have melted since the last ice age ended, the bulk of it occurring in hard melt off beginning 13k ago. There is NOTHING any humans now, then and probably ever are going to do to stop such a magnitude of geologic and climate event. It raised sea level 400 feet. Read the Morner link, and spend time on rational things so I can move on to refute other idiotic progressive claims. Please.

    Only a group of addled brained fools who have fallen hook line and sinker for the AGW fraud could ever imagine such an asinine “fix” for a non problem. “Let’s have a little nuclear winter”.

    I tell you, AGW belief is a mental illness.

  35. #36 by Richard Warnick on March 3, 2011 - 3:41 pm

    Glenn–

    Have you ever heard of displacement? The part of the ship that’s below the water line displaces seawater. The part above the water line does not. Same goes for icebergs.

    Still, it’s amusing to witness your lonely stand against climate science. Go, Glenn!

  36. #37 by Shangri La on March 3, 2011 - 4:03 pm

    Sure, the ice in the water has already raised sea level, when it melts, it actually takes up 11% less volume, but the displacement of water by that ice has already occurred once it lies upon the water, which it has done, all that has happened is that it has broken away from its moorings on land, the bulk of it is already floating. It’s melting will not raise sea level at all.

    The Continental Antarctic ice pack is expanding Richard, that is irrefutable, and wholly inconsistent with an AGW scenario. The climate models, for that is all they are, do not predict accurately in any way what is currently happening, all the AGW predictions are wrong, and Morner ably shows without a doubt that the gross indicator of warming, sea level rise is not trending one way or the other, and is unchanged in his actual physical observations. His method is not modeling, it is actual scientific observation and data collection. AGW as it stands has been exposed as a fraud Richard. Period.

    It is no lonely stand, there are no end of scientists that know AGW is a fraud, AGW is not climate science. Do you question the like of Morner in his analysis of 40 years of sea level observation that you are right, and he is wrong? That would be called amusing.

  37. #38 by brewski on July 12, 2011 - 8:49 am

    In “Reckless Endangerment,” a new book about the causes of the crisis, Gretchen Morgenson, a business reporter and commentator for the New York Times, and Josh Rosner, a financial analyst, make clear that it was Fannie Mae and the government housing policies it supported, pursued and exploited that brought the financial system to a halt in 2008.

    After James A. Johnson, a Democratic political operative and former aide to Walter Mondale, became chairman of Fannie Mae in 1991, they note, it became a political powerhouse, intimidating and suborning Congress and tying itself closely to the Clinton administration’s support for the low-income lending program called “affordable housing.”

    This program required subprime and other risky lending, but it solidified Fannie’s support among Democrats and some Republicans in Congress, and enabled the agency to resist privatization or significant regulation until 2008. “Under Johnson,” write Ms. Morgenson and Mr. Rosner, “Fannie Mae led the way in encouraging loose lending practices among banks whose loans the company bought. . . . Johnson led both the private and public sectors down a path that led directly to the financial crisis of 2008.”

    The authors are correct. Far from being a marginal player, Fannie Mae was the source of the decline in mortgage underwriting standards that eventually brought down the financial system. It led rather than followed Wall Street into risky lending.

    -Peter Wallison
    [you may now attack the messenger, on cue]

    So why aren’t Johnson, Frank and Dodd in jail?

    And Johnson was Obama’s very first appointee.

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