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INTERVIEW
Matt Taibbi
By Gregg LaGambina@GreggLaGambina
Nov 2, 2010 12:00 AM
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In summer 2009, Rolling Stone published an article titled The Great American Bubb
le Machine by contributing editor Matt Taibbi. Its first two lines are worth repr
inting here verbatim: The first thing you need to know about Goldman Sachs is tha
t it s everywhere. The world s most powerful investment bank is a great vampire squi
d wrapped around the face of humanity, relentlessly jamming its blood funnel int
o anything that smells like money.
The article pissed some people off. Most notably, it pissed off Goldman Sachs. W
hy would such a powerful, faceless behemoth be so bothered by a piece tucked awa
y inside an aging rock n roll magazine? Because in the world of finance, reputatio
n is everything.
But after the financial catastrophes that nearly brought this country to its kne
es in 2008, the American people deserved some clarity, an explanation that could
be understood. It still does. With Griftopia: Bubble Machines, Vampire Squids,
And The Long Con That Is Breaking America, Taibbi gives that article a book-leng
th spin, sifting through every popped bubble and unraveled Ponzi scheme to find
more complex tales of thievery.
On the eve of the midterm elections, Taibbi spoke with The A.V. Club to dismantl
e the myths of Ayn Rand and Alan Greenspan, express admiration for Elizabeth War
ren and Orson Welles, explain how short-term thinking is short-changing our coun
try, and reveal why he might still have a tiny shred of hope leftover for Barack
Obama and America.
The A.V. Club: There s an epilogue in Griftopia where the hope portion should rear
its head, but it never arrives. Where is the hope?
Matt Taibbi: You know, it s funny. We discussed that, and we had a chapter where I
was supposedly going to discuss what could be done, and that sort of thing. I w
rote something up, and I don t think I was believable when I wrote that chapter ab
out the good news. [Laughs.] So we ended up just leaving that out. I m probably no
t as pessimistic as I make it out to be in this book. I think some of this can b
e overcome, but on the other hand, I wanted people to be a little shocked at the

scale of the problem.

AVC: Early on in the book, you admit to not being an economist, writing Like most
Americans, I don t know a damn thing about high finance None of us understands thi
s shit. How did you develop enough of an understanding of these issues to write t
his book?
MT: I think the process is very similar to learning a language. A lot of what th
is is It s a lot of jargon. If you ve ever studied a language, at some point, you re ju
st able to speak it. I did a couple of these stories early on for Rolling Stone,
and I was very cautious about what I wrote about, because I didn t want to ventur
e into any areas that I didn t understand. But I think somewhere along the line, I
talked to enough people that I got the basics down, at least. There s still so mu
ch stuff that goes on that is so arcane and so difficult and so complicated, you
really have to take a crash course every time you venture into any particular c
orner of the financial universe. Even people, for instance If you talk to a commo
dities trader, he s not going to understand foreclosure. All of these things are h
ighly specialized and difficult. You re never going to be a complete and total exp
ert on any of this, but I feel at least I have the basics down.
AVC: At one point, you write, We live in an economy that is immensely complex and
we are completely at the mercy of the small group of people who understand it. I
s this why President Obama appointed National Economic Council Director Larry Su
mmers and Treasury Secretary Timothy Geithner to his administration, and re-nomi
nated Fed chairman Ben Bernanke people closely connected to the players who arguab
ly created the crisis? Is it necessary to hire the maze-makers because they re the
only ones who can navigate us back out of the maze?
MT: [Laughs.] Well, that s the argument that they will make. If you listened to so
me of the coverage of Obama s appointments, there were a lot of people on Wall Str
eet who said, Oh, you have to hire people and nominate people who work in the bus
iness, or who are from the business, because nobody else understands it. We re the
experts. I think that s not as true as they make it out to be. This stuff is not s
o difficult that ordinary people can t get it. There are certainly plenty of peopl
e in Washington who are not from the financial-services industry who have gotten
to the point where they really do get it. There are some politicians out there
who are very qualified to do this stuff, who don t have experience working at Gold
man Sachs or Citigroup, or something like that. I think there s some truth to that
, but I also think that s an argument they make to prevent outsiders from getting
into the club.
AVC: You call Elizabeth Warren one of the few honest people left in Washington. Do
es her recent appointment as special advisor to the Consumer Financial Protectio
n Bureau give her enough power to affect some significant changes?
MT: Not yet, no. But what s great about Elizabeth Warren is that she is completely
literate in all of this stuff, which is a rarity among Washington politicians.
There are some senators who have been excellent on a lot of this material Ted Kauf
man is an example, Sherrod Brown, Bernie Sanders is actually pretty good on a lo
t of this stuff. But Elizabeth Warren, she taught this stuff at Harvard, she kno
ws it inside and out, and that s really what s needed. I think one of the things peo
ple are disappointed about with Barack Obama is that what s really needed with all
this material is someone with great communication skills to explain it all to v
oters and people out there. Obama seemed, to me, perfectly suited to do that job
. He s a great communicator, but he didn t make the argument. He didn t explain Wall S
treet to people after he got elected. So we need somebody like Elizabeth Warren,
I think, to do that. And she s able to do that.
AVC: In terms of being disappointed with Barack Obama, in the book, you don t seem
to give him any credit for his passage of health-care legislation. In fact, you

accuse him of flat-out lying and imply that as a candidate, he not only knew he
wouldn t be able to accomplish what he claimed he could, he didn t even want to.
MT: I had an argument with some of the folks at Rolling Stone about this, when w
e wrote about this topic, because it s probably an unprovable assertion either way
. My impression of it is that they never believed they were really going to foll
ow through on a lot of these promises. I think if it were just one or two campai
gn promises he didn t follow through on, I might ve given him more credit, but it ju
st seems like every single one of them ended up falling by the wayside. And they
didn t fight particularly hard, either. The manner by which these promises disapp
eared, to me, was so disappointing. When I was writing that chapter, I was just
particularly disappointed in the way it all unraveled. The whole business of giv
ing up the right for the state to negotiate bulk prices for Medicare, the drug r
e-importation from Canada they bargained that away in a meeting with PHRMA, in a b
ackroom meeting with [pharmaceutical company lobbyist] Billy Tauzin, a guy they
made a [negative] campaign ad about! That just told me a lot about what the admi
nistration was all about.
AVC: You write in the book, This was a party leadership that was not really inter
ested in actually fixing the health care problem You re implying that there was neve
r any genuine motivation to create a viable health-care system for the country,
and that it was all politics. But wasn t that an eventuality that Obama and his ad
ministration came to realize over time? Don t you think the president at some leve
l truly wanted to reform health care?
MT: Yeah, sure. I see what you re saying. I think you re right in the sense that wha
t they said to themselves was, We want to do what we can to fix the problem. Right
? But my quibble with them, I guess, would be about what was possible and what w
asn t. I know because I talked to some of the people who were in the meetings on the
Hill when all of these proposals were being hammered out for instance, that Rahm
Emanuel basically openly said, I almost don t care what s in the bill. I just want to
pass something that s called health care.
He was not even shy about saying that. Bar
ack Obama probably thought, I want to pass health care. But I think he had a sense
that he could only do it if he did it a certain way. I just don t see how you can
try to pass health care and call it meaningful if you don t eliminate the antitru
st exemption. My sense was that they didn t think it was politically possible to t
ake that on, so they didn t.
AVC: That antitrust exemption or the McCarran-Ferguson you call it one of the worst p
ieces of legislation in American history, and say it just might be a more shameful
chapter in our legal history than the Jim Crow laws. Isn t there some implicit agr
eement that you re not allowed to say any legislation is worse than Jim Crow?
MT: Yeah, I know, I know. [Laughs.] I had been doing the health-care stuff for s
o long, by the time I wrote that chapter, I was probably That s probably a little h
yperbolic, but it is an awful, awful thing. And it never gets any press. I think
that s what is so frustrating to me.
AVC: There s an entire chapter in Griftopia devoted to systematically dismantling
the character of former Fed chairman Alan Greenspan. It s called The Biggest Asshol
e In The World. Maybe we should just start with that title.
MT: [Laughs.] There are three things going on with Greenspan, three reasons why
I thought it was worthwhile doing that chapter, and doing it in that way. He had
a specific role, as a politician, in the sense that he was one of the primary p
eople pushing deregulation and a specific kind of deregulation that ended up being a
major factor in the crisis. So there was that. Then there was the second thing,
which was his role as the head of the Fed, which basically allowed Wall Street
to bail itself out every time it got into a speculative disaster. And then the t
hird thing was, he was really a symbol of the kind of mindset, the ideology, tha

t sort of Ayn Randian belief in complete and total deregulation, and the cult of
the producer, and all of that stuff. The superficial pushing of that ideology,
on the one hand. On the other hand, the sort of backdoor use of the government a
s an insurance policy and welfare program for the financial-services industry. T
hose contradictions were so perfectly symbolized in Greenspan, I just thought he
was the ideal way to start out the whole discussion of what Wall Street was all
about. He had a specific role as a villain, and he also had a sort of general r
ole as an ideological leader of everything that went wrong.
AVC: Oh, and you also call him

a lying whore.

MT: [Laughs] You keep throwing out all these terrible things that I ve said back t
o me. Now I m beginning to feel bad.
AVC: You also spend a lot of time criticizing the cult of Ayn Rand and her acoly
tes. Greenspan was a devotee, heavily influenced by her books, and even spent ti
me socializing with her. You, on the other hand, characterize Rand as a bloviatin
g, arbitrary, self-important pseudo-intellectual and call Atlas Shrugged an incred
ibly long-winded piece of aristocratic paranoia. How influential are Rand s ideas i
n the financial world, and why is that a problem?
MT: I think [she] is very influential, even if people aren t specifically referenc
ing [her books]. I just hear the Randian philosophy constantly when I talk to Wa
ll Street people, this whole excuse that Everything we do is okay, because we are
the producers. We re the productive members of society. Everybody else is a paras
ite, therefore what s good for Goldman Sachs is good for America. This whole mindse
t is so deeply ingrained in a lot of people in this particular part of America t
hat I don t think there is any way you can talk about modern Wall Street without t
alking about these ideas.
You know, maybe it s not Ayn Rand in particular that s responsible for it, but the i
deas that are in her books are incredibly widespread. They re important in the sen
se that a lot the things these people do they couldn t do if they didn t have some k
ind of intellectual justification for it. If you re going to sell $30 million of w
orthless mortgage-backed securities to some pension fund in Minnesota, and you k
now that s going to bankrupt some janitor who s been saving up his pension his entir
e life, you can t do that if you don t think it all works out well in the end for ev
erybody. This provided the moral cover for people to do that stuff, so that s why
I thought it was worth writing about.
AVC: Reading about some of these traders and financiers and their scams, you beg
in to sense that money is only part of what drives them. When they operate, they
operate almost like military minds, with the numbers never really connecting to
actual people s lives.
MT: That s a completely accurate impression. Have you ever seen the movie The Thir
d Man?
AVC: A long time ago.
MT: That scene where Orson Welles, they re up in the Ferris wheel looking at the l
ittle people below, and he s like, If I could give you X amount of money every time
one of those dots stopped moving, would you really tell me to keep my money? Tha
t s what these guys are; they don t see the dots. The money is so easy, they re so com
pletely divorced from consequence. It s an incredible rush for these guys. Talking
about the thrill of making these trades and doing these billion-dollar deals is
enormous, but they can t even think about the consequences of it, because they wi
ll instantly go insane if they do. I think their minds get really, really weird
after being in that environment for a long time.

For instance, I talked to this one guy who was sitting in one of those meetings
where they re trying to sell the Pennsylvania Turnpike to a bunch of Arabs. There
was a guy at a desk next to him who was involved in the Chicago parking-meter de
al who actually went and bought a Chicago parking meter and stuck it on his desk
as a trophy. [Laughs.] He got a kick out of the fact that he bilked the city of
Chicago out of a billion dollars! You have to be a pretty strange person to get
off on something like that.
AVC: In the book, you always come back to this idea of short-term thinking as the
new norm. Whether it s the mayor of Chicago selling off the city s parking meters to
a financial group from the United Arab Emirates, or Goldman Sachs essentially w
inning a staring contest against AIG all of it is in the moment, concerned with no
w, never about the old long-term ideas of saving, pensions, or what investing im
plicitly once meant
MT: Right, exactly. That short-term thinking, what s so amazing about it is how wi
despread it is. It requires everybody to have that same mindset, not just these
guys who work at AIG, for instance, who bet half a trillion dollars on mortgages
knowing it s eventually going to blow up their company. But they ll get a huge bonu
s this year. It s not just guys like that, it s these politicians who work in the ci
ty of Chicago who know they re doing a terrible deal, who know they re going to lose
their city billions of dollars in the end, but it s going to get them through thi
s year in the budget. It s expedient for 10 minutes. After that, it s someone else s p
roblem. I guess that s one of the themes I was trying to get to in this book. One
of the reasons this stuff didn t happen before, I think, is that there was just a
little bit more, I don t know, patriotism, or decency, or whatever. I m sure the opp
ortunities to do this kind of stuff were there, but people just didn t do them bef
ore. That change is pretty chilling.
AVC: You relay the travails of a non-English-speaking Mexican immigrant making $
9 an hour who was sold a $615,000 house. The loan went through because the lende
r falsified the documents without the buyer s knowledge. To play devil s advocate: W
hy is someone who makes $9 an hour even shopping for a house? Yes, there are pre
datory lenders, but nobody who makes just above minimum wage can possibly think
they can afford a six-figure loan. Is this particular type of homebuyer to blame
on some level too?
MT: On some level, sure. But I think the common misconception about all of this
is that the reason all of these people were suddenly buying these houses was bec
ause the government was forcing banks to lend to all of these people. Exactly th
e opposite was true. These securitization practices were suddenly making it poss
ible for banks to take that guy s worthless loan and chop it up and disguise it as
a triple-A rated security and sell it off to some fund in China or Holland. It s
basically like taking oregano and selling it as weed to somebody. They just foun
d a way to do that, and as soon as they figured out they could get away with tak
ing all these bad loans and selling them off to people who didn t know what it was
, then they suddenly started looking for people to give those loans to.
I didn t put this in the book, but at the height of this crisis, there were litera
lly guys from lenders like Countrywide going out into the street and 7-Elevens i
n the middle of the night looking for people to lend houses to. The tail had beg
un to wag the dog at that point. There was such an unbelievable demand for these
assets, these loans, that these banks were just constantly ordering more and mo
re and more because they knew they could ship it off somewhere else.
And,
upid
will
for
was

yeah, the people who took these loans? They were oftentimes being really st
and oftentimes being irresponsible. But on the other hand, the one thing I
say in defense of a lot of these people is that there was even an incentive
people to buy houses and then flip them. Even Alan Greenspan suggested this
sort of a good idea. All of this easy credit was making it possible for peo

ple to get these properties and at the time, they were all increasing in value i
mmediately, so why not buy a house and hold on to it for three months and flip i
t for $20,000 [profit] a little while later? It was irresponsible for people to
do that, but it wasn t nuts. The other thing, taking a billion dollars worth of su
bprime mortgages that you know are bad mortgages and selling them off to some Du
tch bank as safer than treasuries, that s a crime. That s not just a bad investment
decision, that s a crime.
AVC: Your observation that organized greed always defeats disorganized democracy
eems particularly deflating on the eve of the interim elections. Have elections
become completely irrelevant?

MT: No, it s not completely irrelevant. That s hyperbolic. Elections aren t irrelevant
. For the purposes of this stuff the rules of the financial-services industry and
how the economy works elections just don t decide a whole lot, because 90 percent of
it is done in these rule-making sessions that take place outside of Congress. T
he few things that are debated in Congress, the two parties tend to be more or l
ess in line on most of the issues. What we saw this summer with the financial-re
form bill that got passed they basically didn t touch about 90 percent of the stuff
that made up this crisis. So, yeah, obviously elections are important, because a
lot of other issues get decided through elections, but on this particular stuff
, the stuff involving money and how the economy works? There isn t a whole lot of
change, no matter which way they vote, which is the really depressing thing.
AVC: There seem to be rallies every other week on the Mall in Washington, whethe
r it s Tea Partiers or progressives, yet they re generally directed at fringe issues
that don t seem to particularly matter in the grand scheme. Even if both sides ar
e misguided, the energy for movements and marches is very real and ready to be t
apped. Will this so-called disorganized democracy ever find a way to focus its ene
rgies at the right things and accomplish anything?
MT: It s hard, right? I think the first thing that has to happen is that people ha
ve to get it a little bit more. Then they ll start asking for specific things. The
one thing that leads me to believe that that will eventually happen is that peo
ple are all over the place coming into personal conflict with Wall Street and th
e economic system in a way that will teach them about what s going on. Whether the
ir houses are being foreclosed on, or whether they re being wiped out because of c
redit-card debt, or whether you re that janitor in Minnesota who lost his pension
because the state invested mortgage-backed securities, or you re in Jefferson Coun
ty, Alabama, and you re paying a sewer bill that s 1200 percent more than it was two
years ago, because your city got involved in an interest-rate swap deal with JP
Morgan.
Constantly when I m traveling around the country I run into people who understand
this stuff more just because they ve been personally wiped out by it in some way.
Eventually, there s going to be some politician who is going to be able to talk ab
out this stuff that makes sense to people, and there will be a lot of people who
will respond instantly because they ve already been forced to learn it, for very
unpleasant reasons. It ll eventually come around, it s just going to take a while, o
r it s going to take another disaster before it happens.
AVC: Were you optimistic when Barack Obama was elected?
MT: Oh, yeah.
AVC: But it s safe to say, that enthusiasm has drastically waned for you.
MT: Yeah. I was very disappointed. The funny thing is, a lot of people who I tal
ked to who were sources for me on all of these stories, they were also very hope
ful. They thought, Wow, this whole thing just blew up on all of us, and there s no

way that is going to happen and they re not going to step in and make big changes.
I think even people in the business were really shocked that there weren t sterner
measures after 2008. So, yeah, I was definitely disappointed. I was very inspir
ed when he won. I don t know about you, but I thought he was going to be something
different, and he wasn t. On this stuff, anyway.
AVC: On the one hand, you can make an honest argument that Obama was handed two
wars and a financial crisis, and to get them into at least a holding pattern is
some kind of an achievement. On the other hand, you can say he squandered an opp
ortunity to take the immediate emergency of financial ruin to make significant,
long-term, historic changes.
MT: I can t say which one, but I talked to a U.S. senator who was literally grindi
ng his hand against his head in frustration because he was saying, After 2008, th
at was the teaching moment. After Obama got elected, the whole world had blown u
p, he could ve just stood in the ruins like Bush after 9/11 and laid down the law
at that point. Also, the Democratic Party that was the moment they could have made
a great argument about everything that had gone wrong in the last 20 years with
the changes in regulation, and they completely blew off that opportunity. Instea
d, they just brought in the same old crew. Not only did they bring in Wall Stree
t guys, but they also brought in guys who had directly been responsible for this
mess, all these Bob Rubin people. [Robert Rubin was Secretary of the Treasury u
nder Bill Clinton, and has worked for both Goldman Sachs and Citigroup. ed.] That
was incredibly disappointing. The excuse that he inherited Bush s mess would be a
valid one, but he brought in Timothy Geithner and re-nominated Ben Bernanke, wh
o were the two chief architects of Bush s bailout. So how do you campaign against
Bush s policies when you bring back those guys?
AVC: Is this a ship the Obama administration can turn around in the next two yea
rs?
MT: Maybe. There have been a few signs that they ve gotten a little bit of religio
n on it. After Scott Brown got elected [to the Senate], they suddenly went on th
is rampage about telling Wall Street they can t be giving billion-dollar bonuses w
ith bailout money, and that sorta thing. And they got tougher on a few of the th
ings in the Dodd-Franks bill this year. I think they see They maybe see that ther
e s political hay to be made with this, but we ll see if they actually do that in tw
o years.
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