essential reading for occupy wall street: matt taibbi's griftopia

8/3/2019 Essential Reading for Occupy Wall Street: Matt Taibbi's GRIFTOPIA

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A relentlessly disturbing, penetrating exploration of the root causes of the

trauma that upended economic security in millions of American homes . . .

a polemic, a full-scale indictment of Wall Street and Washington.

The New York Times Book Review


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G R I F T O P I A , ,

The financial crisis that exploded in 2008 isnt past but pro-logue. The grifter classmade up of the largest players inthe financial industry and the politicians who do their bid-dinghas been growing in power, and the crisis was only

one terrifying manifestation of how theyve hijacked Amer-icas political and economic life.

Matt Taibbi has combined deep sources, trailblazing re-portage, and provocative analysis to create the most lucid,emotionally galvanizing account yet written of this ongoing

American crisis. He offers fresh reporting on the backroomdeals of the bailout; tells the story of Goldman Sachs, thevampire squid wrapped around the face of humanity; anduncovers the hidden commodities bubble that transferredbillions of dollars to Wall Street while creating food short-ages around the world.

This is essential reading for anyone who wants to under-stand the labyrinthine inner workings of this country, andthe profound consequences for us all.


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CONTENTS

1

The Grifter Archipelago; or, Why the

Tea Party Doesnt Matter 3

2

The Biggest Asshole in the Universe 35

3

Hot Potato: The Great AmericanMortgage Scam 78

4

Blowout: The Commodities Bubble 124

5

The Outsourced Highway: Wealth Funds 156

6The Trillion-Dollar Band-Aid:Health Care Reform 173

7

The Great American Bubble Machine 206

Epilogue 241

New for the Paperback Edition: The Grift Goes OnIntroduction 251

Looting Main Street 265

Invasion of the Home Snatchers 277

Note on Sources 297


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New for the Paperback EditionThe Grift Goes On

Introduction

Early in February of 2011 I had an interesting experience, one of

those revealing behind-the-scenes journalism stories that unfortunately

are rarely shared with readers. Just in the course of a few days of trying

to do my job, I learned almost as much about how Wall Street works as

I had in years of research up to that point.At the time, I was working on a story that asked a simple question:

Why hadnt anyone from Wall Street gone to jail in the wake of the

financial crisis? It was a difficult subject to write about from a legal

standpoint because the very premise of the story was loaded with un-

comfortable implications. Nothing makes your average libel-defense

lawyer more nervous than calling a well-represented rich person who

has been officially cleared of wrongdoing a criminal who should be injail.

The story I wrote focused on a number of cases involving promi-

nent Wall Street figures who had been enmeshed in scandal and had

whistleblowers and witnesses coming forward against them, but had


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252 N E W F O R T H E PA P E R B A C K E D I T I O N

been let off the hook by the SEC and the Justice Department. These

were people like Richard the Gorilla Fuld of now-defunct Lehman

Brothers, the nebbishy former head of AIG Financial Products Joe

Cassano (prominently featured in chapter 3 of this book), and currentMorgan Stanley chairman of the board John Mackamong others.

It was a long piece and the fact-checking process was unusually dif-

ficult, as we struggled to settle on language that was both accurate and

legally defensible in talking about these cases. In the best of circum-

stances my nerves become very frayed during the fact-checking stage,

but in this case I began to notice a peculiar problem with the material.

We would be writing about this or that misdeed committed by a certain

bank, and one of the research editors would make a superficially very

sensible objection.

But the problem is, that technically wasnt illegal, theyd say.

Take, for example, the issue of Lehman Brothers use of instru-

ments called Repo 105s to hide billions in losses. In that case, the

bank took assets on its balance sheet, for instance bundles of securities,

and parked them in the hands of certain business partners like UBS. In

return, those counterparties would send Lehman billions in cash. This

was usually done toward the end of a quarter, and Lehman would

record those transactions as true sales, marking the incoming cash as

revenue from honest business transactions. Investors would think the

bank had tens of billions of cash revenue from sales of assets.

But as soon as the quarter was over, Lehman would return themoney and take back its assets, sending its counterparties a small carry-

ing charge for their trouble. This is like parking your worthless old 83

Grand Am in your neighbors garage at the end of every month before

rent day, borrowing $1,500 to pay the rent from said neighbor, then

paying the rent with that cashthen scrambling to repay the money in

order to get your car back at the beginning of the next month.

Thus these repurchase agreements, the Repo 105s, were not infact sales but loans; Lehman was essentially borrowing tens of bil-

lions of dollars at the end of every quarter, using that cash as pancake

makeup to gloss over its shaky balance sheet before trotting out its

quarterly report for investors to see. Metaphorically speaking, Lehman


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I N T R O D U C T I O N 253

was claiming that it sold that worthless old car for $1,500, a real sale,

when in fact the neighbor was just holding it for collateral.

In the heat of the bubble era, as the banks insane debt and leverage

levels began to overwhelm the company, Lehman repeatedly used theseRepo 105 deals to hide the truth about its condition from the outside

world. In order to do so, though, it needed accomplices who would

sign off on its bad math. The bank shopped these transactions around

to various accounting firms and were rejected each time; only Ernst &

Young, in the end, agreed to give them an opinion that the transactions

were legal (and even then, they had to go overseas to find a law firm that

would bless the deals). Thus when Lehman Brothers decided to hide as

much as $50 billion in loans each quarter, it had an opinion from both

a prominent law firm (the British firm Linklaters) and a major ac-

counting firm (Ernst & Young) that what it was doing was legal, even

though executives internally knew they had gone down a very dubious

road. Bart McDade, the companys COO at the time, called the Repo

105 transactions another drug we R on.

By the time I sat down to write about this, the story had been doc-

umented quite extensively in public, with a bankruptcy examiner

named Anton Valukas explaining everything in a 2,200-page report

that was released in March of 2009. But even within the offices of

Rolling Stonewe were having a hard time finding a way to publish the

routine assertion that Lehman had done something wrong, because the

bank had essentially bought itself an opinion that what it had done waslegal.

Within our offices, everyone from the fact-checkers to the editors

knew what had gone on hereLehman Brothers had prettied up its

balance sheet using sham transactionsbut the issue here was not

truth, but legal pull. Absent an SEC case or a successful criminal pros-

ecution against Lehman, there was no easy way to say in print that

Lehman and/or Ernst & Young had committed a crime without invit-ing a potential court case with those parties.

And here we came into conflict with another one of the key points

of the storywhich was that the lawyers these banks and finance

companies hire are not just the best in the country, they also inevitably


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are all, themselves, former high-ranking prosecutors and regulators.

Even thinking about opposing these people is nerve-racking, because

they have home-court advantage in the justice system, or whats left of

it; everyone from judges to current officials and regulators are formercolleagues of theirs.

Anyway, a few days before we went to press with Why Isnt Wall

Street in Jail? I made a routine call to the attorney for another one of

our article subjects, asking if he wanted to comment on what we were

writing. Not that we dont always call for comment, but in this case it

was sort of a must; given the legal sensitivity of the material, we wanted

to make sure we had everything absolutely correct. This was true even

though the article was not going to be breaking news; all we were doing

was recounting what had already been written about this person in the

governments own highly tame official history of the financial crisis, the

Financial Crisis Inquiry Commission report.

The attorney in question was, like many of the attorneys in these

instances, a former law enforcement official, in this case a former fed-

eral prosecutor. When I spoke with him on the phone the first time, he

told me that he was going to insist that Rolling Stonepublish, in full,

a statement on his clients behalf. Well, okay, well take it into consider-

ation, I said.

The attorney instantly became emotional. He told me that if I

would not agree to print his statement in full, he demandedto speak to

my editorand that if I didnt comply, we would be in a place wherewe werent being helpful to each other. That last phrase instantly sent

me hurtling into asshole-pucker mode. One doesnt like to think of a

former federal prosecutor drifting into an unhelpful frame of mind

with regard to your physical person.

In the interest of hearing out all sides and making sure we had our

facts right, we eventually had an audience with said lawyer and his as-

sistant at the Rolling Stoneoffices. This was a lot of fuss for a relativelysmall section of a magazine piece that, again, was not covering any new

ground at all. The crux of what we were saying about the attorneys

client was simplewe were asserting that the former Wall Street exec-

utive had engaged in a certain common financial transaction, then later

misled investors about it. For the purposes of this book, lets just say


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that I was writing that the executive had at one point in a fiscal quarter

sat down in his living room and later told investors he had been stand-

ingthe entire time.

The attorney took out sheets of paper with all sorts of arguments.You will see in the first tab, he said, that all the relevant parties have

agreed that the piece of furniture shown in this photo of the living

room is not a chair, but in fact an item for resting continually. Here in

tab 2, he went on, you will see that under section 105-D slash 97 dot X

of the federal code, sittingis defined as something that takes place in a

chair, and I think you will agree that since the undersigned parties

agreed at the outset that the item of furniture pictured was in fact nota

chair, it cannot be said that my client was ever, in fact, sitting. In tab 3,

you will see that an independent auditor asserts that my client is not an

expert on sitting, and therefore cannot be held responsible for making

statements about sitting in public . . .

This went on for nearly twenty minutes. Almost nothing the

attorney said had any relevance at all to what we were writing about,

but purely from a spectators standpoint, it was a mesmerizing

performancebullshit, all of it, but brilliant bullshit, like watching a

Kobe or MJ of lawyering go through a layup line. As the meeting went

on, it occurred to me that this same attorney had at some point in the

last years given the exact same pitch to the government investigators

who had targeted his Richie Rich client and apparently had convinced

them. This bullshit, in other words, had worked! This surely was an in-credible indictment of someone up in the regulatory ranks.

Later, when we pressed him on a certain point, returning to an

incontrovertible instance of his clients questionable behavior, he

frowned. Look, youre a magazine committed to social justice, he

said. And that has to apply to everybody, rich and poor. After hearing

out the attorney on all his points, we went back over that portion of the

story one more time with a fine-toothed comb. Because we had alreadyfact-checked it so carefully, all that was needed was to rework our

phraseology in a couple of places. But the point is, even just to repeat

what the government itself has already concluded about these Wall

Street characters, one has to be incredibly careful.

This whole question of regulation and criminal justice is a matter


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of who has the best lawyers, and who arethe lawyers. The simple truth

is that Wall Street owns all the best lawyers, and even the ones who

arent in private practice yet soon will be, and they know it. Even if they

start out as prosecutors ostensibly representing ordinary people, theywill sooner or later become millionaire defense flacks like the one

who visited our offices, using their considerable legal skills to throw up

thick binders full of fiendish bulwarks to any kind of assertion of

wrongdoing.

The reason I tell this story is to explain how it is that so much can

have gone wrong, and yet no one has been held responsible. The law is

a fungible thing: no matter what is actually written on the books, peo-

ple in positions of responsibility have to at least generally agree as to

what the laws are in order for them to have any practical effect. And if

a big enough group of influential people collectively decides that theres

nothing illegal per se about hiding billions in debts from investors, or

defrauding homeowners with predatory mortgages, or making born-to-

lose derivative deals and selling them to foreign banks as AAA-rated

investments, then that consensus affects everyone. It seeps into the SEC

and the Department of Justice, which is staffed with once and future

employees of the big legal defense firms, where this consensus was born

in the first place.

And it bleeds far enough into the public consciousness that even

within the walls of a magazine like Rolling Stone, the mere decision to

call these frauds and thefts wrong and illegal and deserving of punish-ment is highly controversialeven in our own minds, in the minds of

politically conscious, liberal-arts-educated lefties, its hard to take that

step. Its not just the threat of a lawsuit you have to overcome, although

thats certainly a real enough problem; its that this consensus has dom-

inated the intellectual atmosphere for so long that you end up double-

and triple-checking yourself before leveling any kind of accusation of

criminality upward. On the other hand, when you think about thecrimes committed by people on the street, about guys selling eight-balls

of coke in alleys and ripping stereos out of cars, your mind shifts in-

stantly to punishment and arrest. Theres no intellectual obstacle sti-

fling the instinct for punishment and justice.

If I might make a quick digression here, think for instance in com-


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parison about the American attitude toward the sale of drugs. Street

dealing is a strictly economic activity voluntarily undertaken by two

consenting adults. Its against the law here, but one could make the ar-

gument that thats purely an accident of history; its not illegal every-where in the world, and selling some of the same drugs one hundred

years ago was legal even in this country. But in the last century or so,

the sale of narcotics in America has been broadly criminalized and a

massive police apparatus has grown up around this now-illegal busi-

ness, which very conveniently is often the chief commercial activity

driving the economies of poor and nonwhite neighborhoods.

That selling drugs and taking drugs is not widely considered inher-

ently wrongis proven by the fact that large majorities of the population,

including at least a few presidents, have guiltlessly engaged in the activ-

ity. If youre white and have money, the chances are very good that you

smoked pot from high school on and dabbled at least occasionally in

harder stuff somewhere along the line. But do you think of yourself as

a criminal? Absolutely not. It just happens to be widely understood that

a certain type of nonviolent economic activity is technically illegal in

our society and if you want to be sure of avoiding punishment for en-

gaging in it, you cant do it openly if youre on the campus of Harvard

or Penn State, and probably not at all if you live on a heavily patrolled

street in the Bronx or East St. Louis.

To me this is no different from the laws against selling rabbit hats

or blue jeans, or changing money, that I experienced as a college stu-dent in the Soviet Union. While the buying and selling of black-market

goods was so pervasive and morally accepted that party members and

other high-ranking officials didnt worry at all about wearing Western

clothes in public (Raisas furs and Mishas tailored suits come to mind),

all the same there was a giant police force ready to jail you if you were

caught selling, say, a pair of Dutch dress socks to a tourist in Red

Square. While most Russian citizens understood that there wasnt any-thing morally wrong with these activities, few people questioned it

whenever the police hauled away afarsovshik(black marketeer) to do

time. Thats just the way things were. It was just generally understood

that when it came to buying and selling black-market consumer goods,

what was okay for a party secretary to do in a back room of the Dom


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Modelei was not okay for a broke twenty-year-old student to do on the

streets of Leningrad.

What does any of this have to do with financial crime in modern

America? Well, after the crisis hit, and the whole country was rocked byjob losses and foreclosures and soaring commodity prices, the general

public was still, overwhelmingly, hesitant to demand punishment for

the people responsible. From coast to coast, the mere suggestion that

powerful bankers should go to jail for technical infractions like lying to

investors and hiding losses and front-running client trades met an im-

movable wall of public skepticism. Are those activities really crimes?

people continually asked. Isnt that just being greedy? Can you really

put people in jail for trying to make money?

Again, think of the contrast with drug dealing. Man sells bag of

dope on the streets of Harlem; an economic transaction between two

consenting adults, with no third-party victims involved anywhere. But

when a banker sells a million dollars (or ten or a hundred million dol-

lars) of mismarked mortgage bank securities to a pension fund, you

dont have two consenting adults. The buyer of the securities is obvi-

ously unaware that hes acquiring an essentially counterfeit property,

that his fund is going to lose that money. And there are third-party vic-

tims galore; all the pensioners or other investors are going to see their

savings disappear.

But people still cant wrap their heads around the idea that this

highly destructive transaction is a jailable offense. In the extreme formof the argument in defense of the bankers who engaged in that activity,

it is said that these deals were legal because it cannot be conclusively

proven that the bankers selling this dreck knew that the goods they

were trading were worthless and dangerous.

The notion that these bankers didnt know that what they were sell-

ing was toxic is, empirically speaking, absurd on its facethere were

pools of mortgages that banks like Goldman were selling where morethan 50 percent of the borrowers didnt show ID when taking out their

loans, and other pools where borrowers had collectively put less than

1 percent cash down on nearly a billion dollars of home loans. Not even

the dumbest trader could ever genuinely believe that 60 percent or

70 percent of a pool full of borrowers with no ID buying houses with


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no money down could be investment-grade securities. But the defend-

ers of these bankers still insist that there cant be a crime without con-

crete proof of the bankers mental state when selling those properties.

Again, imagine a drug dealer busted for selling a bag of Dra-no in-stead of heroin arguing, with a straight face, that he didnt knowthat his

product was harmful to his buyers. Think that would go over well? And

lets say a dozen people end up sick and dying in the hospital because of

the stuff he sold: can you imagine anyone arguing that said dealer still

cant be prosecuted without proof of his mental state? This is where we

are with financial crime. Millions of people around the world lost huge

chunks of their life savings to these deals, but still we insist that we can-

not punish the dealer without knowing for sure what was in his head

when he sold us that financial Dra-no.

Well, so be it: lets say now that we have to have proof of their men-

tal state. Heres some proof, right along those linesthe officials from

the two Bear Stearns subprime hedge funds that ultimately blew up

their company. We know, because weve seen the e-mails that were ad-

mitted into evidence at their trials, that Ralph Cioffi and Matthew Tan-

nin knew their fund full of subprime junk was toxic long before they

stopped selling it to investors. In April 2007, long before the funds

blew up, Tannin wrote an e-mail to Cioffi, saying, I think we should

close the funds now . . . The entire subprime market is toast.

He also wrote this: The subprime market looks pretty damn

ugly . . . If AAA bonds are systematically downgraded then there issimply no way for us to make moneyever. Three days later, he was

telling investors that he was very comfortable with exactly where we

are and theres no basis for thinking this is one big disaster.

Investors in the Bear hedge funds ended up losing, collectively,

$1.6 billion dollars. This is exactly what a Wall Street crime looks like:

financial players lying to investors, with documentary evidence to prove

it. Yet a jury found both Cioffi and Tannin not guilty. This was a rarecase of the failure of justice not being the fault of a conspiracy of pow-

erful political interests and captive regulators; this fuckup was on ordi-

nary people in a jury box, who could not bring themselves to see the

Bear funds collapse as a punishable crime.

That the subprime instruments Cioffi and Tannin were selling in


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the first place were essentially worthless counterfeit marketed as rock-

solid, perfectly hedged investmentsDra-no sold as dopenever even

entered into the equation. The government focused entirely on the

mental state issue and jurors couldnt see the crime. The state evenhad the e-mails proving that these rich hustlers knew they were piloting

a financial Titanicand repeatedly failed to tell their passengers to head

for the lifeboats. And it wasnt enough.

After the acquittal in the Bear case there was widespread criticism

of the Department of Justice for even subjecting poor Cioffi and Tan-

nin to a trial. Wasnt it enough that they went through the shame of see-

ing their funds blow up? (A side note: This on Wall Street, shame is

enough argument is incredibly common. I even had a high-ranking fi-

nancial regulator tell me privately once that the absurdly small $80,000

and $100,000 fines for two Citigroup officials caught hiding billions in

liabilities was appropriate because just bringing a case against the CFO

of a company like Citigroup is a really big deal.)

A law professor at the University of Illinois summed up the con-

sensus on the Bear case nicely. He said the Bear fiasco was about stan-

dard business dealings where the views of the markets were shifting

rapidly and these guys were being criminally punished for expressing

views on one day and acting differently another day. He added: This

never should have been the subject of a criminal prosecution.

In the end, the only things that made the crimes of these people

difficult for the public to see were the identities of the potential defen-dants. In almost any other arena, fraud is loathed and despised as not

merely a technically illegal economic activity like selling rabbit hats in

Red Square, or selling weed in Washington Square. Rather, its under-

stood to be a dangerous and destructive crime with victims who really

suffer.

Even when Crazy Eddie Antar was caught scamming investors by

filling warehouses with empty boxes when auditors inspected his in-ventory, there was no call from the public to let good old Crazy Eddie

off because he was just trying to make money and engaging in stan-

dard business dealings where the views of the markets were shifting

rapidly. People understood that Eddie Antar was a rip-off artist, and it

came as no surprise when it was learned that he was involved in all sorts


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of other crimes, from jiggering the digits on his financial reports to

putting used merchandise in new boxes.

Yet the remarkable thing about the Wall Street crime wave was the

way the public almost unanimously rushed to make excuses for thepeople who had committed these offenses. There was an almost univer-

sal belief that while some of what these bankers did was shady and

demonstrated perhaps unhealthy amounts of greed, their transactions

were technically legal and certainly not bad enough to make jail time

necessary.

This public faith in the essential legality of Wall Streets business

model not only allowed bankers to escape scrutiny for the broad fraud

scheme of the mortgage bubble. It also somehow shielded these same

people from scrutiny when, just like in the Crazy Eddie case, it subse-

quently came out that most of them were also engaging in all sorts of

other crimes, from outright bribery (i.e., in Jefferson County, Alabama;

see page 265) to insider trading (countless cases from Galleon on

down) to hiding income (i.e., Lehman CEO Dick Fuld, among others)

to Enronesque accounting irregularities (the Repo 105 transactions) to

systematic front-running (which became epidemic during the bailout

period) to the almost comical frauds committed by companies like

New Century and Countrywide, where mortgage dealers would liter-

ally hold a few sheets of a fixed-rate mortgage contract over a deadly

adjustable-rate deal and then tell kindly old black ladies to sign here

and fork over their life savings.These guys literally stole from old ladiesand we couldnt find a way

to believe they deserved jail time. This went far beyond the old clich

about the rich having better lawyers and an advantage in court. This

was a problem of perception buried deep in the public consciousness.

We simply couldnt find a way to view anything these people did as

criminal. But if we ourselves had profited from the commission of

equivalent offenses in the streets and storefronts of our own communi-ties, few of us would have argued with the logic if and when the state

came to take us to jail.

Graham Greene in Our Man in Havanawrote about this phenom-

enon. In describing life in Batistas Cuba, he talked about how there is

a torturable class. In one scene, a corrupt police captain, a torturer


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who owns a cigarette case made of human skin, explains the distinction

to Greenes British antihero, Wormold:

Did you torture him?

Captain Segura laughed. No. He doesnt belong to the torturable

class.

I didnt know there were class-distinctions in torture.

Dear Mr. Wormold, surely you realize there are people who expect

to be tortured and others who would be outraged by the idea. One never

tortures except by a kind of mutual agreement.

We have the same situation here in America now. We have a jailable

class and a nonjailable class. The street thieves who go placidly to jail,

reporting dutifully to prison after being out on bail, do so by a kind of

mutual agreement, implicitly accepting the idea that they deserve jail

more than the Dick Fulds of the world. Meanwhile, the high-class

thieves on Wall Street who dont go to jail for far worse thefts really are

outraged by the very idea that maybe they should. And not only are

they outragedthey deploy frightening legal bulldogs to both defend

them and to argue furiously as to the inappropriateness of even sug-

gesting that theyve done wrong. They are fighting not just to stay out

of jail but to preserve this system of mutual consent.

In between are all of us, and the fact that so many of us implicitly

accept this bizarre, subterranean, bipolar belief system is a huge partof why nothing was done to change things in the wake of this finan-

cial crisis. The vast majority of Americans are, I think, waiting for

Wall Street itself to agreethat it deserves to be punished or reformed,

before calling for punishment or reform. But its never going to happen.

I feel strongly that once more people realize this, that they dont have to

ask for Wall Streets permission to be angry about what happened to

their money and their mortgages and their credit ratings in the last tenyears, the politics governing our economy will be altered. And the rea-

son people think they need to ask permission is that they dont under-

stand a lot of what went on, because the details seem complicated and

the bankers in charge have great lawyers continually clouding the issue.

The reality, of course, is that this situation is not as complicated as


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it seems. If you strip away all the verbiage and the long-winded expla-

nations and bought-off legal and accounting opinions, all were dealing

with here is simple stealing and lying and fraud. Its crime and people

need to go to jail for it: end of story. The issues in Griftopiaare reallylaw-enforcement issues, and these stories are cops-and-robbers stories.

Describing them as anything else actually clouds the issue.

Anyway, included in this paperback edition are two more of these

crime stories I wrote for Rolling Stoneafter Griftopiawas put to bed.

Looting Main Street is about the Jefferson County, Alabama, finan-

cial disaster, which shows how the same sorts of financial scams that un-

dermined Greece were devised and executed in small-town America.

Here were dealing with crime in the baldest conceivable sense of the

word: small-town officials literally bribed with cash and gifts to stick

taxpayers with billions in crappy, toxic loans. The theft was so overt

that in one case, one bank (JPMorgan Chase) actually paid millions to

another bank (Goldman Sachs) to back off the dealas obvious a case

of anticompetitive behavior as youll find. And again, when disaster

strikes, its not the bankers who suffer, its the ordinary people who live

in the Birmingham, Alabama, area who see their city stripped down

and sold for parts.

Invasion of the Home Snatchers is another true-crime story,

about the foreclosure crisis. Again, this was a story that was sold to

America as an economic disaster, something that happened organi-

cally thanks to a poor economy. In fact, it was just criminal fraud on amassive scale. If you peel back the paperwork even a little bit, you see

the crime there, bare as can be.

When the financial crisis first struck, it was, for most people, terri-

fying, depressing, and confusing all at once. Years later it is, at the very

least, no longer all that confusing. This material really isnt that hard;

these guys arent nearly as sophisticated as theyd like you to think. Its

just stealing, no matter what their lawyers choose to call it. And whiletheres often despair at the question of what to do about this crisisthe

issues seem so staggeringly complex and both the economy and the

regulatory system seem so brokento me the first step is a very simple

one. Find the people who are stealing and give them jail time; lets start

with that.


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You will often hear pundits asking, with straight faces, certain

rhetorical questions about the issue of punishment for financial crime.

What good would it do, they ask, to put this or that banker CEO in

jail for fraud? After all, they say, giving a Dick Fuld or John Thain jailtime wont change anything.

Which is an interesting point, but consider this: when was the last

time anyone stood up at a car thiefs trial and argued that jail time

wasnt warranted because putting the defendant in jail wouldnt end car

theft? We dont make that argument because its absurd; thats not how

we measure justice. The chief problem of the financial crisis is that it

has made inequality systematic and created two political systems, one

for Wall Street and one for everybody else, a financially torturable class.

The country has underlying economic problems for sure, and those will

be difficult to untangle, but the inequality problem can be fixed rela-

tively quickly. If we force the people on Wall Street to live under our

laws and our criminal justice system, who knowsthey may even start

to see themselves as citizens of the same country. And behave accord-

ingly.


18/19

MATT TAIBBIS

GRIFTOPIA

UPDATED AND EXPANDED

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19/19

2011 Spiegel & Grau Trade Paperback Edition

Copyright 2010, 2011 by Matt Taibbi

All rights reserved.

Published in the United States by Spiegel & Grau, an imprint of The Random

House Publishing Group, a division of Random House, Inc., New York.

Spiegel & Grau and Design is a registered trademark of Random House, Inc.

Originally published in hardcover and in slightly different form in the United Statesby Spiegel & Grau, an imprint of The Random House Publishing Group, a division

of Random House Inc., in 2010.

Library of Congress Cataloging-in-Publication Data

Taibbi, Matt.

Griftopia/Matt Taibbi.

p. cm.

ISBN 978-0-385-52996-9

eBook ISBN 978-0-385-52997-61. Political corruptionUnited States. 2. DeceptionPolitical aspects

United States. 3. DespotismUnited States. 4. United StatesPolitics

and government2009 5. United StatesPolitics and

government20012009. I. Title.

JK2249.T35 2010

973.932dc22

2010015067

Printed in the United States of America

www.spiegelandgrau.com

2 4 6 8 9 7 5 3 1

Book design by Susan Turner

essential reading for occupy wall street: matt taibbi's griftopia

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