BRIAN LAMB: Matt Taibbi, the Washington Post had an article you - about you in 2005 and they called you a Gonzo journalist. Is that the way you would describe yourself? And if you do, what's it mean?
MATT TAIBBI: You know, it's funny, a long, long time ago when I was very young and very broke, I actually was approached by a publishing company and asked to edit an anthology of Gonzo journalism. And I took the project because I needed the money at the time, but what I discovered when I was doing that and trying to put together a compilation is that Gonzo journalism is really a meaningless term. All it really means is Hunter Thompson, you know, it's a word that was invented specifically to describe his work. And I think it really only applies to that one writer. So I'm always skeptical when I see that that term applied to other journalists and other writers. And I don't entirely think it applies to me.
LAMB: Well, in the same article by Peter Carlson on the Washington Post, he quote you from some of the stuff you've written. And I just want to read a couple of lines here, just tell us what you - what your approaches, why you go this way. Jean Schmidth, Congresswoman from Cincinnati, Ohio in those days, Democratic, I'm sorry, a Republican freshman who called Jack Murtha a coward, you referred her as a "wrinkly, witchlike woman with a pension for dressing like a harbor buoy."
LAMB: The point - why are you doing that?
TAIBBI: So, I mean, I get a lot of flack for this. Obviously, one of the things that happens when you try to cover a - sort of inside baseball politics or especially what I do now which is Wall Street and high finance. A lot of these topics are basically inaccessible to broad audiences. They're really, really difficult to sell to people if you want to talk about congressional procedure. I think that particular article was about the Rules Committee, and about how laws get made. And so, one of the things that you have to do, I think, in order to get people interested in these topics is to turn it into a human drama. You have to make characters for them. You have to use fiction writing techniques to identify and caricaturize people so that people know, you know, that this person is this sort of character and then there's the good guy over here. And it allows them to follow the story and to consume this more as a story than as an essay or a term paper which will put them to sleep.
LAMB: But the other side of the political system gets the same treatment. You say on Harry Reid, the Senate Democratic leader from Nevada, "a dower pro-life Mormon with a campaign chest full of casino money."
TAIBBI: Yeah, I know - I don't - another thing I think about this process is that if the reader knows exactly what your politics are, and he can - he or she can predict how you're going to describe a politician ahead of time, then you really haven't done your job. You should be a little bit obscure to the reader. And I don't - you definitely and we shouldn't be partisan because that eliminates the ability of people to be interested in what you have to say, you can't be predictable. So if you're going to give it to one side, you have to give to the other side. You have to use exactly the same techniques that you would use for Democrats that you would use for Republicans. And I think that's something that modern audiences have really respond to especially now when they see the news landscape being fractured more and more overtly into sort of pro-Republican and pro-Democratic camps.
LAMB: I know you're not with Rolling Stone. I don't think anymore, but how long did you write for them and when you wrote the book that we asked you come talk about you were with them, how long were you there?
TAIBBI: I was there for 10 years. I loved working there, it's a great magazine, you know, obviously iconic organization. And, you know, I basically had the job of, you know, one of my childhood heroes, Hunter Thompson, and I got to travel around the country and, you know, write about basically anything I wanted. And it was a fantastic job. And it allowed me to, you know, because I got to travel so much and see so much of America, it allowed me to do projects like this where, you know, so going in and out of different places.
LAMB: Who was or is from your book, it's near at the end of the book, Maria Espinoza.
TAIBBI: I believe she's in the P-100 Chapter, right? She's the - that's the one of the people who - so there's this program in San Diego, California where you essentially get -
If you have fly for welfare, they're allowed to preemptively search your house. And the reason for this is this; the idea is to prevent you from committing welfare fraud. What they're really looking for is, let's say, you're applying for welfare and you say that you're a single mom and you don't have any other source of income. Well, they want to make sure that you're not cohabiting with another money earner in the house. And so this particular law in San Diego was designed - it allowed the state to come in and check around and see if there was evidence of a man in the house. They would go through your underwear drawer and look through your toothbrush rack. And Maria, I think it was just one of those people who had to go through one of those searches, this program was called P-100 and that was a P-100 search.
LAMB: Did you know, meet her? Did you talk to her?
TAIBBI: No, I actually - this was through her lawyer that I'd conducted that interview.
LAMB: You say she was a pioneer, why?
TAIBBI: Just because she was one of the early people - first people to go through this program. You know, there weren't that many, you know, this program didn't go back that far. So, it was - she was one of the very first.
LAMB: And what about her was interesting to you beyond what you've already told us?
TAIBBI: Well, mainly, that I had access to her or that - or at least through her attorney. There were - and a lot of the people, one of the things I discovered about covering things like welfare, Section 8 housing, and people stop and frisk is that a lot of people who've been either arrested or charged with fraud or who are on the welfare or in the system, they're highly reluctant to talk about their experience just because it's very shaming. And so, it was slow going for me to try to find people who'd been through this program. I did eventually find a handful of people and a couple of people who'd been on the record about it. There was a lawsuit about this program so I had to talk to some of the plaintiffs in that case. But, you know, it's just difficult to find people who will talk about their experiences.
LAMB: The book is named called "Divide." What's the premise? When did you start on it?
TAIBBI: So, for the last five years or so ever since the 2008 crash, I've been primarily covering corruption on Wall Street. And this is either an accidental detour in my career, I was sort of a typical campaign-trail reporter. I covered, you know, left-right politics, selections, that sort of thing. And then after - after the crash in 2008 and after Barrack Obama got elected, Rolling Stone decided to assign me sort of one story on what had cause the crash. And I did one story that was really about what had happened at AIG in 2008 and we got such a tremendous response to that story that I ended up, essentially, doing that and only that for the next five years or so. And, in the course of covering this material, there was this theme that I kept - that kept resurfacing in all of these stories that I wrote about, which is that, there were these awful crimes that would be committed and none of the individual's responsible would ever be prosecuted. The worse-case scenario is always the same that it was always - if the company got caught which was always a very rare thing to begin with, they would either simply promise never to do it again or they were - in - or they would have to pay some money, you know, was never had have actually their own pockets, the individuals who are committed to crimes. It was, you know, the shareholder's money, it was the company's money. So I was very struck by this phenomenon of nobody - nobody actually paying a criminal penalty for what almost everybody who covers this subject agrees was the biggest white-collar crime wave in American history. And in the flipside of that, of course, is we're living through this other part of American history where we have an exploding prison population. We have this statistics based policing strategy that's being implemented in cities all over America. And so the flipside is it's easier and easier to go to jail everywhere else in America but, it's harder and harder to go jail if you work in one of these two big - to fail banks on Wall Street. And so, this is the divide that I'm talking about. There is, you know, we have some attention that's being paid to income and inequality in this country. But I wanted to talk about this other kind of inequality which is justice inequality which is, you know, there's one class of people that's essentially non-jailable and another class of people that is jailable.
LAMB: Want to show you some video and this goes back in 19 - 2008 and it's Richard Fuld who you've devote a whole chapter to - partly his life. Let's watch this and then we can ask him about.(BEGIN VIDEO)
HENRY WAXMAN: So you've been able to pocket close to $0.5 million and my question to you is a lot of people ask, "Is that fair for the CEO of a company that's now bankrupt to have made that kind of money." It's just unimaginable to so many people.
RICHARD FULD: I would say to you, the 500 number is not accurate. I would say to you that although it's still a large number, I think for the years that you're talking about here, I believe my cash compensation was close to $60 million which you have indicated here. And I believe the amount that I took out of the company over and above that was, I believe, a little bit less than $250 million.(END VIDEO)
LAMB: How does he'd fit in to your book?
TAIBBI: So, you know, I have a whole chapter about all the shenanigans that went on at Lehman Brothers but that - that particular episode was interesting for a number reasons.
So, first of all, there had been whistleblower lawyer at Lehman Brothers, name Oliver Budde, who had gone to the SCC about eight or nine months before that congressional hearing and told the SCC that there was - there were discrepancies in the way that they are reporting Mr. Fuld's income. And that he's actual income is much higher than he was reporting to Congressman Waxman there in that hearing. Incidentally, he said half a million, what he really meant was half a billion, you know. And so, the SCC was aware that there were some abuse in terms of how Lehman executives were counting their stock options, they were underreporting their income. But they ignored that warning, you know, a highly place internal whistleblower. They ignored other warnings about the company and right up until the time that this sort of massive bomb of leverage exploded and nearly destroy the entire world economy. And the other interesting part about this is that, here's the guy who was a CEO of company that literally almost destroy the entire world. I mean, the collapse of the Lehman Brothers was an event that you just can't understate the significance of it. It triggered a series of losses that ultimately ended up wiping out, you know, according to some, 40 percent of the world's wealth. I mean, that's how much money disappeared in the 2008 crash. And the triggering event was really Lehman and AIG well, what happened to those two companies? And here's a CEO that - of this company who would engage in incredibly irresponsible practices for years, and years, and years. It's definitely happened on his watch and he's unapologetic about the fact that he has taken hundreds of millions of dollars out of this company that he gets to keep. Even as the taxpayer now has to go in and spend, you know, as much as $7 trillion filling in the hole that was caused by the irresponsibility of executives like that. And that's what's really striking to me about the attitude of a lot of the people who work on Wall Street is, this total lack of shame or apology or any sense that they have bare any responsibility for any of it all. And also, the fact - the idea that it's totally natural that the government should come in and bail them out, that this is what has to be done and they feel this way even as they feel that it's totally outrageous for, say, somebody who's house is in foreclosure. No way should that person be helped by the government and get any aid at all in, you know, in keeping his house because that would be rewarding for someone for being irresponsible. They just don't see the discrepancy between those two different points of view. And it's incredible.
LAMB: Why do you think they don't?
TAIBBI: Because they live in a bubble. And one of the - there are so many reasons why this is the case. One of the reasons is the financial press caters, exclusively, to people who work in the financial services industry. Financial reporting, if you're somebody who doesn't work on Wall Street, it's almost indecipherable. If you're just an average Joe who works in Middle America, you know, had some kind of job completely unrelated to finance. If you pick up the Wall Street Journal and you try to read a story about derivatives clearing or a high frequency treating, it's - it might as well been, you know, in Greek to you. It's totally indecipherable. They are - the press that covers this group of people is very worshipful. They - it tends to aggrandize anybody who is successful in making himself a lot of money. You see this in particular with the treatment of somebody like Jamie Dimon, who is continually lionized on Wall Street by financial reporters despite the fact that his company just paid out this - the single biggest settlement in the history of regulatory settlements because Jamie Dimon makes a lot money for his company. And â€¦
LAMB: Stop you just a second, $13 billion and one lump sum to the United States government â€¦
TAIBBI: And $20 billion overall for the year.
LAMB: What's the reason that they're getting this kind of money out of the company like that?
TAIBBI: Because they committed an astonishing array of misdeeds ranging from manipulating energy prices in California and Michigan to engaging in subprime fraud to lying about the London Whale episode, where they had this sort of gigantic suck hole of losses that was expanding within the company and they didn't disclose to sometime to their investors and their shareholders. I mean, there are so many things that went on at Chase. And they were - and they were sort of charged collectively with all of this stuff, they were burning it off banker, that was another thing. I mean, they somehow missed the fact that this gigantic hedge fund wasn't making any trades, and they could have sounded the alarm years beforehand.
LAMB: Let me show you some more video. This is Jamie Dimon testifying in 2012 with Barney Frank and the Chair.(BEGIN VIDEO)
BARNEY FRANK: Oh, yes, you did say finally that there would be some callbacks for compensation. You must have taken some responsibility here. Will the callbacks for compensation - of your compensation on the table for consideration of callbacks?
JAIME DIMON: Yes. So all of the - this whole act should be renewed by the board â€¦
FRANK: No, specifically, just specific question.
DIMON: My compensation is 100 percent up to my board â€¦
FRANK: Is it under - Mr. Dimon, you said, there going to be callbacks for people responsible. Is your compensation in the pot that's going to be considered for that?
DIMON: They will do what they see is appropriate. I can't tell my board what to do.(END VIDEO)
TAIBBI: Well, Jamie Dimon got a 74 percent raise at the end of this year. Again, after, you know, having stewarded a ship that got the biggest settlement in the history of settlements ...
LAMB: But what about Barney Frank, I - he was in the authority position there, how tough was he? How tough was the Congress on somebody like JPMorgan Chase?
TAIBBI: Well, look, they ask some very good questions, I think the - that the hearings that they had about - on London Whale episode, for instance. I think they were very insightful, they led us some testimony that was very damning. And that may have opened the door for future regulatory actions. I don't - you can't blame at all, lay it all at the feet of Congress. I think Congress on the whole has done a better than the regulators had of examining a lot of these issues. But I was at a couple of those hearings, and I was really struck by the fact that Jamie Dimon was bored during this proceedings. There were numerous occasions where he would - he was sitting back, you know, almost rolling his eyes while, you know, senators and congressman were asking him these questions, because it's just that - there isn't a sense of urgency that any of this really matters to these guys, because they don't have to feel, individually, the pain for anything that they do wrong. And Dimon is just a classic example. Here's a company that was made sort of a symbol of corruption in the financial services sector. The Department of Justice and the Obama administrations that have superficially decided that they were going to make an example out of Chase and that led to this massive settlement, the $20 billion in fines. But how did Chase pay for that? How did they handle it? First of all, it, you know, it didn't - it only put a dent in about half of their profits for the year. They still ended up in the black, and - but they laid off 7,500 lower level employees and overall compensation for the upper level employees still increased at the end of the year.
And the people, primarily, responsible like Jamie Dimon, not only didn't suffer and not only didn't lose their jobs, they got raises. And you have to contrast this with what happens, for instance, in other countries, you know, in Great Britain when we had the Libor scandal, which was this massive, massive incredibly important price-fixing scandal involving the biggest banks in the world where they were manipulating interest rates, the London Interbank Offered Rate. And when they caught Barclays being involved with this, essentially, the Bank of England basically told the CEO of Barclays that he had to go. Coincidentally, his name is also Dimon - or Diamond, Bob Diamond and see, he was out. In the United States, we - obviously, we can't just tell a guy he has to leave. But, you know, Jamie Dimon is still sitting there and he's sitting there with a raise. So this is a tremendous difference in approach between the regulatory structure there and over here.
LAMB: Well, Mary Jo White was here recently, the Chairman of the Securities and Exchange Commission. Here's a clip of what she had to say, and she talks about this very thing about whether that they can bring criminal cases. Let's listen.(BEGIN VIDEO)
MARY JO WHITE: OK, SEC doesn't have the criminal powers and I certainly understand the call for accountability in the financial crisis - I mean, lots of people, obviously, tremendously damaged and harmed. But one thing, you always have to step back as a law enforcement person, criminal or civil, what's the evidence and can you make a case and can you make a criminal case. And so, I think it's a matter of, you know, and the SEC in particular, I think that's a very strong record, again we're on the civil side. But we brought over 160, 170, you know, defendants related to the financial crisis. We brought cases against them. We, basically, I think among those are 70 CEOs and CFOs - so real senior executives.(END VIDEO)
LAMB: I didn't read to her, before that - your headline on the story in Rolling Stone, "Why isn't Wall Street in jail?" And that's what she explained. What do you think of her answer?
TAIBBI: Well, this is the answer that I get all the time that it's just really, it's too hard and, you know, that this cases are very difficult to prove. You know, it's hard from the outside to say that there's enough evidence to put somebody in jail. Here's my response to that. Let's take a case like HSBC, right, which got a $1.9 billion settlement, sort of level datum, I guess it would be a year ago. And in that - among the part of the Deferred Prosecution Agreement for HSBC, they admitted that they had laundered as much as $850 million for a pair of Central and South American drug cartels. So we're talking about, you know, not only did they commit minor financial infractions, technical infraction, we're talking about an organization that was operating at the top of the illegal narcotics pyramid. I mean, this is a major criminal enterprise and they admitted it, and if they didn't find the evidence to put those people in jail, that's on them. I mean, that's a failure of the regulatory system. If you have somebody that you know is guilty that who- who's admitted that they were guilty, who were in league with truly dangerous and violent people and helping them out with, you know, the worst kinds of behavior that a bank could be involve with, and nobody does a single day in jail, that's outrageous. But it's even more outrageous when you look at it in comparison with who does go to jail in America and that's people who are - the people at the very bottom of the illegal drug pyramid, the consumers, people who are caught in possession of drugs. People who were caught selling dime bags in the corner. They're the people who go to jail and they go to jail for a real time. They go to jail for five years, 10 years. At the same time, they were letting HSBC off with a total walk. I mean, again, nobody does - nobody pays any individual penalty in that case. There was another - there was a race track owner in Texas who got busted by the US Attorney's Office for laundering money for another Mexican drug cartel. And that guy got a ton of years, he got like 15 years for his sins. So it's - these are enormous discrepancies, you know, between 20 years in nothing, 15 years in nothing. And here's the other thing I would say about that, over and over and over again with these settlements, we have situations where these companies pay these massive fines, you know, in the case of Chase, $13 billion, $20 billion. In the case of, you know, Goldman Sachs pays $550 million for its role in the Abacus scandal a couple of years ago. So we keep having these instances of companies that have liability and the hundreds of millions or the billions and yet somehow, there isn't enough evidence to prosecute criminally, to move ahead in a criminal case. That just complete - maybe in one instance, that might be true, but a completely defines logic to have it be true over and over and over again, that you could have billions in liability and no criminal liability, and not enough evidence of criminal liability. I just don't believe it.
LAMB: A couple of weeks ago, Toyota was fined over a billion dollars and it seems like an idea, but it seems like there've been a lot of these fines that are in the billions for corporations, is it unusual or is it -?
TAIBBI: No, you know, not just Wall Street but - this is another thing I've talked about in the book, there are pharmaceutical companies. Just last year, there were three enormous settlements involving pharmaceutical companies for doing things like, you know, mismarketing drugs that they knew to be dangerous, you know, for consumption by adolescence. And this is all part and parcel of this new strategy that is being employed by the regulatory structure and the justice department. And it's an outgrowth of something, you know, that Eric Holder kind of came up with way back in the Clinton years called, "Collateral Consequences". And this is a very complicated issue and there are a lots of twist and turns to it. But, essentially, when it comes down to, is the government looks at these big companies that commit misdeeds and they say to themselves, "Well, if we charge this company criminally, it might result in lots of job losses in the current financial climate if we charge a bank, it might also result in a chain reaction of losses, a new financial crisis. So what we don't want to do is just sort of willy-nilly go in and charge somebody criminal where there might be a drastic consequences of that prosecutorial action. But this is also morphed into, you know, not only are we not going to charge the companies criminally, but we're not also - were not only charging - we're not charging individuals either from these companies. And they decided instead an alternate forms of recourse. And this tends to be very large fines. This is the way they've decided to go, there's been a huge spike in collection of fines since the mid 2000s. And this really started after Arthur Andersen, the accounting company, the government filed a single felony count against them for their role in the Enron scandal, company went under - 27,000 jobs were lost and after that, it sort of became a political sort of given that charging companies of this size and of that importance was something you should only do in very, very extreme circumstances and you should always seek some other form of recourse if you can.
LAMB: What mark would you give at the New York Times, or the Wall Street Journal, or the Washington Post for their coverage of the same story?
TAIBBI: Well, I think the New York Times is on great stuff, I mean, reporters like Gretchen Morgenson had been - they've been very much on top of the story from the beginning. I think there's a growing awareness in the mainstream media that this is a serious problem. And it's something that I talked about with other reporters from other organizations. You are starting to see more and more coverage of this subject. Frontline, last year, did a documentary on this subject and they -and that resulted in number of senators sort of calling for more action. But even when Jamie Dimon got his raises here, that was sort of the straw that proved the camels back for a lot of reporters who cover this stuff. It's, you know, they can see the rationale of not charging these companies and not putting them out a business, and not yanking their bank charters like HSBC, they left the company in business when they clearly had the power, to go in and wipe them out. You can see the rationale behind that, you don't want to destroy a functional, viable commercial enterprise if you can avoid it, but somebody's got to pay. And that's - that's what everybody's feeling to realize now.
LAMB: Where did you learn how to do what you do then? And where did you learn how to figure out what's going on? And how many lawyers did you have to have to, you know, vet this book?
TAIBBI: Well, first of all, lawyers were a lot of my sources for this book. I mean, a lot of the stories that I write about in "The Divide" were - they are legal stories, they're arcane sort of financial tales of, you know, a company that was - for instance was under attacked by a serious of short sellers, and they nearly go out of business and they try for years and years and years to get the regulatory system interested in protecting them and they can't do it. And so, you know, lawyers for companies like that will reach out to me, and they'll walk me through the whole process, and then I have to go through the whole process of, you know, finding out what's true and what isn't, reading all the evidence. But lawyers, you know, it's a difficult thing that's what - and this is another one of the problems with the story is that, it's very, very difficult for sort of non-financial journalist to get up to speed on a lot of these issues quickly, it's just - you have to make a commitment of significant time, for instance, to understand the Libor scandal, right? I mean, that's something you're not going to able to get in a day, it's going to take a while, and you don't have that in modern news. You only have a few hours at the outset. And at the outside and that's one of the problems.
LAMB: I want to show some video of your father. Those who watch television may know who he is. And I want to get you to talk about what influence he may have on you.
LAMB: And your journalism is very different. Here is Mike Taibbi, who is an NBC correspondent. We'll just look at a little bit so people can make the connection.(BEGIN VIDEO)
MIKE TAIBBI: Another day of high drama that is as yet unexplained in the Michael Jackson trial. I took some notes this morning starting at 8:15 when Jackson's attorney, Tom Mesereau, was on his cell phone for the first of three phone calls. Remember, the Court first started 8:30 local â€¦(TALKING OVER VIDEO)
LAMB: So he's covering the Michael Jackson trial, how much you guys talk?
TAIBBI: I was actually there with him. I covered the Michael Jackson trial too for Rolling Stone back then. You know, my father was an enormous influence on me, he is very old school, he - .And I talk about this a lot, you know. I grew up around journalist in my entire life when I was youngâ€¦(END VIDEO)
â€¦ you know, when I was a boy, all of the people I knew were journalist, or cameraman, or photographers. And at that time, journalism - the people who went into journalism, that was a very different group of people. You know, way back when, I would say, even before my father's time, journalism was more of like a trade than a profession. I mean, it was something that you went into when you were 16 or 17 years old almost like plumbing or carpentry. You know, if you talk to somebody like Seymour Hersh, it was something that you went into as a copy boy or a newsboy. And you just sort of stayed in and you learned it, and the people - and it tended to be sort of working class, middle class people, and they had kind of a chip on their shoulders, they were sardonic, they relished this role of being this oppositional force that represented the people, and represented the rest of society, and kind of - and when they got a chance to stick it through the man, they never pass that chance. And then somewhere along the line, that changed that, you know, journalism became kind of a superstar profession. Maybe it was after Woodward and Burnstein, I don't know what it was. But this new class of people started to come into the profession and it was Ivy League kids, upper league, upper class kids who wanted to - and what they were attracted to wasn't so much that old role that, you know, that I saw growing up around my dad and his friends, but the role of, you know, being close - being having some proximity to powerful, and famous, and rich people. I think they saw themselves - this new group of journalist sees itself as being a member of sort of the ruling class in a weird kind of way. They're not separate and distinct from it, and that's a major change. But I definitely learned the other way of looking at it from my father.
LAMB: I want to show a bit of a contrast - what your dad would think of this, but this is from your Wikipedia site - and I'm sure you know what's on there. In March of 2001, as the editor of the magazine, The eXile is that what it's called?...
LAMB: Taibbi burst into the office of New York Times Moscow Bureau Chief, Michael Wines, and through a cream pie spiked with horse semen into his face, after Taibbi's magazine had awarded Wines' the title of the "Worst Journalist in Russia".
TAIBBI: Yeah. My dad would never do that. And I was definitely younger then and I was doing a lot of drugs at the time, and that was Russia and, you know, it was â€¦
LAMB: You were in Russia for what reason?
TAIBBI: I lived in Russia for 10 years. I went to a college there for, you know, a year and a half. And after I graduated, I basically just stayed there. I had my own newspaper in Moscow for six years called, The eXile. And I loved being in Russia, it was sort of crazy time it was a wild west sort of atmosphere. And believe me, that kind of thing wouldn't have made sense anywhere except for that country and that time period â€¦
LAMB: What was Michael Wines' reaction?
TAIBBI: It wasn't positive, let's put it that way. And, you know, I'm sure, there are things about that that I wouldn't do if I had it to do all over again. But, certainly that's not something that my dad would have approved, I don't want to â€¦.
LAMB: You mentioned the drugs thing- this generation, your generation seems to have been into the drugs more than some of the previous, at least that's what we think, why?
TAIBBI: I don't know, I don't know that that's true, actually. I mean, I think, you know, it seems to me, you know, if you - having been on the campaign trail for, you know, two or three campaigns now, I never saw drugs on the campaign trail. I think people, you know, but if you read Hunter Thompson, if you read back, you know, if you're moving in the campaign trail of '72, it seem like the entire press corps was whacked on speed the entire time. So, I don't know, I mean, it - I don't do drugs anymore, I don't think that's really part of journalism culture anymore. But, certainly in college, it's probably more widespread than it used to be and it's different drugs, too.
LAMB: Where did you meet your wife speaking of not doing it anymore? And how long have you been married, and you have a child?
TAIBBI: I do have a child, yes, my wife and I. My wife is a doctor in Manhattan. We meet at a party ages ago, and we just had our first child in December. His name is Max and - yeah, he's beautiful little boy so I'm getting used to it, to that whole thing, too.
LAMB: How much has getting older influenced you, and are you worried that you're going to lose the edge?
TAIBBI: You know, I definitely try to listen to, you know, your readers, I think that that's an important thing to do. A lot of people don't read their hate mail, you know, because this - the internet people feel very free to say all kinds of things in the internet and they'll send you the worst kinds of abuse, and a lot of people don't read their critiques. I do - I make it a point to that. If somebody takes the time to writing me a letter, I read it. And over the years, you know, a lot of times, I've realized that people are right about, you know, certain things that I've been wrong about. I've definitely toned down things like profanity in my writing; I've tried to cut out, you know, gratuitous, meanness. There were things that I thought were funny ages ago that turned out to be not so funny. And you have to learn how to â€¦
LAMB: I mean, for instance would you write "The 52 funniest things about the upcoming death of the Pope" again?
TAIBBI: Probably not, no. Probably wouldn't do that as a 44-year old father, I probably wouldn't write that anymore, but I'd certainly wouldn't have terribly kind things to say about the Pope either. So, I mean, I think the key thing is when you get older, you have to - look, outrageous is an important thing to happen in this business. You have to - if you're going to cover the news, the moment you start feeling like it doesn't matter and this is just the way the world is and we all have to accept it - That's when you know you got to get out of it, because you're no longer of any use to anybody at that point. And I've really tried to, you know, even though I might have changed some superficial things, I've tried to stay in touch with what's outrageous about this, what really makes me angry and what should people be angry about. And that I don't want to ever change.
LAMB: Maybe a couple of desk of people that have been on their fringes of journalism. Here's one, a young man that you used to work with, the name of Michael Hastings who was here some time ago but died in a fiery crash out in Los Angeles. So let's watch this for a second.(BEGIN VIDEO)
MICHAEL HASTINGS: I mean, Matt's incredible. The reason I wanted to write - one main reason I wanted to write for Rolling Stone was because Matt was there and I felt Matt was doing an incredible work. The great thing about Matt reporting, great thing about Rolling Stone's reporting in general is that it's reporting, you know. It's not a mystery, you know, all these other - the magazine tell,"oh we need to do more opinion, we need to do more think piece, we needed more this". Rolling Stone is invested in its reporting and it pays off. So - and Matt's criticisms and humors based in his reporting is where, I think - I think the way - the reason I can even write a book like this is because I - the reporting is solid.(END VIDEO)
LAMB: He was responsible for Stanley McChrystal lead, the military - what happened to him? What happened?
TAIBBI: You know, I don't want to speak out of school, I didn't know Michael all that well and I certainly wasn't in touched with him in the months before his passing. So I can't really speak to exactly what happened. I know there's a lot of speculation out there, I know that there were a lot of people who were concerned that maybe something unnatural happened with his death. But all I can say about that is that that was something that we looked at Rolling Stone at the time, the magazine â€¦
LAMB: See any evidence or anything strange happened?
TAIBBI: All I can say is that we'd looked at it and we didn't see any reason to follow up on it too much. I think there are, you know, it might be something that were - somebody closer to Michael should talk about that in the future. And it's not really not our place to talk about it, I don't think â€¦
LAMB: But then he crashed into tree at 4:00 in the morning in Los Angeles on the city street â€¦
Matt Taibbi: That's right, yes.
For those that don't remember.
LAMB: There - but he did praise you as - are you aware of that, or?
TAIBBI: Yes, no, I mean, I - that's - I've never seen that clip, but that's great, I mean, it makes me feel great. Michael was - he was such a natural reporter, I think that maybe the difference between the two of us is that, you know, I'm kind of a failed novelist, I never wanted to be a journalist growing up, believe it or not. I wanted to be a, you know, I wanted to write funny novels basically, and now it turned out that I - my fiction is terrible and this is what I ended up doing for a living. Michael was kind of a born reporter. If you read his books, you can tell, he has - and there is a certain kind of person who has this mania for uncovering faxable types. He was very promiscuous in his search of facts and factoids. And his books were filled with these details that you can only get by asking a million questions of people, and it's kind of a rare talent. It doesn't sound like it should be, but it really is. And he was a young man, but he was very gifted in that respect. And I think he had a great future ahead of him, it's a real shame.
LAMB: After the death of Andrew Breitbart, March of 2012, you wrote, "Andrew Breitbart, Death of a Douche." Here is some video of Andrew Breitbart and I want to ask you about this thing, too.(BEGIN VIDEO)
ANDREW BREITBART: It's over, there's no such thing as moderate Democrat. And so what do we get now, in Barrack Obama? Oh, I've got videos, by the way. This election were going to vat him. I've got videos. This election were going to vat him, from his college days to show you why - to show you why racial division and class warfare are central to what hope and change were sold in 2008.(END VIDEO)
LAMB: He was sitting in a bar one at night in Los Angeles, chatting, got up from the bar, walked outside, drop dead of a heart attack.
LAMB: Young age. But he's all the way on the right where Michael Hastings was on the left. So, what's going on here? Are they living too fast of life?
TAIBBI: Hey, you know, I don't think any of the - I think those things are, you know, unrelated accidents, say, you know, it doesn't sound to me like they were - that they - there was any common factor there. I will say that I don't see a real correlation between what Andrew Breitbart did for a living and what Michael Hastings did for a living. Obviously, the reporting on the progressive or the left side certainly has things about that are, you know, that are worthy of criticism that are lamentable, that are sometimes ponderous, sometimes humorless, and sometimes overly focused on the misties of the right. But the difference - the key difference that I see between somebody like Michael Hastings and somebody like Andrew Breitbart is that, you would never see Michael Hastings knowing they're putting something out there that he didn't know to be absolutely true. And I don't think that's always true on the other side. I think that there's a emphasis on message over accuracy with guys like him that I think is regrettable.
LAMB: What led you, though, writing - calling him, "The Death of a Douche?" What was the reason â€¦
TAIBBI: Yeah, I mean, well, among other things, he had intercepted a bunch of my private e-mails and turn them over to the FBI shortly before that. This was during the occupy protest. And he was, I guess, trying to start up some kind of criminal investigation into the activities of myself and a bunch of my friends who were - really, we were just chatting about what the possible objectives of the movement. We didn't have any connection to the Occupy movement at that time. We were just a bunch of financial journalists talking about Occupy. And I subsequently found out that, you know, that Breitbart and some of his cohorts had done this, and I was shocked and I just, you know, again, that was another, I would say, something that I maybe wouldn't do if it were this time around. But, I don't feel bad about Andrew Breitbart.
LAMB: Let's go back to your book in chapter four, where we talked a little bit about this earlier, "The greatest bank robbery you've never heard of". What's the bank robbery aspect of this? We're talking about Richard Fuld and Lehman Brothers, but what's the bank robbery?
TAIBBI: So this is a deal where Lehman Brothers, essentially, it gets absorbed into Barclays Bank. And the essence of this story is basically that a bunch of the executives of the Lehman Brothers who were in charged of sort of evaluating the company for its acquisition by - what it turned out to be Barclays - they surreptitiously took job offers during that process from Barclays and the evidence suggests that they seriously undervalued the company so that - that Barclays could acquire Lehman Brothers for, perhaps, as much as $11 billion less than it was worth. And so, you know, I talked to one lawyer involved in this whole situation and, you know, if there had been a bank robbery where some - where $11 billion was taken, that would be the biggest bank robbery in history. And this was essentially a bank that, you know, that had $11 billion taken out â€¦
LAMB: Let me read to you from your own book, Bob Diamond, and you mentioned him earlier who was the head of Barclays at the time, a British bank, secured the revolt by agreeing to pay a small crew of key insiders bonuses of millions of dollars at piece to do a secret job. What were the - and what were your sources? Or how did you find the story?
TAIBBI: This is - this was lawsuit. There - well, it wasn't a - it wasn't exactly a lawsuit. Essentially, there was actions that were - some of the interested parties were Lehman's creditors were trying to overturn the bankruptcy's - the original bankruptcy settlement for Lehman Brothers. And they believe that Lehman had been - the valuation of Lehman Brothers had been off when it had been acquired by Barclays. And what came out in the course of all this testimony was that the, again, the people who were still employed by Lehman Brothers, technically, at the time that they were evaluating this company for future acquisition by Barclays, they had already accepted lucrative offers of future employment by Barclays at that time. And so that's what I was talking about with Bob Diamond. He, essentially, bought, you know, a dozen or, you know, executives and they helped make the acquisition a lot cheaper for Barclays.
LAMB: Will you say that later on that same page, collectively, "just the nine men listed above would be offered an astonishing $302.9 million that week" - you gave the impression in the book that it was done like, you know, 24, 48-hour period.
TAIBBI: Yeah, no, there are â€¦
LAMB: And by the way, why would Barclays want to buy Lehman when it was gone down?
TAIBBI: Because the company was still important, you know, I mean, it had - it was a major American investment bank that still had an enormously valuable operation here in America. The question is, it was all - it was valuable if you got to buy it without all of its - without, you know, it's very, very toxic liabilities, if you got to buy it for a certain price, if you got to keep all of its cash and not take on certain obligations, then you have this functioning company with all sorts of infrastructure. It was a very valuable and profitable acquisition for Barclays. In fact, they would subsequently report a significant profit on that transaction. But, that wouldn't have been the case if they had paid, you know, $11 billion more for it. And what came out in the court of this core proceedings was that, yes, this was all done in a period of days. In fact, some of these deals where some of these executives from Lehman, they were actually striking this employment deals in the predawn hours of a Tuesday before one of the - what would turned out to be Lehman Brothers last board meeting, where they would approve - among other things, approve this deal with Barclays. So they were guys, you know, they were literally e-mailing and on the phone, and accepting job offers at 5:00 and 6:00 in the morning before they - before this last board meeting, and they never disclose to anybody at that time that they already done this.
LAMB: Did anybody have to give that money up? Did anybody lose their jobs in the process? Did anybody go to jail?
TAIBBI: No, no, of course not. There was never even a criminal investigation. And the ...
LAMB: How could that be?
TAIBBI: Well, because there are a variety of reasons. Number one, no regulator ever took any particular interest in it. The only legal avenue for pursuing this was to try to get the judge who had signed off in the original bankruptcy to overturn his own decision. So that was problematic to begin with. You know, it was the biggest bankruptcy in American history and for Judge Peck in that case to go back and say that he had been hoodwinked by, you know, a group of bankers, and that he had to reopen this Pandora's box and redistribute all of these assets. It would have been an enormous undertaking, he would have had to admit to serious errors. And it's just didn't happen that way. And, you know, this was just an example of one of the things that I'm talking - I talked about in the book, where it seems wrong, it seems like somebody should definitely go to jail for it, but in this case, this was where Mary Jo White might be right, you know. Is there a specifically a law against this? And, you know, the, you know, to an ordinary person on the street when you lay out the circumstances, it sounds like all sorts of things like theft. But, it may - there may not be a specific statute against what happened in that case.
LAMB: Who is Judge Peck?
TAIBBI: Judge Peck was the - he was the judge who signed off on the original Lehman bankruptcy and who was in charge of ruling on the reopening of the case.
LAMB: So when they reopened the case, what happened?
TAIBBI: He essentially - he issued an opinion in the end that essentially said, you know, one talks about the fog of war. And in this case, we can talk about the fog of Lehman, what he was really saying was when this bankruptcy went down with Lehman Brothers, this was in September of 2008, the world is melting down, we had to make decisions on the fly that we're going to have massive consequences all around the world. And if we didn't get everything exactly right, well, you know, that's what happens, that's the fog of war, you know. And so let's just let - let sleeping dogs lie and that was his decision.
LAMB: You wrote this in that chapter, if you follow enough of this Wall Street cases, you start to see this phenomenon all over the place. You go in the Court the first day and everyone in the room right down to the judge and even the plaintiffs' attorneys looks like Marcel Marceau. And then they talk in blasÃ© tones about acts of perversion that would shock a normal person to the point of screens.
TAIBBI: Yes, I was making a metaphor there that basically, if - first of all, in order to understand a lot of these cases, you have to basically learn a foreign language. And I was saying, it might as well be as foreign as French, right? You have to learn all of these financial terms. And so the only people who are qualified to litigate any of these issues are people who are fluent in the language. So, you go in the Court and again, if the metaphor is that it's all French, then people on both sides are wearing berets, they're dressed like mimes, and they have - what happens, I think, is that overtime, the natural outreach that you might feel towards some of the things that go on in Wall Street is dulled, just by the process of having to learn how it all works, having to learn the language, having to learn the culture which you must do if you're going to operate in that world. You start to see things from the point of view of these banks and their CEOs, and you stop seeing things from the point of view of the ordinary person and that's what I was trying to bring out in that passage.
LAMB: Was the judge hoodwinked?
TAIBBI: I think so. I mean, currently there was an episode in that case where they - the lawyers for Barclays has essentially said, "Well, the deal is done but we're going to clarify a few things in a letter - later on." And in the letter that they later or filed to the judge, they've - they significantly changed the parameters of the entire deal.They informed the judge of this by simply filing it his courthouse along with thousands of other documents, sort of like the seniors raiders in the Lost Ark, you know, where they dump the ark in a gigantic warehouse full of stuff. He was never going to find this clarification letter and he wasn't aware of it until years later when the case came forward again. I think if he had known at the time what was going on, if he had known that they had significantly devalued the company over that weekend, he might have had something to say about it. But he - by the time it came to his attention, it was too late.
LAMB: You write about a guy named Gary Aguirre?
TAIBBI: Aguirre, yes. He was a â€¦
LAMB: We covered a hearing in 2006. You don't see this in what we're going to show you - we're going to show you him. At the time he was a whistleblower in the Securities and Exchange Commission, and seated at the desk, they're with him around - at the table are people that - were his bosses, but let show him and then tell us how he fit into your book.(BEGIN VIDEO)
GARY AGUIRRE: That day, they authorized me to meet the next day with the FBI and the U.S. Attorney and present the same facts to initiate our criminal investigation, now that's a serious matter. That's why I was so shocked when nine days later, they would not permit the issuance of an administrative subpoena for Mr. Mack's testimony. Of course, something had changed during those nine days. On June 23rd, the Wall Street Journal announced that Mr. Mack would be a candidate as the CEO for Morgan Stanley. On June 22nd or June 23rd, Mr. Hanson explained to me that I could not issue that subpoena for Mr. Mack for one reason. And he gave me only one reason and that reason was his powerful political context.(END VIDEO)
LAMB: He's not - he didn't and I mean he answered it there. We're not showing that but - what's the point of putting him in your book?
TAIBBI: Well, that particular case, I think, was a classic example of what I'm trying to talk about with "The Divide", Gary was referring to - he had an investigation where he was pursuing an insider trading case against one of the most powerful figures on Wall Street â€¦
LAMB: John Mack.
TAIBBI: John Mack, who was the once and future CEO of Morgan Stanley. At the time of the investigation, he was sort of in between, he wasn't CEO of Morgan Stanley but he would be in the future. He had been in the past. He was still very powerful. Gary had significant evidence that at least warranted an interview with Mr. Mack suggesting that he might have been the source of the tip that led to an insider trade involving a hedge fund called Pequot Capital. He wanted - all he really wanted was permission to interview Mack. And he was denied permission by his superiors. When he pressed the matter, he was ultimately dismissed. Now, he won a wrongful terminations sued against the SCC for $755,000 later. But the key part of the story was that, here was a guy, you know, a sort of line investigator trying to pursue what seemed like a pretty open and shut insider trading case against the high - a high level Wall Street figure and he couldn't get the case mid.
LAMB: Where is he today?
TAIBBI: He's a private - he's in private practice. He represents all the whistleblowers in San Diego. But just briefly, the flipside of that story is that the SCC did pursue an insider trading case in that particular - for that particular trade, but it involved two very minor players that was an executive from one of the companies involved and his Kung fu instructor. And they made a trade that was really, really small. I think a $150,000.
LAMB: You write in one of your chapters by 1996 Bill Clinton single biggest private campaign contributor would be Goldman Sachs, a distinction he would share with the next Democratic President, Barrack Obama. From your studies and I know you talked about Republican senators as much as you do Democrats, how deep is this - the money, you know, paid apply?
TAIBBI: I think it's a significant factor in the way Congress looks and also that the executive branch looks at pursuing criminal investigations against these companies. The financial services sector has been a primary cash cow for both the Republicans and the Democrats. Traditionally, more or so for the Democrats especially since, you know, their early Clinton years when Bill Clinton brought in people like Bob Rubin to help with his administration. Rubin, of course, was the former CEO of Goldman Sachs when he was brought in. And I think it's at least in the background of a lot of the decisions that they've made to either non-prosecute companies to seek fines instead of criminal prosecutions. Dodd-Frank was the major act that was designed to reform Wall Street, was significantly watered down at even at the start. They, you know, instead of going through a sweeping reforms like FDR had done after the depression, where they could have done very simple things like force all derivatives to be traded on open exchanges the same way that stocks are. They didn't do that. They allowed for the sort of piecemeal approach that was very complicated. And I think that was all influenced by the money. And the money is a huge factor. This people don't want to lose access to these contributions.
LAMB: About out of time. I'm talking about your book, "Divide", but you have other job and what is it?
TAIBBI: I work for First Look Media, which is the company that's founded by Pierre Omidyar, the - sort of eBay billionaire. You might have heard that he is already hired folks like Glenn Greenwald, Jeremy Scahill, Laura Poitras and they've already created a site called "The Intercept" which is like an independent digital magazine focused on national security issues. I'm going to have another one of these microsites that's going to be focused on - I would say more domestic issues, finance, politics, and it's going to be also sort of humorous and satirical as well.
LAMB: Couple quick things, you went to Bard, graduated what year?
TAIBBI: '91, I guess yes.
LAMB: And you live today where?
TAIBBI: In Jersey City, new Jersey.
LAMB: And the cover of this book, who was the artist that did the - she has some unique work inside of the book.
TAIBBI: Yes, and this is Molly Crabapple. She's a friend of mine. She sort of became famous during the Occupy protest. She is, you know, an amazing artist, very up and coming. She specializes in this sort of gargantuan painting with these allegorical figures. They're very bright, and colorful, and beautiful and it was a real coo for when she agreed to illustrate the book and do the cover. I think it really add something - add something especial to it.
LAMB: Our guess has been Matt Taibbi, the name of the book is "Divide, American Injustice in the Age of the Wealth Gap", thank you sir for joining.
TAIBBI: Thank you so much for having me.