Streams

The Big Takeover

Wednesday, March 25, 2009

Matt Taibbi, reporter for Rolling Stone, on why he thinks Wall Street is using the bailout as a power play to stage a revolution. March Economy Madness: Your Bad-Guy Bracket
In his article, Taibbi highlights his Wall Street dirty dozen. Who would you put in your final four as the game-changing villains who sank the economy?
Comment below!

Guests:

Matt Taibbi

Comments [98]

VERONICA from FLORIDA

ALL THE SUITS MENTIONED CAN TAKE "CREDIT" FOR THE MESS, INCLUDING BOTH POLITICAL PARTIES...
BUT EACH FIRE STORM MUST HAVE FUEL TO CONTINUE ITS PROGRESS. IN THIS CASE THE TINDER WAS A MAN NAMED CARLTON SHEETS. REMEMBER ALL THOSE INFORMERCIALS HAWKING "NO MONEY DOWN AND WALK AWAY FROM THE CLOSING TABLE WITH CASH". THE SUITS NEEDED MORTGAGEES TO WALK THROUGH THE "LOOKING GLASS" AND CALRTON SHEETS SHOVED THEM THROUGH.

THIS WAS ASSISTED BY THE IMAGE OF DONALD TRUMP, ETC. NOT THE MAN BUT THE CONTROLLED PR IMAGE. SO MANY WILLING PARTICIPANTS WANT TO LIVE THE MYTHICAL LIFE OF THE DONALD. THEY NEVER REALIZE THAT IT IS NOT YOUR GROSS ASSETS THAT COUNT BUT YOUR NET, WHICH IS THE VALUE YOU HAVE MINUS ALL THE DEBT.

THE THIRD VILLIAN ARE THE GODS OF GREED/ENVY. IT IS SAD THAT SO MANY TRY TO CATCH RAINBOWS BUT NEVER REALIZE THAT MATERIAL THINGS DON'T MAKE YOU HAPPY. IT IS LOVING RELATIONSHIPS THAT MAKE YOU FEEL GOOD. THE GODS OF GREED/ENVY CAN BE COUNTED ON FOR UNHAPPINESS AND NOTHING ELSE.

CLEARLY THE SUITS CAN HOLD THEIR HEADS UP HIGH AND CLAIM VICTORY IN THE WAR OF ECONOMIC BLIGHT. BUT THEIR FOOT SOLDIERS WERE THE AMERICAN PUBLIC WHETHER GETTING A NEW MORTGAGE, REFINANCING USING THE PIGGY BANK SYNDROME OR JUST MAXING CREDIT CARDS. LAST TIME I LOOKED THERE WERE NO GUN BATTLES FORCING THE DEBTORS TO SIGN ON THE DOTTED LINE. THEY CAME WILLINGLY WITHOUT THE THREAT OF A FIRING SQUARE AS PENALTY FOR LACK OF PARTICIPATION.
WITHOUT THE STREAM OF PEOPLE WANTING TO SIGN -THE BANKS, CREDIT AGENCIES, AIG, ETC. COULD NOT HAVE ACHIEVED THEIR LEVEL OF CRIMINAL ACTIVITY.

Mar. 27 2009 09:32 PM
Noel Dinneen from New York

Phil Gramm.

He spearheaded efforts to pass banking deregulation laws, including the landmark Gramm-Leach-Bliley Act in 1999, which removed Depression-era laws separating banking, insurance and brokerage activities.

He was one of five co-sponsors of the Commodity Futures Modernization Act of 2000. One provision of the bill is often referred to as the "Enron loophole" because some critics blame the provision for permitting the Enron scandal to occur. Gramm's wife, Wendy Lee Gramm, was on the board of directors of Enron when it collapsed, and she was named in many of the Enron shareholder lawsuits.

Since leaving the government in 2002, Gramm has worked for UBS and has an office in their building at 49th & Park.

Mar. 26 2009 05:02 PM
Julie

Robert Pickel, executive director and CEO of the International Swaps and Derivatives Association

Mar. 26 2009 01:58 PM
Micheal from UES

what is with it with al of this Cuba bashing crap? Out of ALL the nations in the Caribbean, INCLUDING Puerto Rico, CUba is alone in its technical, medical , educational and social achievements. Want to see what free market capitalism can do for an economy? Look at Haiti and Jamaica. If the Cuba bashers had their way Cuba would be as poor and crime ridden as those nations. I think its funny how they neglect to mention the state of development of other independent nations in that area but pick on Cuba for not being as "developed" as the USA. Ever been to Appalachia? or seen the people STIL sleeping out in the open in New Orleans. If the USA was run by the "Commies" we would then have their higher literacy rate and lower infant mortality rate.I think its time to hit the anti socialists back where it hurts .. with the facts!

Mar. 26 2009 01:23 PM
Joe Bellofatto from Hoboken, NJ

I listened to Matt Taibbi on your show, yesterday, and, subsequently, read "The Big Takeover....". I found the article amazing, but, of course depressing. Throughout this financial meltdown, with every article I read about it, I always come back to the same question: where is the outrage from the Institutional Investement community (i.e. Fidelity Investments, The Vanguard Group, Janus, TIAA-CREF, etc.). They're the people who invest our pension money for us and derive fee revenue on the value of the portfolios they manage. I can understand the little guy not being hear, but I've not heard one Mutual Fund company vent outrage over the situation.

Mar. 26 2009 10:29 AM
James B from NYC

Or maybe we can blame Fidel Castro for not successfully overthrowing capitalism & installing true socialism & the people's justice throughout the Americas, North, Central & South! Think of it - but for his & Che's catastrophic failures, we could all be living in the same socialist paradise that currently is the state of Cuba. No greed, no capitalist exploiters & profiteers, no financial scandals, no housing glut, rampant consumerism, filthy ostentatious rich, in fact no nuttin - just all of us equally poor!!

Mar. 26 2009 02:53 AM
James B from NYC

The American people brought this upon themselves. People may encourage others to spend & borrow beyond their means (which may not be nice) BUT, nobody HAS to spend & borrow beyond their means. If hucksters advertise to u to do something, if u do it, it's NOT the huckster who's responsible for u'r act - u are. If people can no longer be held accountable for their own, profligate spending & borrowing behavior then how does it make sense to expect them to govern themselves? Nothing undermines the principles of democracy & the right of the people to determine their fate more than the argument that people just can't control themselves or be held responsible for their actions. Blame the spendthrift, debt-ridden profligacy of the American people on anyone but them fundamentally undermines their right to vote & govern themselves. If u can't make prudent & sound decisions about your own finances, how can you do so about the community's? The millions of Americans who lost the ability to work hard, spend LESS than they made (i.e. SAVE) & avoid imprudent debt (i.e. debt for anything but primary home & auto) are the culprits. The millions of Americans who voted for their taxes to be reduced but shrugged when it came to cutting government spending - thus building ever higher the mountin of public debt - they are the ones who got us here. The hucksters & enablers are not the main culprits - they simply took advantage of those who thru caution to the wind & laughed at the idea of 'reading the fine print'.

Mar. 26 2009 02:39 AM
Amy from Manhattan

I was glad to hear Mike Taibbi's answer to Rob's question, but he didn't go far enough. Redlining wasn't about denying loans to unqualified people; it literally meant drawing a red line around a neighborhood and denying loans to everyone who lived inside that line, whether or not they were qualified. It was discrimination, plain and simple, and the law made it illegal to refuse to give a loan to qualified borrowers based only on where they lived, not on their ability to pay it back.

Mar. 26 2009 02:20 AM
Mark from New Jersey

1-GREENSPAN He thought in his own mind that he was this economic GOD!2-COX you think he was taking cash to look the other way!!they should hang him!!3- Clinton and little Bush they did not ask questions.They looked the other way .Fist warning was savings and loan MESS!4- All the ceo's of all the major banks on wall street. They should be Hung on WALL STREET on CNN to show what happens when you ROB the American PEOPLE!!

Mar. 25 2009 09:39 PM
Gene

I empathize with, and know better than most, the people who are too busy just getting food on the table to delve into the myriad ramifications of many national issues.

At the same time, many people who should have known better were gorging themselves and gobbling up the earth's resources as if there were no tomorrow. "If I want a giant SUV, that's my RIGHT as an AMERICAN," I heard on Bill Maher's Politically Incorrect, more than once from the Coulters and other neocons. Then they'd go off on some free-market or religious tirade.

There was very little thought about real conservation of resources, and most of the media ignored the ramifications.

Remember, Bill Maher was one of the first with a Prius.

What a state of affairs--our comedians have been way ahead of our movers and shakers and thinkers. Of course, a joke, in order to be funny, must be truthful.

Mar. 25 2009 04:36 PM
MW from Manhattan

Timothy is 100% correct He has hit the points that REALLY need to be discussed. I hope he reads this I would love to talk with him. Timothy , if you are out there let us know how to contact you.
We have been turned into economic Sharecroppers
We do not OWN, we OWE. This is14th century Feudalism perpetuated into the 21st century. locking us up behind the economic walls of their castles. There are NO scarcities in goods and services as well as economic staples, yet we are conned into believing that we have a stake in this construct that rips us off. WE have to wake up and change this system.

Mar. 25 2009 03:32 PM
MW from Manhattan

The Mafia is behind this to many "anos", "inis" and such including that guy on CNBC . Even John Stewart is alluding to this by his use of the "Joisy" and Brooklyn accent to characterize the crooks that brought this apon us. They cant be allowed to hide behind laws that prevent retroactively seeking redress for crimes that were committed without regulation to control them

Mar. 25 2009 03:11 PM
Robin T. from Manhattan

I didn't know anyone while growing up who had a granite counter-top, either. I went to college and professional school and married a general contractor. He installs granite counter-tops, and we have one.

Like many people with granite counter-tops, we spend money that we earn. Our kitchen renovation was financed with a low-interest loan that we could have easily paid back from our joint incomes. Ditto the house -- bought with the proceeds of an apartment sale after we ran Excel spread sheets estimating our costs and income over the length of time that we planned to live in it.

Now our income has been reduced drastically. Our modest savings and investments are down 50%-60%. Like most Americans, we did not plan for a massive recession/depression. We do not have credit card debt, however, or otherwise fit the stereotype that apparently gives those like Frankie comfort.

The economy tanked due to a bubble created when certain investors on Wall Street chose to "hack" the Clinton/Frank Fannie Mae housing program to create a derivative market backed by mortgages, many of which were issued to people who were first-time homeowners. Many such buyers had little means of paying for those mortgages. Some were naive, some were irresponsible, and some were duped. All of the lenders should have known better, but not everyone who worked for the lenders, even in the financial services department, was a co-conspirator.

Nor are middle-class families such as ours, who lived comfortably and prudently on real, not imagined incomes, thieves, profligates or morons. We are among those caught in the crunch.

I love my counter-top. I prepare dinner on it each evening, and pack my brown bag lunch on it each morning. I earned the bleeping countertop, Frankie. What I didn't earn was the financial crisis that has - we sure hope temporarily -- deprived me and my husband of 40% of our income and most of our savings.

Mar. 25 2009 02:37 PM
Frankie from NYC

And what, pray, did the real criminals do? Invest in the securities that had that homeowner's loan in it. AIG suffered the losses as those same homeowner's defaulted.

Listen to Ellen's comment: "So what if a home owner, god forbid, refinanced and bought a granite counter top!"

Growing up I didn't know anybody who even had granite, marble or stone counter-tops. There isn't even a sense that this is not normal. It's a given for Ellen.

So what if people bought granite counter-tops, landscaping, Cadillac Escalades, vacations in Cabo San Lucas, stainless steel appliances, a new, ever-larger, TV every 6 months. So what? The real criminals, the ones who should be hanged by their testicles (to quote Jon Stewart), are the ones who gave you the money.

It's their exclusive fault. They had nothing to do with your vacation in Cabo San Lucas, but just as soon as you get back and can't make your mortgage payment, then it's their fault. You're pretending like this didn't happen on a grand scale. You're pretending that most American families don't have credit card balances because they can't afford what they buy. Head in sand.

With this attitude America cannot save itself. Travel outside of the US sometimes. Go Ellen, go in search of the ubiquitous granite counter-tops in every home. Go look in Europe for every family's 50k Escalade. Go look at the size of homes everwhere else in the world where people make different, more responsible choices in the face of all those things that they also have available to themselves.

Or else, go blame someone, anyone really. It's not my fault, it's everyone else's fault. It doesn't matter that the AIG employees who received the bonuses had nothing to do with the CDS losses, or were even in that department at the time. Reason is out the window. Let's find someone to blame because we sure as hell didn't do any of it.

Mar. 25 2009 12:54 PM
ellen from ny

I am tired of hearing it's the amercian people's fault, --We're all to blame, must all sacrifice. Nonsense. That just deflects blame from those with immense power and wealth who ignored their responsibilities, took advantage of our freedoms and screwed society. The average person doesn't even understand what's behind all this, and to hold the public to an unrealistic standard is excusing the real culprits which include our elected representatives. So what if a home owner,god forbid, refinanced and bought a granite counter top! No comparison with what the real criminals did.

Mar. 25 2009 12:31 PM
Karen Casamassima from New York City

Ronald Reagan for advocating deregulation policies and putting free market ideologues in charge of the stewardship of the wealth of our nation with blatant disregard to the system of checks and balances built into the fabric of our Constitution.

Michael Milken for his pioneering work on financial products, fashioning financial products out of junk, using ratings as a basis for his scheme.

Former Chair of AIG Maurice Greenberg who bears responsibility for AIG having hired the rest of the department at Drexel including Joe Cassano after Michael Milken went to jail and allowed the new unit to relocate to London out from under SEC scrutiny.

Michael Bloomberg for building the infrastructure for trading exotic financial products without the proper policing component in place to flag anomalies such as when the derivatives exceeded the GDP of every economy in the world, since electronic trading systems for such products was said not to be destabilizing.

Mar. 25 2009 12:24 PM
Frankie from NYC

jawbone,

Take a look at some of this material, there is some hockey-stick graph commentary in this series (not referring to income but the unsustainability of the shape of the curve):

http://www.chrismartenson.com/crashcourse

Mar. 25 2009 12:21 PM
jawbone from Parsippany

I did find a map of GINI coefficients for most nations of the world at Wiki:

http://upload.wikimedia.org/wikipedia/commons/a/aa/Gini_Coefficient_World_Human_Development_Report_2007-2008.png

I'd like to find source for the hockey stick graph the caller mentioned and for the same GINI number for US and Haiti.

Again, thnx.

Mar. 25 2009 12:16 PM
Frankie from NYC

To KC:

I am not trying to excuse the banks. I agree that regulation must occur on the side of the banks as they are the only ones who can be regulated.

I also agree that the deck is stacked against the borrower. Banks have many more resources that borrowers.

Nonetheless, if you are currently renting and paying 2,000 and not saving, you cannot possibly expect to make a 4,000 loan payment - even if the bank will make you the loan.

Borrowers had no issues lying on applications even though there is language right below the signature line that says it's a federal crime to lie on the application.

But why even read anything that you sign? Why bother trying to understand the difference between "fixed" and "variable"? Why do we have to know anything about anything. Let's blame someone else.

We want to live in "the greatest democracy", we want the most freedom on the planet, yet we will not even (a) understand the most basic financial issues, and (b) take responsibility for our own actions. It's always someone else's fault here.

If someone who refinanced with a NINA loan (or even a NINJA - no income, no job, no assets) takes 100k out of their home - and don't pretend this didn't happen all the time - what id they do with the money. If you have 100k sitting in your account, shouldn't you be able to make the loan payment for a year?

How can you go to the bank, or the mortgage end-investor, who just took a 80k loss on your mortgage (while many borrowers were up, based on the equity they put into the house and the refinance-proceeds they took out of the house), and blame them exclusively?

I agree that the banks were less than responsible. I am merely pointing out that we all need to take responsibility in order to fix this problem. If consumers do not change their ways, and blame the banks now, this crisis will surely repeat itself.

Mar. 25 2009 12:10 PM
Gene

I changed my mind, based on some reviews here.

Actually, #1 is the American Public, who have been so stupid, so ill-educated (remember when California had the greatest educational system in the world--before Reagan became Gov?), so consumed by silly cultural issues, and so lulled into distraction and intellectual flabbiness by 3 decades of prosperity, that they stood by and allowed the total anschluss of its government by corporate interests.

Mar. 25 2009 12:05 PM
jawbone from Parsippany

If the caller who mentioned the GINI curve is around -- or anyone who knows where he found his information about the similarity in the GINI curve for Haiti and the US -- could you please give a source for that information.

I googled and found out some info on the GINI curve--nothing so far on the national ranksing. It must be somewhere...but can take a long time to find if search terms aren't just right.

Thnx!

Mar. 25 2009 12:04 PM
neil W from Summit, NJ

AGreenspan(FedRes), PGraham (Congress), CCox (SEC), Gullible American Citizens.

This was another outcome of failed hyper-partisanism, bickering, seeking advantage but letting the HyperCapitalist wolf ravage the sheep. There was an ideological(R) imperative to get rich, allow maximum freedom, “to dance while the music played”. The common urge toward honesty and fairness was trumped by "get it now or you’re a chump". Redistribution of wealth upward and the addiction to consumption was talked about in the press but there was no political or moral authority to change course. It marginalized people who believed in more sustainable growth and the regulatory agencies taken over by political hacks (SEC, FDA, DoJ). We were distracted by wars abroad and ill-served by Congress beholden to Corp $$$. Blaming individuals satisfies the crowd, but institutional, systemic change is what immunizes the polity against individual excesses. Good Show, good article.

Mar. 25 2009 11:57 AM
Karen from Manhattan

The 2% figure is misleading, because it includes among the top 2% people living in high-cost, high-inflation metro areas such as NYC. We earn twice as much money as more as the average American, but have no more spending power than he or she does. In order to see how wealth is actually distributed, cost of living needs to be taken into account.

Mar. 25 2009 11:54 AM
Karen from Manhattan

People here are delivering sermons, not analysis. It's easy to churn out platitudes instead of dealing with the facts (as Obama pointed out last night to reporter Henry of CNN, an idiot if there ever was one.) Nobody is responsible for management decisions merely because he or she is in the building or works in a related field. There are chains of responsibility and knowledge in every organization, including AIG.

This AIG mess -- not what AIG did, which was bad enough, but rather the public reaction -- has made me wonder why Obama or anyone else with intelligence and discretion wants to be POTUS. I wouldn't want to pilot ship of fools.

Mar. 25 2009 11:52 AM
Laurence Cantor from Manhattan

My final four:
Robert Merton, Nobel Prize winning Financier, whose Contingent Claims Theory invented and inspired the math that made it possible to put a price tag on anything and paved the way for all the exotic derivatives including the credit default swaps. If the barn is burning, Prometheus doesn't escape blame;
Hans Angemuller, the house attorney who rose to Vice Chairman of Citicorp, and beat the drums for 30 years to undo the regulatory protections that the survivors of the Great Depression had put in place;
Robert Rubin who presided over the death of Glass-Steagle and then cashed in as the "Grown-up" in residence at Citibank; and,
Phil Graham just one of so many craven, rapacious politicians but the one whose malfeasance has cost us all most dearly.

I would have liked to ask Matt Taibbi why the choice comes down to the binary "We are the victims of a horrible accident" or "We are the victims of a handful of psychopaths on Wall Street whom we allowed to gang-rape the American Dream". How about the fact that the psychopaths are as American as apple pie, are in fact imbedded in the American dream itself. The "hockey stick" (the explosion of wealth in the hands of the top 2%) isn't an aberation but rather the logical conclusion. The American dream is a mug's game, and the American people, the other 98%, proved once again that they are mugs. This generation will be sadder and wiser (and poorer), some for a long while, some for the rest of their lives, but sooner or later the game will go on. New mugs will come along. As P. T. Barnum said "there's one born every minute"; and didn't I hear that the circus was back in town?

Mar. 25 2009 11:50 AM
Evelyn from Brooklyn

1. Rating Agencies: Fitch, S&P, Moody's, etc...

2. Alan Greenspan

3. George W. Bush for continually telling the American public that the American economy was sound

4. Asset-Backed Securities

Mar. 25 2009 11:48 AM
Karen from Manhattan

Everybody knew about credit default swaps, Dan, including you. Why didn't you stop it? You probably had as much power as DeSantis. That was his point; he was an employee, not a manager, and did not have influence over or participate in the transactions that brought AIG down. Should my cousin, a secretary at World Com (who lost her retirement fund when the company crashed) be held responsible for World Com's fraudulent accounting?

Mar. 25 2009 11:47 AM
Susan Ticker from Morristown, NJ

I worked for a brief time during the 80's for a Wall Street investment banking firm. It was during the time of Milken, Boesky, Siegal, junk bonds, insider trading...Greed mixed with knowledge and control is always a dangerous thing. Unfortunately ethics, morals and honesty are things we as a public can not regulate.

Mar. 25 2009 11:46 AM
Karen from Manhattan

I read DeSantis' letter and, in fact, emailed it to Brian from the NYT website. It's an excellent letter. He is criticizing AIG's management and stating that everyone in the company and on the Hill has been responding to preessure from the mob and unfairly treating AIG employees who had no responsibility for the meltdown.

As for "they make so much money": yes, Wall Street professionals make alot more money than either you or I. Some of those salaries and bonuses are hugely inflated and should be reined in. However, someone with an MBA or law degree and 20 years experience is, in fact, going to be earning a higher income than a secretary or elevator operator. This is not unfair, and nobody should demand that the money be given back. The key word is "earn."

If we let this discussion degenerate into class envy, then we lose the point. Wall Street needs to be regulated, but people who don't want to earn a blue collar income should go to college.

Mar. 25 2009 11:45 AM
Edward from NJ

I'm fairly sympathetic to most of what Jake DeSantis wrote in his op-ed/resignation, but here's where loses me...

"None of us should be cheated of our payments any more than a plumber should be cheated after he has fixed the pipes but a careless electrician causes a fire that burns down the house."

Sorry Mr. DeSantis, but you were also an electrician. You were doing good wiring in one room of the house and failed to see your coworker doing substandard, potentially hazardous work in the next room. If you were valuable enough to keep around to fix the mess -- and hey, I'll take your word that you were -- you have to accept some responsibility for failing to prevent the mess in the first place.

Mar. 25 2009 11:44 AM
Richard Johnston from Manhattan Upper West Side

Taibbi's enthusiasm has become obsession. What about people who left good jobs to go work for AIG FP in 2008 or 2009 to help them wind down, knowing it was the second Lusitania, and were promised bonuses to compensate them? It truly is a nasty job but you need somebody to do it right or the situation will become even worse than it is, and you need to pay them right.

Mar. 25 2009 11:43 AM
Dan from NJ

Jake DeSantis didn't say he didn't know about the credit debt swap transactions (as you said earlier), he says specifically:

"I was in no way involved in — or responsible for — the credit default swap transactions that have hamstrung A.I.G."

That may seem like a small difference, but it truly means a big amount of "wiggle room" for DeSantis. He saw what was happening, benefited from what was happening, but because he didn't click the mouse or sign the papers he asserts he had nothing to do with it. That's just untrue.

Dan

Mar. 25 2009 11:41 AM
Max Z.

This guy is just looking for mob justice. He doesn't care about actual guilt. He just wants to string them all up. I thought we are innocent until proven guilty? So much for civility and the rule of law.

Mar. 25 2009 11:40 AM
John Celardo from Fanwood, NJ

Greenspan

Mortgage Brokers

Boy Bush

All securities rating agencies

Mar. 25 2009 11:40 AM
Karen from Westchester

READ DESANTIS' LETTER BEFORE YOU CRITIQUE.

Mar. 25 2009 11:39 AM
Gene

#1 To blame?

Our entire system of legalized bribery.

Which has also allowed hiking the usurious credit card rates-- the next shoe (of the 12-footed beast) to fall.

It also helps to remember Balzac's dictum (roughly): Behind every great fortune there lies a great crime.

Mar. 25 2009 11:39 AM
KC from NYC

Frankie:

Have you heard of NINA loans? That stands for "No Income No Assets". By 2007, banks were quite likely giving out thousands of those.

The difference between individuals signing those mortgages (irresponsible though they may have been) and the banks that offered them is this: those banks had Manhattan skyscrapers full of lawyers working out ways to make these barely-legal loans profitable. The signers had nothing. Explain to me how banks aren't the offending party in that scenario.

Mar. 25 2009 11:39 AM
Josh from Brooklyn

Say what you want about these "bonuses" (they're actually contracted payments as if a salary). Obama allowed this to happen. with all the bonuses with other companies, and jets, etc before, he should have done something. It was stipulated in the bailout deal that allowed this to happen. The purpose of government is to protect the people's rights. Blame Nixon, Bush, Clinton, it doesn't matter. Nobody was watching out for us. You'll never stop anyone from acting greedy. Only rules that punish that will stop them. Don't you try to get the highest salary you can? If your boss said, I need the money back, would you do that? The free-markets did this. It allows these people to take advantage of us. What are you going to, ask them to stop? please.

Mar. 25 2009 11:38 AM
Karen from Westchester

JACK DESANTIS DOESN'T SAY HE DIDN'T KNOW ABOUT THE CREDIT DEFAULT SWAPS, ONLY THAT HE WAS NOT INVOLVED, THAT ONLY A HANDFUL OF EMPLOYEES WERE....

P.S. WHY DOESN'T ANYONE SEE THE BUBBLE IN THE WIDER CONTEXT OF A 30 YEAR HISTORY OF ECONOMICS IN THE US AS WELL AS THE CONTEXT OF FOREIGN CURRENCY EXCHANGE MARKETS. I GUESS HISTORY ISN'T PALATABLE FOR THE MEDIA, REQUIRES TOO MUCH TIME/THOUGHT.

Mar. 25 2009 11:38 AM
Karen from Manhattan

Taibbi's response to Regina illustrates the worst in bad reporting. She was trying to provide information, and good information, about what was going on internally at AIG, and Taibbi dismissed her out of hand to make a glib, cynical, "hip" point based on no information.

A witchhunt is not investigative journalism. I know exactly what Regina is talking about, because people who are mid and low level employees even at a small firm (my firm has 100 employees) do not make policy or understand the underlying risks of that policy, particularly if they are in different field, e.g., I.T. Hanging everyone who worked in the division is not merely bad reporting, but also pretty bad politically -- Rolling Stone -- mob violence is never a good thing.

Mar. 25 2009 11:38 AM
Rob from Manhattan


Sub-Prime Mortgages--millions of 'em.

It wouldn't have happend without them, yet Matt wants us to disconnect the fincnacial meltdown from the CRDA.

???

Mar. 25 2009 11:37 AM
Lance from Manhattan

Boohoo for those AIG employees who were not involved in the crappy derivatives unit yet are now being lambasted for taking huge bonuses. The editorial writer Brian referred to has the luxury of resigning. Should all the people who are now out of work, having been laid off, and can't find a job as a result of AIG and company's misdeeds feel sorry for him?

The greed of these finance people defies credulity. Give up your bonus for one year. There will be rich years with fat bonuses in the future.

Mar. 25 2009 11:37 AM
Freelancer from Washington Heights

Taibbi rocked it! Great guest.
Very informative!

Mar. 25 2009 11:36 AM
Jeremy from Brooklyn

Brian:

Your comment about The AIG employee who wrote an op-ed the NYT today is inaccurate - he won't return the money true - but he is donating ALL of it to charities helping people hurt by the economic disaster.

Please read the whole thing.

I'm no friend of AIG officials - but his full letter seems genuine is is very critical of the CEO.

Mar. 25 2009 11:34 AM
r from NYC

Brian,

The wrong people are being targeted and feel the Gov't response borders on abusiveness.

Mar. 25 2009 11:33 AM
chris from brooklyn

What I wish is that we would address our evolution into a society where we accept that profit trumps absolutely all. At some point in the 70’s we allowed ourselves to reclassified from citizens to consumers; while this change may seem to be just semantic, it has been accompanied by a corporate culture that is devoted more and more to replacing the production of goods and services with the devising of financial instruments- or to be frank, ploys. Whether it be health care, housing or energy, to credit cards, water, telephone, and cable tv, deregulation has opened up American society – particularly the lower and middles classes- to unabashed financial strip mining. Credit card companies now charge interest rates that rival the mafia and phone bills are loaded with inscrutable surcharges. In many areas we seem to have abandoned the idea that clean drinking water is a public trust. We are the one country in the industrialized world where health care costs regularly cause personal bankruptcies; and nowhere in the developed world is the disparity (growing annually) between those that run and own these corporations and the rest so stark; where many a CEO’s ethos appears to be “It may be way more than I need but it’s a lot less than I want”.

It seems that after 100 or so years, the US is once again an extraction based economy, only now we are the raw material- I guess all those warm and fuzzy 30 second spots aren’t kidding when they say people are our greatest natural resource ( in a “Soylent Green” sort of way).

Mar. 25 2009 11:32 AM
Frankie from NYC

There was a study done on defaulted Alt-A loans. It turned out that more than 75% of the people who defaulted on Alt-A loans (so not sub-prime but rather exception-prime loans) overstated their income by over 50%.

When you overstate income like that (a) the bank is irresponsible for lending to you without appropriate diligence, but also (b) you are complicit in causing the problem.

Matt Taibbi's comment that "a few poor people did not bring down the economy" may be correct, but it is also true that there was a widespread atmosphere in this country that made it ok to "embellish" your loan application.

Do not pretend this is a small problem. This happened ALL THE TIME in Prime, Alt-A and Sub-Prime lending.

Mar. 25 2009 11:32 AM
JT from LI

@[32] HW from Manhattan,
You can't blame a mathematician for how people apply the math.

These people we are blaming for this mess, is there any recourse for recovering their earnings? Can these guys really create this big mess and just walk away? You'd probably face lawsuits and maybe prison time for far lesser activity that bankrupts a small business.

Mar. 25 2009 11:31 AM
Nancy from NYC

1. Reagan: father of the free-market mania
2. W and his administration: fiddling while the economy burned
3. Credit rating agencies: corrupt
4. Congress: failing to regulate

Mar. 25 2009 11:30 AM
Robert Matlock from Staten Island

BONUSES -- They gave investment bankers an incentive to fabricate time bombs because they knew they could take their money and skip town before it all fell apart. They played dice with the entire economy, committing, in my opininion, neglegent treason.
OTHER VILLAINS:
Phil Graham
Larry Summers
Alan Greenspan
SEC
Bond Rating agencies as the caller correctly points out.

Mar. 25 2009 11:28 AM
ADSRF

more PhD ranter pls -- perhaps 6-7am daily?

Mar. 25 2009 11:27 AM
cyndy from new york city

Another point about banks and credit card companies-What about their fees? interest rates that would make a loan shark blush?

Mar. 25 2009 11:26 AM
Karen from Westchester

Please see Jake DeSantis's Letter entitled "I QUIT!" to AIG's Mr. Liddy, in today's NY Times

Mar. 25 2009 11:26 AM
mary

Matt - great info but one piece of the puzzle that is not being reported on is why were the investment banks BUYING the protection from AIG? Speculation yes but also because buying protection from an external third party (ie., AIG) reduced a traders internal credit cost to make a risky trade more profitable. That is a critical part of the story.

Mar. 25 2009 11:26 AM
mym from flatbush

Greenspan

Bernake

Collaterized Debt Obligations

Credit Default Swaps

Mar. 25 2009 11:26 AM
Maddy from long island

Who oversaw Joe C's decisions? I'm sure there were several layers of mgmt between him and the CEO.
Those people share as much blame as Cassano.

Mar. 25 2009 11:26 AM
BigGuy from Forest Hills

Losses from firms obeying the Community Reinvestment Act amount to far less than 1% of financial industry capital. Subprime lending was NOT what the act allowed; the act made redlining illegal.

Asserting that our financial crisis has originated from the enforcement of that law presupposes that the George W. Bush administration vigorously enforced the law. That NEVER happened.

Please do not broadcast these clowns who call in who spout the shibboliths of the Right spouted by Hannity and Rush.

Mar. 25 2009 11:25 AM
hjs from 11211

RT
100% correct

Mar. 25 2009 11:24 AM
KC from NYC

Speaking of our credit dependency: Joe Biden.

True, the Supreme Court decided that Delaware could legally charge any APR they wanted nationally, so he didn't come up with the idea, but he certainly helped them profit from unethical lending practices with the newest bankruptcy bill.

Mar. 25 2009 11:24 AM
hh from brooklyn

Okay we can come up with scapegoats, an easy if not fun excercise, but it is only another way of allowing what is a system based on pure greed to subsist (yes, based on the isolating/reactionary philosophy of Ayn Rand who promoted the Virtue of Selfishness).
How can the transfer of billions of dollars to a handful of people be justified under any circumstances whatsoever?

Mar. 25 2009 11:23 AM
mc from Brooklyn

This caller Timothy from LI touches on a good point. The middle class lifestyle that many people grew up with is now unaffordable for the middle class. So everyone borrowed to the point where we owe the amount of the whole economy.

Mar. 25 2009 11:23 AM
Stephen from Connecticut from United States

It is very misleading to compare market transactions to betting on football. The market for risk provides a valuable economic function to the society. There would be no such thing as insurance without these markets. What went wrong was a huge underestimation of the risks involved.

Mar. 25 2009 11:21 AM
Karen from Manhattan

The Clinton/Frank program was a good program that was hacked by Wall Street, who turned it viral, creating hundreds of thousands of undocumented loans for the benefit of Wall Street, not the homeowners.

Mar. 25 2009 11:21 AM
Jeremy from Manhattan

Robert Rubin

He fiercely resisted regulating derivatives when in the Clinton administration, then strongly promoted investing in them as a senior member of Citibank

Mar. 25 2009 11:20 AM
Rich from Staten Island

Why has the Banking industry been allowed to consolidate to such a level? Who has benefited from these institutions becoming so large - the "too big to fail" institution is still a concern. I've heard that one of the reasons was scale (economies of scale) for what benefit?

Mar. 25 2009 11:20 AM
Mike Spreitzer from Westchester, NY

1. Everybody who has been living beyond their means.

2. The boards of directors and management of all the financial institutions involved.

3. The federal government.

4. The news media.

Mar. 25 2009 11:19 AM
HW from Manhattan

The guy that came up with "Game Theory."

Mar. 25 2009 11:18 AM
mc from Brooklyn

Brooksley Born wanted to regulate the credit default swaps from her place as chair of the Commodities Futures Trading Commission. The modernization act of 2000 that is being referred to was pushed through Congress with by the four players I named above to stop her.

Mar. 25 2009 11:18 AM
KC from NYC

Sweet! A caller who honestly thinks a few working poor defaulting on their mortgages caused the entire global banking system to collapse. I never get tired of these idiots.

Mar. 25 2009 11:18 AM
Matthew from Manhattan

Jaimie Diamond.

Mar. 25 2009 11:17 AM
John from Jersey City

My final four is a mix of perennial powerhouse programs - think of dominant number 1 seeds in basketball - an underperformer and a cinderella:

- The goliath private equity shops that fueled the LBO mania.
- Goldman Sachs: alumni have fingerprints all over the crime scene.

Next - an underachieving "team" that heats up late in the season: Greenspan and the Fed. He was able to dictate the style of play through his inaction.

Finally, Cinderella - Phil Gramm (representing the GOP congress): Not only responsible for gutting regulation, but the GOP (with acquiescence from scared Dems) pro-actively prevented the meager regulatory bodies that remained from performing even minimal oversight. Enabled not only AIG, the mortgage backed security debacle and much of the current mess but also had a big hand in Enron!

Mar. 25 2009 11:17 AM
Frankie from NYC

How about the American public? Why do so many people have car loans, credit card debt, home equity lines, etc.. Why do you buy a 800k home, put 5% down and take out a second lien when you can just as well buy a 400k home without a second lien.

A large part of this was driven by bad, uneducated personal choices on the part of the American consumer.

Don't tell me that only the banker benefited when someone refinanced and took 100k in cash out of their home. That money flowed right back into the economy and enabled consumers an unrealistic lifestyle.

We can solve this only if we all take responsibility. Banker have their part of the blame but so do American consumers.

Mar. 25 2009 11:16 AM
RT

Who sank the economy?

How about the American people and attitudes!

American Greed - over consumption of homes and credit cards. Keeping up with the Jones. High risk investments, refusing to take the losses and be responsible

American Unwillingness to Sacrifice: What pay now for better education system, advance technology and research, health?

American Mediocrity: See above, Never think ahead just think NOW what can I get Now.

American shortage of Morals: Do anything, say anything, Allow everything, be responsible for nothing.

Just blame Someone else for any crisis.

Mar. 25 2009 11:16 AM
Darius from Prospect Heights

Laura is right: wars in Iraq and Afghanistan!

Mar. 25 2009 11:16 AM
dan from bed-stuy, brooklyn

Oh, c'mon. Uncle Milty (Milton Friedman) gave all these people an ethos, ethics (or lack thereof), and an excuse for indulging in their more base instincts.

We all became complicit in valuing the "creation of wealth" and making rock-stars out of bankers and brokers.

Mar. 25 2009 11:16 AM
jeff from greenwich village

final four:

the rating agencies:

moody's
fitch
standard and poors

triple AAA my (expletive withheld)

and that guy from aig you just mentioned

Mar. 25 2009 11:15 AM
hjs from 11211

the american people for look the other way (while they cashed the checks)

Mar. 25 2009 11:15 AM
VICTOR JUHASZ from In the studio

Matt's article is indeed the best, most understandable exposition of the financial collapse yet. I've been recommending it to friends and acquaintances who, like me, have a difficult time sifting through all the layers of financial lingo and mumbo jumbo. It's also been a consistent pleasure to illustrate his articles for ROLLING STONE. His writing inspires my imagery.

Mar. 25 2009 11:15 AM
valerie from NYC

Nixon in 1971 for stopping the Dollar to be connected to the gold standard

Mar. 25 2009 11:14 AM
bob from huntington

matt taibbi is talking about a "protection" scheme? wait, doesn't this sound more mafia than madoff?

Mar. 25 2009 11:14 AM
barbara johnson

Robert Rubin
Greenspan
Cassano
Lehman Brothers

Mar. 25 2009 11:14 AM
Darius from Prospect Heights

Phil Graham & Larry Summers (breaking Glass-Stegall)
Bill Clinton (see #1)
Greenspan (for believing in Ayn Rand)
George W Bush

Mar. 25 2009 11:13 AM
Laura from Nyack NY

We're not considering the war, and all the money spent there and diverted away from social programs? The huge debt that put us in, the social crunch which put so much pressure on people to be looking for schemes and not doing due dilligence in general? If we can ignore the whole "WMD" lies, maybe that sets the stage for us not doing due dilligence on financial issues? It put us in a place where we could put our heads in the sand, and not worry.

Mar. 25 2009 11:13 AM
Robert from NYC


5. Reagan
4. Greenspan
3. Sandy Weil
2. Bush II

And my #1 Pick: Ayn Rand!

Mar. 25 2009 11:13 AM
mc from Brooklyn

Robert Rubin, Larry Summers, Alan Greenspan and Arthur Levitt who all made sure that Brooksley Born, the Cassandra of credit default swaps was completely marginalized.

Mar. 25 2009 11:13 AM
justen from tampa

for those that have read matt's piece, it seems to all come back to the financing of campaigns, doesn't it. is that eligible for its own bracket spot?

Mar. 25 2009 11:12 AM
Orrie from Port Washington, NY

At the top of the list:: Phil Gramm, who did more than anyone to dismantle the protections in the financial field, which led to the mess we now have.

Orrie

Mar. 25 2009 11:11 AM
cyndy from new york city

George W Bush#1 for ineffectiveness and a look the other way attitude

Henry Paulson-for rewarding his frieds on Wall Street with Bail out money

Albert Mozillo-countywide financial-for being a crooked weasel

Credit Card companies -for taking advantage of their customers whenever possible

Mar. 25 2009 11:11 AM
Kevin from NC

Do New Yorkers really think this Hunter Thompson-wannabee is really clever? Leave his priviledged, liberal rants where they belong, in useless rags like Rolling Stone.

Mar. 25 2009 11:10 AM
superf88

disagree w cassano pic. in that case just another ordinary criminal who found an opportunity.

bush/greenspan/weil/rubin were the enablers.

they securitized morality itself.

Mar. 25 2009 11:10 AM
Cynthia from Brooklyn, NY

George Bush
Federal Regulators
Countrywide

Mar. 25 2009 11:09 AM
Matthew from Manhattan

Please don't forget Clinton's treasury secretary, when goverment began to be outsourced to Goldman Sachs. Rubin (I forget his first name).

Mar. 25 2009 11:09 AM
Frank from NYC


I would nominate Alan Greenspan. He's long gone, but he set into motion a system allowing this to happen.

Mar. 25 2009 11:08 AM
Robert from NYC

I think Mr. Taibi got just right with this. These guys don't want to give up this party they've been having since the Reagan/Clinton deregulation. It's like being on cocaine! It's addictive and they are hooked and hoodwinked the little guy who did fairly well and feel like they've made it too. Now they want to come back with even more power and with the blessing (backing) of the government.

Mar. 25 2009 10:57 AM
Josh from Brooklyn

The winners most certainly are Larry Summers and Bill Clinton. Before they got into office, all these credit-default swaps, mortgage securities and CDO's were illegal. What the banks did to get into this mess was perfectly with the law, and these two guys de-regulated the industry, thus allowing this to happen. They allowed commercial banks to own investment banks, absorbing their losses,thus eliminating any protection for consumers. No regulation was what got us into this mess.

Ronald Reagan isn't far behind, least of which easing the rules to write off debt. The last two are George Bush, crony extraordinaire, and Alan Greenspan who as Fed Chairman did not question or independently confirm policy

Mar. 25 2009 10:46 AM
tom from nyc

The 12 villians of Wall St? I think the perspective should be much broader: It's the 12 thousand and more business leaders who decided to close the plant and move it to China for a 5 or 10 percent increase in profit. Key players? Perhaps the Commerce Secretary in the Reagan, Bush 41 or Clinton Administrations should have encouraged businesses to "Keep Production Here at Home," before it got this far. The fundamental, underlying weakness in our economy is massive loss of jobs going back to the 1980s! This is so apparent in any video of a thriving Chinese boom city, making American brand name products. It is all those low wage jobs --BY THE MILLIONS-- that allow people to pay their mortgages, auto loans and sent the kids to college. The Chinese are loving it! We give them our industries and inventions-- 20 yrs later, lo and behold, we are in debt to them!
All the tricks and schemes of Wall st are only a symptom of this larger shift.

Mar. 25 2009 10:31 AM
hjs from 11211

bush (asleep at the wheel)
greenspan (high priest of voodoo finance)
hastert's & gingrich's GOP congress
reagan (freemarket über alles)

Mar. 25 2009 10:26 AM
KC from NYC

Great guest, one of the best reporters working in the United States right now. If anybody out there hasn't yet read his latest article, do it...along with everything else he's written.

Mar. 25 2009 10:08 AM

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