QA with Matt Taibbi, author of 'Griftopia'
The Rolling Stone contributing editor finds Wall Street, economic gurus lacking
What's a road-hardened gonzo political journalist like Matt Taibbi doing in the swank Brooks Brothers world of finance?
Running amok, of course.
In his latest hell-bent rant, "Griftopia," the 40-year-old Rolling Stone contributing editor and heir apparent to the late, great Hunter S. Thompson doesn't just find a bone to pick with Wall Street, but an entire rotting carcass ripe with bubble machines, vampire squids and other participants in what he calls "the long con that is breaking America."
|Matt Taibbi, author,
After spending a decade abroad, Matt Taibbi returned home with a fresh perspective and a tart pen, which he displays in his latest book, "Griftopia," in which he dissects the American economy. He's less than impressed with America's financial institutions and economic gurus, as shown by chapter titles such as "The Biggest A**hole in the Universe" and "Hot Potato: The Great American Mortgage Scam."
Taibbi bags up the blame for the financial crisis and sets it afire on the doorstep of former Fed chairman Alan Greenspan, whose Ayn Randian laissez-faire approach to regulation ignites Taibbi's full fury in a chapter entitled, "The Biggest A**hole in the World."
"Griftopia" benefits greatly from the over-the-fence perspective Taibbi gained during his decade-long wanderyear living in Uzbekistan, Russia and Mongolia, where he played professional sports and honed his distinctive reporting style as an expat editor and correspondent. He returned home in 2002 to chase the devil out of America's decaying institutions.
Is "Griftopia" light reading? Hardly.
Is it essential? Probably.
CreditCards.com: So, this would be the book to read just before committing suicide, right?
Matt Taibbi: (Laughs) Well, right. It would be harder afterward.
CreditCards.com: Was it a leap for you to go from politics into the belly of the financial beast?
Taibbi: On the one hand, I didn't have any background at all in a lot of the financial terminology and concepts. But on the other hand, I spent a long time when I was in Russia covering third-world politics and the internal corruption between very politically connected banks and a corrupt government, and this storyline was so familiar and so similar to that that it felt like I wasn't doing something completely new.
CreditCards.com: Were you surprised to discover the same sorts of banana republic shenanigans here in the United States?
Taibbi: I was surprised at the extent of it. I had previously understood that there were similarities between the way we did things here and the way things were done over there, but I always kind of assumed that it was cruder over there. But in a way, it almost feels like it's worse here. And also, the sheer scale of the numbers that we're talking about dwarfs anything that goes on in Russia or Uzbekistan.
CreditCards.com: If there's a centerpiece to this book, it's your unsparing and profane screed on Alan Greenspan. What about Greenspan makes him such an appropriate "Griftopia" poster child?
Taibbi: Alan Greenspan somehow managed to convince the entire financial community and the popular press that he was a financial genius, really without a whole lot of effort. He enabled some of the other scams, like the mortgage fiasco where a lot of these banks were taking essentially worthless subprime mortgage-backed securities and selling them as AAA-rated investments for years and years on end and booking billions of dollars in profits. That sort of tells you that our checks and balances system is not all that good in this country.
CreditCards.com: If regulators won't regulate, where's the hope?
Taibbi: The only real hope, I think, is more on the law enforcement front, things like (New York attorney general) Andrew Cuomo going after Ernst & Young. He's going to blow up that company for what they did during the Lehman Brothers episode. If there are enough of those kind of prosecutions, that might have a prophylactic effect on future behavior. But that's kind of wishing a lot; there are a lot of ifs there.
CreditCards.com: What insights did you glean from peering into the credit card world?
Taibbi: During the crisis years, banks were doing the same thing with credit cards that they were doing with mortgages and aircraft leases and everything else, they were securitizing a lot of those loans and selling them off to other people, and that was creating the ability to lend out more to credit card customers. I talked to Sen. Bernie Sanders (I-Vt.) about a week ago, and he said, "Here's what we had to do during the bailout period: We had to go and say to all these banks, 'Yes, we'll bail you out. We'll give you $1 trillion, but your top rate for credit cards is going to be 15 percent.'" And they didn't do anything like that with the Credit CARD Act; there are really no restrictions on that whole part of the economy. When you consider that all of these banks are getting their money essentially for free from the Fed, the interest rates that they're sticking everybody with for credit cards is completely preposterous. That shouldn't be allowed.
CreditCards.com: The CARD Act does seem to have the credit card companies' fingerprints all over it.
Taibbi: Is that surprising? I mean, the credit card industry has an enormous amount of influence. There are some people who would even say that the credit card industry basically caused the financial crisis because the financial bill that they so heavily pushed for (the Bankruptcy Reform Act of 2005) made it impossible for people to declare bankruptcy on their credit card bills in order to save their houses, so they were defaulting on their home loans and those are what triggered the financial crisis. So, yes, they have an enormous amount of power and I don't see it subsiding anytime soon.
CreditCards.com: What's the answer to credit card regulation?
Taibbi: I definitely agree with people like Sanders who say there should be limits to the amount of interest that people can get charged. Take me. I have a credit card and I missed one payment like four years ago for like $33, and I had another credit card that didn't have an autopay function so I was a few days late on one of those payments. Those are the only two blemishes on my record, and I'm paying some ridiculous thing like 27 percent, and it's preposterous. That's not finance; that's extortion, basically. I'm hoping this new Consumer Financial Protection Agency has some kind of teeth to it and they do something about all the fees and we will eventually get those plain vanilla contracts that we didn't get last year.
I talked to Harvard law professor Elizabeth Warren about credit card contracts, and even she said she couldn't understand the standard contract that most people sign for a credit card. Most people just don't know what they're getting into when they get credit cards. There has to be some kind of regulatory solution to this because it's ridiculous how they are able to nail people for fees. These same companies use the same techniques for things like municipal debt and interest rate swaps; they are constantly gouging municipalities, states, individuals, it doesn't matter. Something has to be done about that.
CreditCards.com: Are you strapped in for a long slog on the financial front?
Taibbi: My feeling now about all this is that you really can't do normal political coverage without doing all of this stuff. I don't think it would be responsible to abandon this topic at this point, so I think I'm going to have to stay at least halfway in the financial world for awhile. I think more and more reporters are going to end up covering both and looking at the entire financial landscape as part of the politics story. I think that's going to be the new way to do politics reporting because they're now essentially the same thing.
CreditCards.com: Is tilting at financial windmills fun?
Taibbi: I don't know about you, but I'm really into cheesy detective stories and crime shows and all of this stuff is like a big mystery. These financial scams are incredibly complicated, so there is certainly a tremendous intellectual challenge trying to unravel how all this works, particularly for someone who doesn't have any background in it. I might not have enjoyed doing the political campaign trail stuff where I was just sitting there listening to speeches over and over again, but once I started doing this story and it became that huge challenge, I really started to enjoy it, and I'm definitely having fun with it. Although it's colossally depressing, so there's that, too.
See related: Guide to the Credit CARD Act of 2009, Q&A with 'Real Cost of Living' author Carmen Wong Ulrich
Published: January 18, 2011