Matt Taibbi's “Wall Street’s Bailout Hustle” Makes Boring Financial Stuff Interesting and Hilarious

Matt Taibbi, who lived in Russia for a few years but is not a Communist (or so he says), has written another article for Rolling Stone Magazine about how that “vampire squid” of a company, Goldman Sachs, and others scammed the bailout.

Entitled, “Wall Street’s Bailout Hustle,” the  piece addresses a common misperception that large banks like Goldman Sachs, in paying back the $10 billion of TARP money provided in 2008, actually paid back all of the money they borrowed from the taxpayer.

“The TARP is just a tiny slice of what the bailout is,” said Taibbi. “The bailout encompasses a whole range of direct and indirect federal guarantees, and that $10 billion is really chump change compared to the rest of the stuff that the banks got.”

For instance, Goldman Sachs received $13 billion in the AIG bailout and, along with other investment banks like Morgan Stanley, converted itself into a commercial bank in 2008. Though seemingly benign, this move had huge implications.

“That allowed them to borrow massively from the Fed at basically zero percent interest,” said Taibbi. Combined with the ability to borrow money against government guarantees on the open market, Goldman easily posted a $13 billion profit last year.

In “Wall Street’s Bailout Hustle,” Taibbi used common street scams, like a Three-card Monte trick or a horseracing con, to help familiarize people with these complicated schemes. Because despite a lot of hooting and hollering, Washington has done little to safeguard against another financial crisis. 

“After the crash in September 2008, we had an opportunity to go in and clean out Wall Street,” said Taibbi. “We had to go in and temporarily take over these banks, fire all these guys that got us into trouble. Instead we did everything possible to keep everybody in their jobs, and showered them with money and guarantees.”

He fears that the financial industry is falling back into bad habits, making the same kind of toxic investments that caused everything to go to hell. “We’re recreating the conditions for the crash again because we have not punished these guys,” Taibbi said.

Part of the problem is that companies like Goldman Sachs and Citigroup became so big and powerful, thanks to Congress repealing an Depression-era law prohibiting super-mergers, that they do whatever they want (like handing out $16 billion in bonuses with taxpayer money).

“These guys are really out of touch,” said Taibbi. “They have no concept of how totally offensive that is to the rest of the country.”

Taibbi is finishing up a book that focuses on all of this intricate, complicated, financial stuff, so he doubts anybody will read it unless the I-Man humps the hell out of it.

“I’ll hype it because I like you,” Imus told his guest. “And because you’re willing to say mean, vicious, ugly things about people.”

-Julie Kanfer