Matt Taibbi Dishes on His Latest Journalistic Treat, "The People vs. Goldman Sachs"

Before today, Matt Taibbi would have been pretty low on the list of people who might fall for Imus’s claim that the scar on his forehead was the result of a knife fight, and not a procedure to remove a Squamous-cell carcinoma. Let’s hope Taibbi was less naïve while reporting on his latest article for Rolling Stone, entitled The People vs. Goldman Sachs.
 
Democratic Senator Carl Levin’s Permanent Subcommittee on Investigations released a comprehensive report last month on, basically, all of the fraud that went on during the mortgage bubble era. Though the report homed in on three large companies—Washington Mutual, Deutsche Bank, and Goldman Sachs—Taibbi chose to focus on Goldman’s role since he has covered it for Rolling Stone many times before.
 
The report, an aggressive, bipartisan effort by all accounts, claims that in late 2006, Goldman discovered that it was sitting on “time bomb of toxic mortgage assets,” as Taibbi put it. “The entire mortgage market was rife with fraud,” he explained. “A lot of the mortgages that they were selling as triple-A definitely should not have been triple-A.”
 
That these securitized mortgage pools received false ratings in the first place was the result of what Taibbi called a “very complicated, alchemic math” contrived through derivative products. “They had this fancy math that allowed them to take really, really dangerous stuff and turn it into something they could say was as safe as treasury bonds,” he said. “But they paid more than treasury bonds, so there was a large market for these assets.”
 
Goldman was not the only bank participating in this sort of shady activity, but it was one of the first to realize that sub-prime mortgages were doomed to default. As a result, Taibbi said, “They made a conscious decision to unload that stuff ASAP.”
 
Lloyd Blankfein testifying/lyingThe Levin report, citing evidence like blatant e-mails and PowerPoint presentations, found that Goldman knowingly unloaded the defective products on their clients, and then bet against them—or shorted them—at the same time, without informing clients they were doing so. Adding insult to injury, executives testifying to Levin’s committee last year flat-out insisted that none of this ever happened.
 
While Levin and his co-author, Republican Senator Tom Coburn, have been praised for their report, Taibbi noted that the investigation really should have been conducted by one of the various banking regulatory agencies, like the SEC or the Federal Reserve. Now in the hands of the Justice Department, Taibbi suspects the report will lead to indictments for Goldman executives, like Lloyd Blankfein, for lying under oath.
 
“There are mountains of evidence,” he said, adding, “This is a case where they have stacks and stacks of internal memoranda.”
 
And though Imus’s reaction to all this heady talk was to make fun of Levin’s less than desirable hairline, Taibbi was not on board, saying, “As a fellow balding person, I’m going to leave him alone.”
 
-Julie Kanfer