Thom Hartmann: Similarly, just as the President ran on health care reform, he ran on economic reform. The country was melting down. The banksters had screwed us. They didn’t just screw us, they screwed the entire planet. These gangsters running our banks, and they, you know, the doors were just kicked wide open over a thirty-year period. It started during the Reagan administration, picked up a little more steam during the George Herbert Walker Bush administration, and then really kicked the doors open in ’98, ’99, in the Clinton administration, with Gramm-Leach-Bliley rolling back Glass-Steagall, a series of deregulations that led us right to where we are today. And the banksters now firmly in control. Mr. Obama met with them yesterday, and we saw the same kind of Kabuki dance afterwards. "Yes, it’s a tough conversation, and we’re going to see some change". I’m skeptical.
Matt Taibbi is with us, one of the finest investigative reporters writing in America today, from rollingstone.com, most frequently Rolling Stone. His most recent article, “Obama’s Big Sellout: The president has packed his economic team with Wall Street insiders intent on turning the bailout into an all-out giveaway”. Matt, welcome back to the show.
Matt Taibbi: Thanks for having me on.
Thom Hartmann: Thanks for being with us, Matt. More importantly, thanks for doing the kind of research that you’re doing. You know, I’m astounded that there aren’t fifty other reporters from all the major news sources doing this same kind of research that you are, because it’s all just laying out there in the open.
Matt Taibbi: Well, to address that quickly. I’ve been hearing a lot about that lately, but I think that a lot of it has to do with, you know, nobody has the budget to do that kind of stuff any more. I mean, we’re one of the few magazines that actually allows people like me to sit around for a couple of months, and I think that’s been one of the problems.
Thom Hartmann: And build a story.
Matt Taibbi: Yeah.
Thom Hartmann: There are very few investigative journalists in America any more. Period. I mean, you’re absolutely right. So, you start off talking about how President Obama ran as, you know, the President, the man of the people, who was going to stand up to Wall Street, etc, and then he got elected.
Matt Taibbi: Right, right, and what happened was, you know, Obama, you know, he didn’t run as much as a progressive as say John Edwards did, but, you know, he had some progressive people working for him. People like Karen Kornbluh who is a well-known workers rights advocate although she too worked for Bob Rubin once, once upon a time. Austan Goolsbee, who’s been talking tough towards Wall Street in the last couple of years anyway, you know. And Paul Volker is another person who was an influential voice in Obama’s campaign. These people aren't, you know, leftists, but they were certainly very, very critical of Wall Street.
Thom Hartmann: Right.
Matt Taibbi: And they had, you know, a big influence on Obama’s campaign. When he got elected, the very next day they were basically all gone, they weren’t part of the transition, and he brought in a group of people who were really kind of the same people who had been involved with Clinton’s presidency, Obama’s Harvard classmate Michael Froman from CitiGroup was the head of the economic transition team. And then there were a series of people connected to Bob Rubin who again, of course, was Clinton’s Treasury Secretary, who basically staffed the Obama White House after he got elected.
Thom Hartmann: Right. And Bob Rubin, please remind our listeners who Bob Rubin is, what he is.
Matt Taibbi: Well, Bob Rubin was, he was with Goldman Sachs for a couple of decades, he was the head of Goldman Sachs in the early ‘90’s, and he joined the Clinton White House and the key thing about Rubin is that he pushed through two disastrous moves. One was the repeal of the Glass-Steagall that you’ve just mentioned, the Gramm-Leach-Bliley Act, which allowed insurance companies, investment banks, and commercial banks to merge. Without that Act, we probably wouldn’t have had these so-called too-big-to-fail firms. And the other one was the Commodity Futures Modernization Act of 2000, which was sort of the last thing he did before he left, and that affirmatively deregulated the derivatives industry, and kind of directly lead to the messes like the AIG business, which were really based on bad credit default swap investments.
Thom Hartmann: Right. So in your article you suggest that what we have now in the Obama administration is basically a bunch of, I forget the exact phrase you used, but words to the effect of, “a bunch of Bob Rubin clones”.
Matt Taibbi: Oh yes. That’s not even me saying that. I mean, from, you know, a lot of my sources kind of jokingly refer to the “team of Rubins in the White House”. I mean that’s something that I’ve heard from a lot of people. Because almost everybody who makes up Obama’s economic team has some kind of connection to Rubin, whether it’s from Goldman, from the Clinton White House, whether it’s from CitiGroup which Rubin went to work for after he left the White House, or from the Hamilton Project which is a think-tank that he founded. Geithner worked for Rubin, Gary Gensler who heads the Commodity Futures Trading Commission worked for Rubin, you have Jason Furman, Peter Orszag, the Head of the Congressional Budget Office. I mean, the list just goes on and on. There’s probably a dozen people in high-ranking positions who have connections to him.
Thom Hartmann: Right. We have just a minute before the break. Can you stick around after the break for another few minutes?
Matt Taibbi: Sure.
Thom Hartmann: We’re talking with Matt Taibbi, his new piece, “Obama’s Big Sell-out” in “Rolling Stone”, rollingstone.com, even better, pick up the magazine, newspaper, whatever you guys call it these days. Why, was this, I was saying up to the election, and even afterwards, we’re going to see whether Obama turns into FDR or turns into Bill Clinton. He has turned into Bill Clinton, at least economically, that fast. It is because the head of his transition team was John Podesta who used to be Clinton’s Chief of Staff? Is it because this is really who Obama was all along? Is it because he reached out to Bill Clinton for advice and hired his wife as Secretary of State? What’s the deal?
Matt Taibbi: You know, that’s the big mystery. I mean there’s the school of thought that Obama was just naïve, and that obviously the financial services industry is intimidating, or the other thought is that he just cynically wanted to keep his campaign contributions coming. I think it was a combination of the two.
Thom Hartmann: And they’re going to need a hell of a lot of money if they’re going to win the 2010 election, if he’s going to win re-election in 2012, and where’s the money?
Matt Taibbi: Yep.
Thom Hartmann: It’s with the banksters.
Matt Taibbi: Exactly.
Thom Hartmann: Right. We're talking with Matt Taibbi about the banksters and “Obama’s Big Sell-out”, rollingstone.com, we'll be right back.
...
Thom Hartmann: Matt Taibbi, rollingstone.com, “Obama’s Big Sell-out”. "The president has packed his economic team with Wall Street insiders intent on turning the bailout into an all-out giveaway", the sub-title. Matt, welcome back.
Matt Taibbi: How are you doing? Sorry.
Thom Hartmann: We were talking in the first segment about how the Obama administration has been packed with Robert Rubin clones, Robert Rubin of Goldman Sachs, Robert Rubin of CitiBank, Robert Rubin of the Clinton administration, Robert Rubin the advocate of deregulation, and let’s have banksters and billionaires and to hell with the little people. And, you know, we, I guess, agree. Neither one of us know exactly why he’s doing that other than the obvious political benefits, particularly in this day and age where the Supreme Court has issued a series of rulings over the hundred and twenty years that have given more and more power to the corporations, to influence elections.
Matt Taibbi: Right.
Thom Hartmann: But there’s also a consequence to this in terms of legislation. You talk in your article about the Consumers Finance Protection Agency, that the Obama administration had proposed, actually, and this seems to be going down in flames in Congress. This and some of the other initiatives. Talk for a minute, Matt Taibbi, about the actual policies of the Obama administration and how they might be different if Austan Goolsbee and his colleagues, for example, had been the ones that President Obama had chosen to surround himself with, rather than the Bob Rubins.
Matt Taibbi: Well, the financial regulatory reform was really a three-part process. The first was about derivatives and commodities reform. The second was about the Consumer Financial Protection Agency, and who is basically going to be doing the regulating from this point forward. And the third was what was called a resolution authority, which is really just another way of saying what do we do the next time we have, you know, an AIG go belly up or a Lehman Brothers.
And in the first part, and remember, derivatives are an enormously important thing because they’re, you know, they were behind much of the mess last year. They pushed through initially a series of reforms they favored, and some very good things that would have restored the proper balance of the commodities markets and given the SEC and the CFTC the authority to step in and prevent companies like AIG from doing what they, you know, did before, but at the last minute, Tim Geithner and the administration supported a couple of loopholes in derivatives legislation that basically gutted the entire reform effort. It's going to basically allow the derivatives market to look pretty much the way it looked before, thanks to these loopholes.
Thom Hartmann: Although they’re going to claim, it’s the exact same thing we’re seeing with health care, they’re going to claim that they have reformed the system. My fear is that just like with health care, we’re going to have, you know with health care we’re going to continue to have dysfunctional, expensive system that’s going to kill people. And with the banksters, with this whole economic reform thing, we’re going to have a system that for a couple of years might re-inflate a few bubbles, and might look kind of good, and maybe even until 2012, will have enough time to get the President re-elected. But then an even bigger crash is going to come.
Matt Taibbi: Yeah, I know. I think that’s a fair assessment. You know, the Obama administration right now is trying to put all their chips politically in the passage of this Consumer Financial Protection Agency, which the banks don’t want, and the Obama administration does want, so there is a little bit of a conflict there. But the reality is the issue has never been the government having enough regulatory powers. They’ve always had enough regulatory powers to step in and do something about, you know, Wall Street and all the mess that’s gone on. The problem is who’s sitting in those positions. You know, if you had Alan Greenspan and Henry Paulson being the top cops on Wall Street, well, obviously there’s not going to be a lot of regulation.
Thom Hartmann: Right.
Matt Taibbi: And so the CFPA, while it's a good thing, it doesn’t really change the facts of the situation, unless you have different people sitting in whatever position they create. So there is that, and the fact that the resolution authority portion is going to allow for future, basically unlimited future bailout authority. This is sending exactly the wrong message and it tells, it basically gives Wall Street the ok to start re-inflating bubbles again, as you point out.
Thom Hartmann: They’ve already done it. They’ve already starting. I mean, it's happening now, as we speak.
Matt Taibbi: I know. Yeah. It’s starting on a number of different levels. You know, we’ve seen the oil prices re-inflate kind of in the same way we saw stock.
Thom Hartmann: Commodity prices, gold prices, going up. I think that there’s a fair amount of manipulation going on there.
Matt Taibbi: Right, right. And you know, the dollar itself. You know, I mean, the quantitative easing that Ben Bernanke has, you know, pushed this year has caused, you know, has allowed, given Wall Street the green light to start speculating again. And this is, you know, it’s exactly the opposite of what say FDR did after the Crash. He stepped in and he basically rewrote the entire landscape and told these guys that there was a completely new game in town, and that’s exactly the opposite of what Obama has done.
Thom Hartmann: What are the chances, we’re talking with Matt Taibbi, rollingstone.com, “Rolling Stone” magazine of course, and his most recent article, after two brilliant, brilliant exposes of Goldman Sachs and the first of the company itself, the second of their influence on the Obama administration. Now his third in the series, I don’t know if you intend it as a series, but in my mind it kind of is. “Obama’s Big Sell-out”. What is the hope here? Matt Taibbi, what are the possibilities, and we have just a minute until we've got to wrap this up, what are the possibilities that we can, the citizens can force some sort of change here? And does it have to run through Congress or can we put pressure on the White House?
Matt Taibbi: Well, I think that the White House is already feeling the pressure a little bit. I mean, you have the loss of Corzine this year with heavy support from Obama was very sobering to them. But I think most of the hope comes from Congress, where key Congressmen like Brad Sherman and Paul Kanjorski and Luis Gutierrez of Illinois, they’ve stepped in and basically rolled back almost everything that Tim Geithner and Obama was asking for in the last section, the bailout section of the bill.
Thom Hartmann: Alan Grayson has been kicking ass too.
Matt Taibbi: Grayson as well, yeah. These people are getting enormous political capital out of bashing Wall Street and that is going to be a very sobering thing for the White House to digest. If they see that, and of course we all hope that these Congressmen continue to have success in this area, because it’s so important. But I think the more important thing from a meta point of view is that the White House is going to see that politically that is successful for these guys.
Thom Hartmann: Yeah. So, we need to keep the pressure on. We the people need to keep the pressure on by supporting the progressives in Congress, supporting progressive legislation, and supporting the grass roots organizations that are supporting progressive legislation.
Matt Taibbi: Absolutely. Absolutely.
Thom Hartmann: We need movement politics here. Matt Taibbi, brilliant writing, brilliant writing, thanks so much for being with us today Matt.
Matt Taibbi: Thanks for having me.
Thom Hartmann: And check it out over at rollingstone.com “Obama’s Big Sell-out”.
Transcribed by Gerard Aukstiejus.
