Bill Moyers and Matt Taibbi discussed how the bankers live under a different set of rules than the rest of us.
(photo: Moyers & Company)
BILL MOYERS: This week on Moyers & Company ...
MATT TAIBBI: The rule of law isn't really the rule of law if it
doesn't apply equally to everybody. I mean, if you're going to put somebody in
jail for having a joint is his pocket. You can't let higher ranking HSBC
officials off for laundering eight hundred million dollars for the worst drug
dealers in the entire world.
BILL MOYERS: And ...
VINCENT WARREN: There is not a country in the world that believes
that the U.S. drone attacks that we are doing on countries that we are not at
war with is the right and sustainable solution for us.
VICKI DIVOLL: All we have is the president interpreting his own
powers and the limits on his own powers. And that is not the way it's supposed
to work. We need more oversight.
BILL MOYERS: Welcome. This week, two United States senators
insisted that the Justice Department come clean. Why are Wall Street's big
banks not only too big to fail but too big to jail? Senators Sherrod Brown of
Ohio, a Democrat, and Chuck Grassley of Iowa, a Republican, are outraged that
the giant banks violate the law with impunity -- laundering money, cheating homeowners,
falsifying information -- every trick in the ledger book. They sent a letter to
Attorney General Eric Holder demanding to know why the banks get away with
fines instead of jail time.
Maybe they had their anger roiled by "Frontline,"
Public Television's premier investigative series. The other night,
"Frontline" broadcast a report called "The Untouchables,"
on how the Department of Justice allegedly has looked the other way for fear
that prosecuting the banks would do even more damage to the American economy.
ELIOT SPITZER in Frontline: The Untouchables: It
was a definite sense that justice backed off.
NARRATOR in Frontline: The Untouchables:Did the government
MARTIN SMITH in Frontline: The Untouchables: A
number of people told us that you didn't make this a top priority.
LANNY BREUER in Frontline: The Untouchables: Well
I'm sorry that they think that because I made it an incredibly top priority:
BILL MOYERS: That's Lanny Breuer, the assistant attorney general
in charge of the criminal division at the Justice Department. A week after the
Frontline report, he stepped down and is now expected to return to private
corporate practice -- one more government appointee spinning through the lucrative
revolving door between Washington and Wall Street.
That door could be a big reason why government treats
the banks with kid gloves. A man who once worked for Citigroup, Jack Lew, the
president's chief of staff, has been picked to be the new Treasury Secretary.
And Mary Jo White, the newly named head of the Securities and Exchange
Commission, is a chief litigator at a top law firm representing big investment
banks like Morgan Stanley.
With all this happening, it's time to talk with
journalist Matt Taibbi. You've seen him on our broadcast before. A contributing
editor at "Rolling Stone," he's been tracking the high crimes and
misdemeanors of Wall Street and Washington for years.
Welcome back to the show.
MATT TAIBBI: Thanks for having me.
BILL MOYERS: You're working on a story right now that'll come out
in a couple of weeks on the HSBC settlement. That's the, tell me about that,
why it interests you.
MATT TAIBBI: Well, the HSBC settlement was a really shocking kind
of new low in the history of the too big to fail issue. HSBC was a serial
offender on the money laundering score. They had been twice given formal cease
and desist orders by the government. One dating back as far as 2003, another
one in 2010 for inadequately policing the accounts in their system. They
laundered over $800 million for cartels in Colombia.
BILL MOYERS: Drug cartels?
MATT TAIBBI: Drug cartels in Colombia and Mexico. They laundered
money for terrorist connected banks in the Middle East. Russian gangsters.
Literally, you know, I talked to one prosecutor who's, like, "They broke
basically every law in the book and they did business with every kind of
criminal you can possibly imagine. And they got a complete and total
walk." I mean, they had to pay a fine.
BILL MOYERS: $1.9 billion, a lot of money.
MATT TAIBBI: It's a lot of money. But it's five weeks of revenue
for the bank, to put that in perspective. And no individual had to suffer any
consequences at all. There were no criminal charges no individual fines, which
was incredible. Incredible.
BILL MOYERS: Lenny Breuer also forced the Swiss bank UBS, as you
know, to pay a big fine in the LIBOR, the price fixing conspiracy. And that
outraged you as well, didn't it?
MATT TAIBBI: This is the, I think the biggest financial scandal
of all time. It was a price fixing scandal where, essentially, some of the
world's biggest banks got together and they conspired illegally to artificially
rig the global interest rates which are based upon this London inner bank
offered rate, which is a rate that measures how much it costs for banks to lend
money to each other.
This LIBOR rate affects the prices of hundreds of
trillions of dollars of financial products. And it goes from everything from
credit cards to mortgages to municipal bonds. Basically everything in the world
the price is, you know, is somehow connected to LIBOR. And these guys were
monkeying around with this for individual profit. And they got, again, a
complete and total walk on this. There were no criminal charges, which is just
BILL MOYERS: Did you see the Frontline documentary
MATT TAIBBI: I did.
BILL MOYERS: Then you're familiar with Lanny Breuer's testimony.
MARTIN SMITH in Frontline: The Untouchables: You
made a reference to losing sleep at night worrying about what a lawsuit might
result in at a large financial institution. Is that really the job of a
prosecutor to worry about anything other than simply pursuing justice?
LENNY BREUER in Frontline: The Untouchables: I
think I am pursuing justice and I think the entire responsibility of the
department is to pursue justice, but in any given case, I think I am
prosecutors around the country being responsible should speak to regulators, should
speak to experts, because if I bring a case against institution A, and as a
result of bringing that case there's some huge economic effect. If it creates a
ripple effect so that suddenly counter-parties and other financial institutions
or other companies that had nothing to do with this are affected badly, it's a
factor we need to know and understand.
MATT TAIBBI: Think about what he's saying. He's essentially
saying that some individuals are so systemically important, that they can't be
arrested and put in jail. Now, it's only a few steps forward to the corollary
to that, which is if some people are too systemically important to arrest,
other people may safely be arrested. So we're creating a class of people who
are arrestable and another class of people who are not arrestable, which is
crazy. It's a crazy thing for the assistant attorney general to say, to admit
out loud that he's dividing Americans up into these two classes. There's no
reason they couldn't have taken a number of individuals from some of these
companies and put them on trial.
Historically, we've always done this. Even under the
Bush administration, if you go back just ten years, you know, WorldCom, Enron,
you know, Adelphia. We took the leading individuals of these companies and we
put them on trial to make an example out of them. And this is exactly what
we're not doing in this case. Those companies were systemically important then.
I don't see why they can't do the same thing now.
BILL MOYERS: You were shocked when you heard that President Obama
had named Mary Jo White to lead the Securities and Exchange Commission. And you
wrote that she was a partner in a law firm that represented a lot of these big
banks. You know, Bank of America, Goldman Sachs, Chase, AIG, Morgan Stanley.
You said, "She dropped out and made the move a
lot of regulators make, leaving government to make bucket loads of money,
working for the people she used to police." And I gather your great
concern is that you don't want to see the country's top financial cop being
indebted to the people who created the bank role?
MATT TAIBBI: Right. Yeah, absolutely. I mean, it's just simple
common sense. I mean, you're sitting on $10 million, $15 million, however much
money she made working there at Debevoise and Plimpton when she was a partner
and you owe that money to this specific group of clients and now you're in
charge of policing them, just psychologically think of that. It doesn't really
work, you know? It doesn't really work in terms of how aggressive a prosecutor
should be, what his attitude towards the people he's supposed to be policing
should be. It's just, the circumstances just aren't quite right. You'd much
rather see a career civil servant in that in that situation.
BILL MOYERS: She was once a tough prosecutor. What's your beef?
MATT TAIBBI: Well, you know, I have people who are telling me
that I'm wrong about this, that Mary Jo White was an excellent prosecutor and
she's a good choice. But, you know I've done stories in the past about an
episode, you had an SEC investigator named Gary Aguirre who was pursing an
insider trading case against the future CEO of Morgan Stanley. He asked for
permission to interview that future CEO. His name was John Mack. It was denied.
And it was because there was communication between Morgan Stanley's lawyer, who
at the time was Mary Jo White and the higher ups at the SEC who included the
director of enforcement, Linda Thomsen. Aguirre was later fired for complaining
about having this investigation squelched.
BILL MOYERS: Blowing the whistle.
MATT TAIBBI: For blowing the whistle. But the SEC was later
forced to pay a $750,000 wrongful termination suit to Aguirre in that case. But
what's so interesting is that Aguirre's boss, the guy who killed that case went
to work for Mary Jo White's firm nine months after the case died. And he got,
you know, a multi-million dollar position. It's a classic example of how the
revolving door works in Washington. You know, you have these regulators at the
SEC. And they know that there's that job out there waiting for them. So how
hard are they really going to regulate these companies when they know they can
get that money?
But in Washington, you know, people kind of shake
their heads at it because it's so common you know, that these people, they move
from government back to, you know, these high priced legal defense firms that
represent the banks. And then they go back to government again. And it's this
sort of, this coterie of, you know, 100, 200 lawyers who really run this entire
thing. And it's all the same people on both sides.
BILL MOYERS: Lanny Breuer was one of them. He was in a very
prestigious Washington law firm. Jack Lew, the new incoming secretary of the
Treasury if he gets approved, served three years at Citigroup. His record
there, according to "The Wall Street Journal" was not very lustrous
for a man who's about to take over the Treasury Department. But "The Wall
Street Journal" suggests that he got his job, not because he had the
experience, but because he was a crony of Robert Rubin.
MATT TAIBBI: Jack Lew served in the Clinton administration. I
think he worked in the OMB in the, you know, Office of Management of the
Budget. And he was one of the key players in helping pass the repeal of
Glass-Steagall. And, you know, this is kind of the way it works. It's not a one
to one, you know, obvious connection. But, you know, Glass-Steagall was
repealed specifically to legalize the merger of Citi Group. And, you know,
coincidentally Bob Rubin, who was the Treasury secretary and Jack Lew end up
working at Citi Group five, ten years later. And they make enormous amounts of
money. And then they go back to government. And again, this is just sort of
this merry-go-round that everybody in Washington knows about. And that's the
way it works.
BILL MOYERS: How do you explain President Obama's attitude in
this? When he was running for president, he promised the close the revolving
door. And he seemed genuinely shocked at the collapse of the financial system
and the banks' role in it. But he also was raking in massive campaign
contributions from these very people. Did those investments, did those
contributions turn out to be good investments, or do you think he's just
overwhelmed by the system that's controlled by these guys?
MATT TAIBBI: I think that they genuinely accept the explanation
that they're probably hearing from all these people who run these Wall Street
companies. You know, people like Bob Rubin and Larry Summers who are close
confidants of the Obama administration are probably telling them, "Look,
if we start prosecuting all kinds of people for you know, X, Y and Z, there's
going to be major instability in the markets. People are going to flee America.
They're going to withdraw capital from the American financial system. It'll be
a disaster. Jobs will be lost." But it's just not an acceptable it's
explanation. I think they're--
BILL MOYERS: Why?
MATT TAIBBI: Well, just because the rule of law isn't really the
rule of law if it doesn't apply equally to everybody. I mean, if you're going
to put somebody in jail for having a joint in his pocket, you can't let higher
ranking HSBC officials off for laundering $800 million for the worst drug
dealers in the entire world. People who are suspected, not only of dealing
drugs, but of thousands of murders. I mean, this is an incredible dichotomy.
And eventually, you know, it eats away at the very fabric of society when some
people go to jail and some people don't go to jail.
BILL MOYERS: But do you ever have the sense that those guys are,
you know, are and their lawyers are up there laughing at all of us on their way
to the bank, no pun intended? I mean, the fact of the matter is they are
immune. There was a story in "The Washington Post" the other day by
Howard Schneider and Danielle Douglas. With the lead, "Five years after
the collapse of Lehman Brothers, a global push to tighten financial regulation
around the world has slowed in the face of attempted recovery, which the banks
helped bring on. "And a tough industry lobby effort. Big banks, insurers
and other financial giants remain intact and arguably too big to fail." I
mean, nothing really has changed.
MATT TAIBBI: No, no, definitely not. And in fact, if you want to
look at it objectively, since 2008, you know, the companies that we're talking
about have become bigger and more dangerous and more immune to prosecution than
they were back then. And you might even say by a lot. I mean, you know, the
first factor was that you had a series of mergers in 2008, which you know, made
companies like Wells Fargo and JP Morgan Chase, you know, double in size.
Or they were much bigger than they were before. So
therefore they're more dangerous. And so you have these companies, like
Barclays, like Royal Bank of Scotland, like UBS, like HSBC, which are, you
know, they can't be regulated. We can't get an accurate accounting of what's
going on in their books. And apparently now we can't even criminally prosecute
them for laundering money like HSBC does. I mean we just keep setting the bar
lower and lower and lower. And it's getting scary I think.
BILL MOYERS: There's a new analysis out just the other day from
the Economic Policy Institute that shows the super-rich have done well in the
economic recovery, while almost everyone else has done badly. And the economist
Robert Reich says, "We're back to the widening inequality we had before
the big crash." Are the financial and political worlds just too
intertwined and powerful for anything to change?
MATT TAIBBI: I mean, it's a concern, I would worry about. But it
doesn't mean you can't, you know, try to stop the problem. I definitely think
though that there is this connection now between political power and financial
power that's just becoming more and more overt. I mean, what Lanny Breuer is
saying in that video is these people who have an enormous amount of power,
destructive financial power we can't prosecute them.
On the flip side what they're essentially saying is
that people who don't have any money at all, it's politically safe to put them
in jail. And so, you know, we're creating this kind of dual class. And it's a
very upsetting and disturbing situation.
BILL MOYERS: Matt Taibbi, we'll be looking forward to your next
expose in a couple of weeks. Thank you very much for being with us.
At midday on Friday 5 February, 2016 Julian Assange, John Jones QC, Melinda Taylor, Jennifer Robinson and Baltasar Garzon will be speaking at a press conference at the Frontline Club on the decision made by the UN Working Group on Arbitrary Detention on the Assange case.