This year, no reporter has generated as much buzz on Wall Street as Rolling Stone Editor Matt Taibbi. Matt tossed some molotov cocktails into an otherwise quiet financial media marketplace when he published a laundry list of the top-level culprits responsible for quaking the global credit markets and causing a tsunami throughout the world-wide economy. His follow up piece The Great American Bubble Machine has been the most controversial article in a long time. Several journalists on Wall Street took issue with the piece for three primary reasons: 1) they have relationships at Goldman Sachs who they wanted to impress for greater future access, 2) they didn’t read Matt’s prior articles (See The Big Takeover) which point fingers at many more abetters than Goldman, and 3) on the ever-present Freudian tip, they are insecure they didn’t do their job or write one of the most obviously important stories of the year (while losing said story to a guy outside the financial media sector).
Recently, Congress started investigating Goldman Sachs, and other top financial journalists including Michael Lewis have taken Matt’s side. I caught up with Matt to ask him whether he is running from Goldman like Russell Crow in The Insider, what he thinks journalists can do to better protect the People, and whether he feels vindicated against his critics now that there was obviously gold in the mud he raked.
Damien Hoffman: Matt, since we last spoke Congress has been investigating Goldman Sachs and others to see if they misbehaved. Do you feel vindicated after a sea of critics claimed your articles were hyperbolic fantasy that had no journalistic integrity?
Matt: The Senate investigation centers around the issue of whether the financial institutions had doubts about the soundness of the mortgage-related securities these banks were hawking. When my article The Great American Bubble Machine first came out, a lot of people criticized that particular element of the article. They said the allegation was “outlandish” and “unfair.” So, I’d say Congress’s investigation is definitely a partial vindication.
Damien: Do you think this is the grand purpose of a journalist — to rake mud, expose hidden truths, and follow the mission of the Fourth Estate?
Matt: I definitely think this is what journalists are supposed to do. We are supposed to raise awareness about issues that concern the public. One of the controversial things about this article [The Great American Bubble Machine] has been whether or not journalists should do what I did in my article which was make a case for the prosecution — in other words, take sides in an argument and go on the offensive. Some people believe journalists should be more even-handed and not have a more prosecutorial role.
However, the financial press in particular has let a lot of things slide over the past eight or nine years. So, the approach I used at Rolling Stone is warranted in the end because there’s been an absence of any adversarial reporting in the Wall Street community. What we did was more appropriate than it would’ve been had the press been performing better in general over that period.
Damien: So, you have to throw a few molotov cocktails in order to wake up people from their complacency?
Matt: Normally, you’d rather have a situation where the press incrementally covered things as they happened. You don’t want to throw big hay-makers at large companies, but with the financial story we’re behind the eight ball to the degree where more desperate measures are needed.
Damien: What’s the lesson for other journalists who fear going against the herd opinion?
Matt: You ever seen the movie Predator? [Laughing] It bleeds … we can kill it. If you publish something that strikes a chord with people, you can really have an effect. I know a lot of reporters think what they do won’t make a difference. This is actually one of the first times in my career where I felt I had some kind of an effect on things.
Goldman is a very powerful company, but they were hurt by several reporters including Joe Hagan and Michael Lewis. The best example is how Goldman was affected by the Government’s warrants in the company. As part of the TARP [Troubled Asset Relief Program] deal, the Government bought warrants in Goldman Sachs and the bank was required to repurchase them. In the spring, many banks including Goldman were offering well-below market rates for those warrants. However, after a couple months of illuminating press, Goldman offered almost twice as much money for the warrants because, in my opinion, they didn’t want to be seen as cheating the Government.
So, press can have an effect. It might even push Senate Committees along. Obviously, there are a lot of other reporters on the story now, so that’s good too.
Damien: When you take a stand against a powerful company or entity, and your press may be costing your subject big bucks, do you feel like Russell Crowe in the movie The Insider where he is constantly intimidated?
Matt: Actually, I’ve been surprised by the mildness and lameness of the response. A lot of journalists may imagine that if they go up against a powerful company there will be very serious consequences. But Goldman’s response was completely amateurish and transparent from a public relations perspective. They simply issued a bunch of press releases and relied upon some of their buddies in the media to publish counter-attacks against people like me and Joe Hagan. Now, that might be because I don’t work in the financial press so they don’t have the ability to reach out to my superiors the way they might have if I worked for the Wall Street Journal.
If people are intimidated by these companies, they shouldn’t be. While they are very powerful if you’re a politician, I don’t think there’s a whole lot they can do to a journalist.
Damien: So, you haven’t gotten any letters on your car saying, “Better watch who you f*ck with!” or something like that?
Matt: [Laughing] I’ve gotten hate mail and some funny phone calls, but nothing threatening to me or anyone close to me. I do know people that have been threatened by other financial institutions. But that has been for something where somebody was about to go to the authorities with a very serious issue.
It would be very stupid of any company to do something like that. This isn’t a Third-World country where you can break someone’s kneecaps and expect a positive public relations bounce from that.
Damien: Matt, what advice do you have for those who aspire to win this award next year?
Matt: As someone who covered politics for several years and then moved into finance, I think this is a very fertile ground for journalism. There is a lot here to go through. We need more outsiders looking at this insular world because the people who have been covering it have been there so long, they don’t see the forest from the trees anymore.
So, for anyone who wants to get a good story, Wall Street is definitely the place to go right now. There is simply a lot of disgusting behavior that needs to be examined by journalists, and I hope a lot more people look into it.
Damien: Matt, thank you very much for taking the time to chat with me. I know you are on deadline for your big article covering healthcare which is due out this week. Keep up the great work!
Matt: Damien, thank you very much for this award. I’m very honored and appreciative.
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