Moral surrender

Matt Taibbi talks about his new book and why only some people go to jail these days:

His relentless coverage of Wall Street malfeasance turned him into one of the most influential journalists of his generation, but in his new book, “The Divide: American Injustice in the Age of the Wealth Gap,” Matt Taibbi takes a close and dispiriting look at how inequality and government dysfunction have created a two-tiered justice system in which most Americans are guilty until proven innocent, while a select few operate with no accountability whatsoever.

Salon sat down last week with Taibbi for a wide-ranging chat that touched on his new book, the lingering effects of the financial crisis, how American elites operate with impunity and why, contrary to what many may think, he’s actually making a conservative argument for reform. The interview can be found below, and has been lightly edited for length and clarity.

So, what is “The Divide”?

The book is really just about why some people go to jail and why some people don’t go to jail, and “the divide” is the term I came up with to describe this phenomenon we have where there are essentially two different criminal justice systems, one that works one way for people who are either very rich or working within the confines of a giant systemically important institution, and then one that works in another way for people who are without means. And that’s what the book is about.

A point you make in the book, though, is that the justice system is starting to treat people who aren’t poor or part of a marginalized group with a level of brutality we tend to think is only reserved for the oppressed.

I made a conscious decision to start the book with the story of Abacus Federal Savings bank, which is this little bank in Chinatown. The people who run that bank were not poor. They weren’t even what you would typically classify as members of the victim class … But why was that bank prosecuted and why was Goldman Sachs or Chase not prosecuted? What I was trying to get at was, in this new reality, [legal authorities] consider it not feasible to go after companies of a certain size, and [Abacus] is how small you have to be now to be targeted …

There was an SEC commissioner who talked about “shot selection,” like in basketball, [and] how you should go for the baskets with the greatest chance of scoring. So while it may be more satisfying to go after the bigger companies, you’re more likely to get a successful action against a smaller company.

So it’s not just about poor people, it’s also just about the way the regulatory system works. Bureaucracies organically flow toward the easier result, and the easier result is always a smaller company, an undefended person, a low-level drug dealer. They hesitate before it decides to proceed against a well-heeled, well-defended company [against which] they’re going to have to fight for years and years and years just to get the case in court … It’s not just about the poor, it’s more about how there’s a class that enjoys impunity and then there’s everybody else.

Do you think this is a new development?

Well, certainly the rich have always had it easier than the poor. I think that’s a story as old as a story can be. But what we’re seeing recently — and I tried as much as I could to trace this — is that there have been a couple recent developments that have significantly worsened the situation, both going back to the Clinton years: Clinton signs on to welfare reform, Clinton and the Democrats begin to court the financial services sector and begin to adopt deregulatory policies.

So now you have political consensus in both parties on both issues; both have the same approach to poverty, to people at the bottom, and they have the same approach to enforcement. And so what begins as deregulation of Wall Street concludes, ultimately, in potentially non-enforcement of crime; and what begins as being “tougher” on welfare cheats in the ’90s, and being tougher on the whole process of giving out benefits, devolves into something pretty close to the criminalization of poverty itself … And that’s just something that happens naturally when you have a political consensus, which is what we have now. Adding in the additional factors of the Holder memo —

Would you mind explaining the Holder memo?

Sure. Holder, as deputy attorney general in the Clinton years, outlined what was actually sort of a “get tough on crime” document. He gave prosecutors all these tools to go after big corporations. But, at the bottom [of the memo], he outlined this policy called “collateral consequences,” which was — all it really said was, if you’re a prosecutor and you’re going after a big corporation that employs a lot of people, and you’re worried about innocent victims, you can seek other remedies. Instead of criminally prosecuting, you can do a deferred prosecution agreement, a non-prosecution agreement or, especially, you can levy fines.

When he wrote that, it was nearly a decade before the too-big-to-fail era, but when he came back to office [as Obama’s attorney general], this idea, which initially had been completely ignored when he first wrote it, suddenly [becomes] the law of the land now, insofar as these systemically important institutions are concerned. The administration’s come out and overtly talked about collateral consequences and talked about [how] they can’t go against companies like HSBC and UBS because they’re worried about what the impact might be on the world economy.

What’s interesting about it is that this idea suddenly matches this thing that happened with our economy where we have the collapse of the economy in 2008, [and] instead of breaking up these bad companies, we merged them together and made them bigger and more dangerous. Now they’re even more unprosecutable than before, now this collateral consequences idea is even more applicable. And that’s the reality we live in now; it’s just this world where if you can commit an offense within the auspices of a company like that, the resolution won’t be a criminal resolution, it will be something else.

The argument is similar to why they said they couldn’t prosecute people for torture: because the CIA is systemically important, because we can’t risk pissing off the national security community, because we can’t risk disturbing the national security system.

And where does it end? We’re sitting in the offices of “The Intercept” right now. What if you say you really want to pursue the illegal surveillance program? How could you do it? It’s a $75 billion mechanism that isn’t just contained in the United States. It’s across multiple countries; it doesn’t exist in any one place; it’s everywhere. If you were to move against the smallest member of the conspiracy, you’d have to involve thousands of people. It’s impossible to even conceive of what that kind of [system-preserving] approach would be.

So, yeah, that’s exactly what the situation is. We have companies that are essentially beyond the reach of what we would traditionally think of as the law, which is a crazy concept because, even back in the ’70s, it was reinforced in every American’s mind that even the president could be dragged into a criminal case. And now, we can’t even conceive of taking Lloyd Blankfein to court for lying to Congress.