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Matt Taibbi on the Explosive Investigation Revealing the SEC's Cover-Up of Wall Street's Crimes

In an interview with Amy Goodman, Matt Taibbi explains how the SEC has let the Wall Street bankers who created the global economic crisis get away with it all.

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AMY GOODMAN: Let me ask you about our headline today about Obama administration reportedly putting increasing pressure on New York Attorney General Eric Schneiderman to agree to a broad state settlement with banks over questionable foreclosure tactics. The federal settlement has been widely criticized because it would insulate the nation’s largest banks, including Bank of America, Citigroup, JPMorgan Chase, Wells Fargo, from all criminal investigations in exchange for civil fines. Schneiderman and others have opposed the settlement because they say it would restrict their ability to investigate and prosecute wrongdoing in a variety of areas, including the bundling of loans in mortgage securities. Matt Taibbi?

MATT TAIBBI: Yeah, no. This whole issue of securitization was central to the cause of the financial crisis. All of the banks—not just a few of them, all of them—were engaged in this wide-scale fraud scheme to take worthless and/or extremely risky subprime mortgages and sell them as AAA-rated investments to unsuspecting investors all over the world, including, you know, pension funds here in the United States and foreigners in Scandinavia, China, Saudi Arabia. Basically, this was a fraud scheme where you’re selling garbage as gold. And they were all engaged in this fraud scheme. They all knew that they were selling extremely risky stuff as AAA-rated investments.

And the Schneiderman investigation is targeting this whole—the root of this process, the securitization process, where they took the subprime mortgages and chopped them up and then waved their magic pixie dust on it to turn it into AAA-rated investments. The national deal is seeking to cover this up and try to insulate all the banks from liability, especially civil liability, for what they did. If they do that, then they’re going to get away with this, and we’re not really going to fix the problem. And I think Schneiderman is really the only law enforcement official out there right now who is seriously trying to uncover this mess.

AMY GOODMAN: Let me get to two other headlines. One is Lloyd Blankfein, head of Goldman Sachs, now retaining a top lawyer known for defending Enron defendants. His name, Reid Weingarten.

MATT TAIBBI: Yeah, no. Goldman’s now stock price has now plummeted to $104, which is unbelievable. It was, you know, in the $160s just earlier this year. And I think this news that Blankfein has retained Weingarten is a serious indication that they’re expecting serious prosecution.

AMY GOODMAN: And Deven Sharma stepping down as head of Standard & Poor’s?

MATT TAIBBI: Well, I mean, I think—you know, I don’t know what to make of that. I do know that Standard & Poor’s and Moody’s and all these ratings agencies are going to become—going to come under increased scrutiny for their role in creating the financial crisis, after they—you know, they downgrade the United States. I think it’s time to start taking a look at them again.

AMY GOODMAN: Matt Taibbi of Rolling Stone, thanks so much for being with us and for your reporting.

MATT TAIBBI: Thank you.

Amy Goodman is the host of the nationally syndicated radio news program, Democracy Now! .

Matt Taibbi is a writer for Rolling Stone .

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