AARON MATÉ: Today we dedicate much of the hour to a conversation with award-winning journalist Matt Taibbi, who you may know from his reporting on financial crimes. Well, now Taibbi is back with an explosive new book that asks why these crimes have gone unpunished as an unequal justice system targets the most vulnerable. The gap between what the poorest make and what the wealthiest bring home has reached levels not seen since the Great Depression, and the drug war has fueled the mass incarceration of the poor and people of color.

AMY GOODMAN: Earlier this month, attorney James Kidney, who was retiring from the Securities and Exchange Commission, gave a widely reported speech at his retirement party. He said that his bosses were too, quote, “tentative and fearful” to hold Wall Street accountable for the 2008 economic meltdown. Kidney, who joined the SEC in 1986, had tried and failed to bring charges against more executives in the agency’s 2010 case against Goldman Sachs. He said the SEC has become, quote, “an agency that polices the broken windows on the street level and rarely goes to the penthouse floors. … Tough enforcement, risky enforcement, is subject to extensive negotiation and weakening,” he said.

Well, for more, we turn to our guest, Matt Taibbi, award-winning journalist, formerly with Rolling Stone magazine, now with First Look Media. His new book is called The Divide: American Injustice in the Age of the Wealth Gap.

Matt, we welcome you back to Democracy Now! It’s a remarkable, important, certainly needed book—

MATT TAIBBI: Oh, thank you.

AMY GOODMAN: —in this day and age. Talk about the thesis. What is the divide?

MATT TAIBBI: Well, this book grew out of my experience covering Wall Street. I’ve obviously been doing it since the crash in 2008. And over and over again, I would cover these very complex and often very socially destructive capers committed by white-collar criminals. And the punchline to all of the stories were basically the same: Nobody would get indicted; nobody went to jail. And after a while, I started to become interested specifically in that phenomenon. Why was there no enforcement of any of this? And around the time of the Occupy protest, I decided to write this book, and then I shifted my focus to try to learn a lot more for myself about who does go to jail in this country, because I thought you really can’t make this comparison accurately until you learn about both sides of the equation, because it’s actually much more grotesque to consider the non-enforcement of white-collar criminals when you do consider how incredibly aggressive law enforcement is with regard to everybody else.

AARON MATÉ: Now, you spent time with the—with the poor and vulnerable and people of color, who have been targeted by this system. There was one case of a man in New York, who lives in Bed-Stuy, standing outside of his home—

MATT TAIBBI: Right.

AARON MATÉ: —who was arrested. Can you take it from there?

MATT TAIBBI: Yeah, sure. I was actually in a—I was in a law office in Brooklyn, and I was actually waiting to speak to a lawyer about another case, when I met this 35-year-old African-American man, a bus driver. And I asked him what he was there for, and he told me that he had been arrested for, quote-unquote, “obstructing pedestrian traffic.” And I thought he was kidding. You know, I didn’t know what that meant. And I asked him to show me his summons, and he pulled out a little—little piece of pink paper, and there it was. It was written, you know, “obstructing pedestrian traffic,” which it turns out it meant that he was standing in front of his own house at 1:00 in the morning, and the police just didn’t like the way he looked and arrested him.

And this is part of the disorderly conduct statute here in New York, but this is one of these offenses that people get roped in for. It’s part of what a city councilman in another city called an “epidemic of false arrests,” basically these new stats-based police strategies. The whole idea is to rope in as many people as you can, see how many of them have guns or warrants, and then basically throw back the innocent ones. But the problem is they don’t throw back everybody. They end up sweeping up a lot of innocent people and charging them with really pointless crimes.

AARON MATÉ: There’s a very comic scene where then he goes to court, and he has a hard time convincing his public defender why he doesn’t want to pay a fine for standing in front of his home.

MATT TAIBBI: Yeah, and this is something that I encountered over and over and over again, is that people who were charged with these minor sort of harassing offenses, they—when the state discovers that the case against them is not very good, they start offering deals to the accused. And when people protest that “I’m not going to plead, because I didn’t do anything wrong,” they keep offering better and better and better deals. And no one can understand why they won’t plead guilty, because, in reality, most people do. They will end up taking—

AMY GOODMAN: Like all the bankers plead guilty.

MATT TAIBBI: Right, yeah, exactly. Of course, it’s completely the opposite situation on the other side of the coin. But in the case of Andrew, the guy who was arrested for obstructing pedestrian traffic, he literally could not convince his own lawyer that he was innocent. And it took a long, long time before they got the judge to ask the policeman on duty if there was actually anybody else on the street to obstruct. And it wasn’t until that moment that they dismissed the case, and it just took that long.

AMY GOODMAN: So let’s talk about the other side. And I want to go to Attorney General Eric Holder, his remarks before the Senate Judiciary Committee last May in which he suggests that some banks are just too big to jail.

ATTORNEY GENERAL ERIC HOLDER: I am concerned that the size of some of these institutions becomes so large that it does become difficult for us to—to prosecute them when we are hit with indications that if you do prosecute, if you do bring a criminal charge, it will have a negative impact on the national economy, perhaps even the world economy. And I think that is a function of the fact that some of these institutions have become too large. Again, I’m not talking about HSBC; this is just a more general comment. I think it has an inhibiting influence, impact, on our ability to bring resolutions that I think would be more appropriate.

AMY GOODMAN: That was Attorney General Eric Holder testifying before Congress. His remarks were widely criticized. This is Federal Judge Jed Rakoff speaking last November at the University of Pennsylvania Law School.

JUDGE JED RAKOFF: To a federal judge, who takes an oath to apply the law equally to rich and poor, this excuse, sometimes labeled the too-big-to-jail excuse, is, frankly, disturbing for what it says about the department’s apparent disregard for equality under the law.

AMY GOODMAN: That’s Federal Judge Jed Rakoff. Matt Taibbi, if you could respond? And then talk about the history of Eric Holder, where he came from.

MATT TAIBBI: Well, first of all, this idea that some companies are too big to jail, it makes some sense in the abstract. In a vacuum, of course it makes sense. If you have a company, a storied company that may have existed for a hundred, 150 years, that employs tens or maybe even 100,000 people, you may not want to criminally charge that company willy-nilly and wreck the company and cause lots of people to lose their jobs.

But there are two problems with that line of thinking if you use it over and over and over again. One is that there’s no reason you can’t proceed against individuals in those companies. It’s understandable to maybe not charge the company, but in the case of a company like HSBC, which admitted to laundering $850 million for a pair of Central and South American drug cartels, somebody has to go to jail in that case. If you’re going to put people in jail for having a joint in their pocket or for slinging dime bags on the corner in a city street, you cannot let people who laundered $800 million for the worst drug offenders in the world walk.

AMY GOODMAN: Wait, this can’t be a parenthetical. Explain what you’re talking about with HSBC.

MATT TAIBBI: So, HSBC, again, this is one of the world’s largest banks. It’s Europe’s largest bank. And a few years ago, they got caught, swept up for a variety of offenses, money-laundering offenses. But one of them involved admitting that they had laundered $850 million for a pair—for two drug cartels, one in Mexico and one in South America, and including the notorious Sinaloa drug cartel in Mexico that is suspected in thousands of murders.

And in that case, they paid a fine; they paid a $1.9 billion fine. And some of the executives had to defer their bonuses for a period of five years—not give them up, defer them. But there were no individual consequences for any of the executives. Nobody had to pull money out of their own pockets for permanently. And nobody did a single day in jail in that case.

And that, to me, was an incredibly striking case. I ran that very day to the courthouse here in New York, and I asked around to the public defenders, you know, “What’s the dumbest drug case you had today?” And I found somebody who had been thrown in Rikers for 47 days for having a joint in his pocket. So—

AMY GOODMAN: And that’s—is that even illegal?

MATT TAIBBI: No, in New York City, actually, it’s not illegal to carry a joint around in your pocket. It was decriminalized way back in the late '70s. But with part of the now past stop-and-frisk, what they do is they would stop you, and then they would search you and force you to empty your pockets. When you empty your pockets, now it's no longer concealed, and now it’s illegal again. So they had—in that year, they had 50,000 marijuana arrests, even though marijuana—having marijuana was technically decriminalized at the time.

So, my point was: Here’s somebody at the bottom, he’s a consumer of the illegal narcotics business, and he’s going to jail, and then you have these people who are at the very top of the illegal narcotics business, and they’re getting a complete walk. And that’s just totally unacceptable.

AARON MATÉ: But back to this doctrine that you can’t punish an entire company for the misdeeds of a few because you might hurt the economy, you might hurt shareholders, you know, some of which are pension holders and—pension funds and so forth, how do you get from hurting a—how do you equate hurting an entire company to just not jailing a couple of executives?

MATT TAIBBI: Well, that’s the whole point. They’ve conflated the two things. Originally—so, this—to answer the second part of your original question, “Where does this come from? Where does this doctrine come from?” way back in 1999, when Eric Holder was a deputy attorney general in the—in Clinton’s administration, he wrote a memo that has now come to be known as “the Holder Memo.” And in it, he outlined a number of things. Actually, it was originally considered a get-tough-on-corporate-crime memo, because it gave prosecutors a number of new tools with which they could go after corporate criminals. But at the bottom of it, there was this thing that he laid out called the “collateral consequences doctrine.” And what “collateral consequences” meant was that if you’re a prosecutor and you’re targeting one of these big corporate offenders and you’re worried that you may affect innocent victims, that shareholders or innocent executives may lose their jobs, you may consider other alternatives, other remedies besides criminal prosecutions—in other words, fines, nonprosecution agreements, deferred prosecution agreements. And again, at the time, it was a completely sensible thing to lay out. Of course it makes sense to not always destroy a company if you can avoid it. But what they’ve done is they’ve conflated that sometimes-sensible policy with a policy of not going after any individuals for any crimes. And that’s just totally unacceptable.

AARON MATÉ: Is it not the case that some of these cases are just too complex to explain to a jury?

MATT TAIBBI: Yes. And that—well, they are complex, and juries do have a difficult time with them, but they’re not impossible to explain to a jury. I mean, I attended a trial involving bid rigging in the municipal bond markets where they obtained convictions. Now, that case couldn’t have been more complicated. That was as hard as a case gets. And I actually watched some of the jurors fighting off sleep in the early days of the trial. That’s how difficult it was. And in that case, amusingly, one of the attorneys for the banks got up initially, and he tried to defend his client’s behavior by saying, you know, “When you call up a—if your washing machine breaks and you call the repairman and he tells you how much it costs, you just have to trust him what the price is because you don’t understand how to fix your washing machine, and we do.” In other words, this stuff is so complex, you just have to take our word for it that we didn’t commit a crime. And—but that excuse, I think that’s a weak excuse that prosecutors give out. It’s a cop-out for not taking on, you know, difficult cases. Rich or poor, black or white, if somebody has broken the law, you should want to go after wrongdoers no matter who they are, and the fact that it’s a difficult crime to prove should just be more of a challenge for you.

AMY GOODMAN: I want to turn to remarks by Lanny Breuer in 2012 about prosecuting large companies. At the time, he was the assistant attorney general. He spoke before the New York City Bar Association.

LANNY BREUER: I personally feel that it’s my duty to consider whether individual employees, with no responsibility for or knowledge of misconduct committed by others in the same company, are going to lose their livelihood if we indict the corporation. In large multinational companies, the jobs of tens of thousands of employees can literally be at stake. And in some cases, the health of an industry or the markets are a very real factor. Those are the kinds of considerations in white-collar cases that literally keep me up at night, and which must, must play a role in responsible enforcement.

AMY GOODMAN: That’s Lanny Breuer in 2012, who was like number two in the Justice Department.

MATT TAIBBI: He was the head of the Criminal Division, so he’s basically the top cop in America at the time.

AMY GOODMAN: He was at the Justice Department; of course, Eric Holder is the attorney general—both from the same company. Respond to what he said, and then talk about Covington & Burling.

MATT TAIBBI: Well, first of all, his—that whole thing about the innocent white-collar employees perhaps losing their livelihoods keeping him up at night, I want to know what his response is to, you know, the idea that maybe a single mother on welfare is going to lose her kids because she’s going to lose custody in an $800 welfare fraud case. You know, I saw so many of these cases that it was—that is was just overwhelming to me. Those are the kinds of things that would keep me up at night if I were the attorney general, thinking about the consequences that ordinary people feel—suffer when they are caught up in the criminal justice system.

People—for instance, again, going back to welfare fraud, your relatives can lose their Section 8 housing. So, you know, if you’re—again, if you’re on welfare and you get caught in a fraud case, that may just involve checking the wrong box or having somebody, one of your neighbors, say that you have a boyfriend living in your house, when you really don’t, your mother or your grandmother can lose their housing because of something like that. That would be the stuff that would keep me up at night. I mean, I wouldn’t be worried about millionaire and billionaire executives, you know, who are working at these banks, if I were Lanny Breuer. So that tells you a lot about the priorities of somebody like him.

AMY GOODMAN: And talk about Lanny Breuer, Eric Holder, where they come from, where they go back to.

MATT TAIBBI: So they both came from a law firm called Covington & Burling, which in the 2000s represented basically every single one of the too-big-to-fail banks. They were also involved in the setting up of the electronic mortgage registry, so they played an enormous role in the subprime mortgage crisis.

But here’s the key thing about the presence of these two people at the head of the attorney—of the Justice Department. Prosecutors, by and large—and I interviewed a lot of prosecutors for this book—they basically all have the same personality, the old-school prosecutors. They’re just—if you think of somebody like Eliot Spitzer, they’re all like bulldogs. They just want to get their—you know, get their target; by hook or crook, it doesn’t really matter. They have this ferocious aspect to their personalities. And it’s an admirable quality in a prosecutor. They’re all kind of the same, in a certain way. Cops are the same way. But in the 2000s, that kind of person started to be replaced in the regulatory system by a new kind of figure who tended to come from the corporate defense community. And their attitude was not, you know, get their target at all costs; it was more: “Let’s bring a bunch of people in a room and hammer out a solution where all the sides are going to end up walking out happy.” And that’s why we end up with settlements, like the $13 billion Chase settlement last year or the $1.9 billion HSBC settlement, instead of prosecutions.

AMY GOODMAN: Covington & Burling represented JPMorgan Chase.

MATT TAIBBI: They did, yeah, and a host of other banks that also were involved in nonprosecutions during this time. So, I mean, it’s—you have a whole bunch of people sort of at the top of the regulatory agencies, whether it’s Justice, the SEC, the CFTC, maybe the Enforcement Division of the SEC, who all came from these big banks or from law firms that represented these big banks. And it’s a very incestuous community. And just like you talked about with James Kidney, the SEC official who left, as a result of this kind of merry-go-round of people who all work for the same companies—and they’re going to go to government for a while, then they’re going to go back to the corporate defense community after they leave and make millions of dollars—they’re very, very reluctant to be aggressive against these companies, because it’s their—culturally, they’re the same people as their targets, whereas there isn’t that same simpatico with the very poor. And I think that’s a very—it’s an important distinction to make, and people don’t understand it.

AARON MATÉ: You also suggest that Holder and Breuer are perhaps overly concerned with their conviction rate—

MATT TAIBBI: Oh, yeah.

AARON MATÉ: —and that’s why they don’t go after these banks.

MATT TAIBBI: Again, that’s something I heard over and over again from people within the Justice Department, that once those two came in, the edict came down from above that we were only going to go after cases where we were absolutely sure we were going to win. Now, you can never guarantee a victory in any criminal case, and oftentimes the cases are difficult to prove or the evidence may not be 100 percent there, but the state has a moral obligation to proceed with investigations and, in many cases, criminal cases against people who are guilty. You know, the fact that it’s difficult shouldn’t be a limiting factor. And that’s why you saw—instead of cases against these big banks, you saw ridiculously large amounts of resources devoted to things like prosecuting Barry Bonds or Roger Clemens, you know, cases where there are like only a couple of pieces of evidence and it was hard to screw up. And yet, you know, they didn’t always succeed even in those cases. So, it was a terrible, terrible thing for the Justice Department during that period.

AMY GOODMAN: We’re going to break, then come back to this conversation. The award-winning journalist Matt Taibbi is with us, formerly with Rolling Stone magazine. His new book is called The Divide: American Injustice in the Age of the Wealth Gap. When the government does go after banks, what banks do they go after? We’ll talk about that in a minute.

[break]

AMY GOODMAN: This is Democracy Now!, democracynow.org, The War and Peace Report. I’m Amy Goodman, with Aaron Maté.

AARON MATÉ: Well, we are speaking with Matt Taibbi, the award-winning journalist formerly with Rolling Stone magazine, now with First Look Media. His book is The Divide: American Injustice in the Age of the Wealth Gap. Now, turning to the banks—or the bank that was prosecuted, Abacus Bank, last May it became the first bank to be indicted in Manhattan in over two decades. Manhattan District Attorney Cyrus Vance Jr. announced the indictment.

CYRUS VANCE JR.: Today we are announcing the indictment or guilty pleas of 19 individuals on charges including mortgage fraud, securities fraud and conspiracy, as well as the indictment of Abacus Federal Savings Bank, a federally chartered bank that has been catering to the Chinese immigrant community since 1984. Now, these defendants—the bank and former employees and managers from its loan department—are charged with engaging in a systematic scheme to falsify and fabricate loan applications to the Federal National Mortgage Association, commonly known as Fannie Mae, so that borrowers who would otherwise not legally qualify for Fannie Mae’s mortgages could obtain them unlawfully. This is a large-scale mortgage fraud case that we estimate to include hundreds of millions of dollars’ worth of falsified loan applications. If we have learned anything from the recent mortgage crisis, it’s that at some point these schemes unravel, and taxpayers can be left holding the bag. Financial institutions, in short, have to obey the law and follow the rules. Our financial system is predicated on this basic concept.

AARON MATÉ: That’s Manhattan DA Cyrus Vance Jr. Matt Taibbi, you were at this trial. You heard Prosecutor Vance there suggesting some link here to the financial crisis, but that wasn’t the case.

MATT TAIBBI: So, this is—I mean, it’s almost humorous. It’s not humorous for the bank involved, obviously. But here he is holding this grand press conference. They actually had a chain gang, where they chained 19 of the defendants together and hauled them into court for this—for this exercise.

AMY GOODMAN: All working for Abacus?

MATT TAIBBI: All working for Abacus. And these are working-class Chinese immigrants, basically. The highest-ranking official in this entire case made $90,000 a year. Many of them didn’t speak English. This is a small bank wedged between two noodle shops in Chinatown. And this was the target they chose to go against as a symbol of the financial crisis? In the chain gang incident, actually, three of the—three of the defendants had actually already been arraigned, but they asked them to volunteer to come down to the courthouse for the photo op that day, brought them in, chained them up to the rest of the defendants so they could be re-arraigned for the benefit of the cameras.

But the point of this whole thing is that Abacus Federal Savings Bank, which is a small, community, minority bank in Manhattan, this was the sole target of any reprisal by the federal—by the government in the wake of the financial crisis. And they’re a stone’s throw from all these gigantic skyscrapers, you know, housing all of these other major banks that committed crimes that were hundreds of times worse than Abacus was even accused of. And it was such a visually striking contrast for me that that’s where I wanted to start the book, because here you have this bank being arraigned in downtown Manhattan, and they looked northward towards Chinatown for their target as opposed to, you know, a few blocks south, where they could have found—you know, walked in any direction and found an appropriate target.

AMY GOODMAN: Contrast that with Jamie Dimon testifying before—what was it—the Senate Judiciary Committee, the head of JPMorgan Chase. And talk about what his bank was fined for and what he ultimately—what happened to him.

MATT TAIBBI: So, Jamie Dimon is the CEO of JPMorgan Chase, and they—last year that bank paid $20 billion in fines, which is an extraordinary number. Think about it. I think it beats by a factor of five the record for the largest amount of regulatory fines in a single year, which was previously held by BP for their Deepwater Horizon incident. They were accused of an extraordinary array of things, everything from being Bernie Madoff’s banker and not raising red flags early enough, to manipulating energy prices in Michigan and California, to failing to disclose to investors the extent of losses in the London Whale episode, to abuses during the subprime mortgage period by some of their subsidiaries. The list of things goes on and on and on and on. And—

AMY GOODMAN: I mean, if this were translated into common criminal law—

MATT TAIBBI: Right.

AMY GOODMAN: —this is—this is sort of replacing hundreds of years in prison for many different people.

MATT TAIBBI: Oh, yeah, absolutely. I mean, I made the point in another case—there was another case involving a company called General Reinsurance where a bunch of executives were charged with a $750 million stock fraud, that that amount of fraud that year was more than the total value of all the cars stolen in the American Northeast that same year. So you think about everybody who’s doing time for a stolen car that year, and, you know, these guys ultimately got off on a technicality.

So, again, going back to Chase, they paid $20 billion in fines. And what the government always says in response to the question of why aren’t these guys in jail, they always say, “Well, we don’t have enough evidence. These cases are hard to make.” But my question is, over and over again, they somehow seem to have enough leverage to get billions of dollars of fines out of these companies, but not enough leverage to get even a day in jail for any of their executives? It doesn’t add up. Logically, it’s a total non sequitur. There’s no way you can have a company paying that much money and not have somebody guilty of a crime. It’s just—it’s not possible.

AARON MATÉ: And Jamie Dimon, of course, gets a 74 percent raise.

MATT TAIBBI: Yeah, exactly. I mean, that’s the punchline to this whole thing, right? I mean, if you were, you know, the head of any other business—Alex Pareene of Salon.com made this point, that if he were running a restaurant and he got the biggest fine in the history of restaurants, there is no way that he would be kept in, kept on the job as the head of the company. But he was not only not fired, not only not prosecuted, but he was kept in the job, and he got a 74 percent raise. And they essentially paid for $20 billion fines by laying off 7,500 lower-level workers that year, and so that’s where the pain came from.

AMY GOODMAN: Let’s go to Richard Fuld, the final chair and chief executive officer of Lehman Brothers. In 2008, he spoke before the House of Representatives Oversight Committee and was grilled about his own exorbitant earnings as the bank went under. This is Committee Chair Henry Waxman questioning Fuld.

REP. HENRY WAXMAN: You’ve been able to pocket close to half-a-million dollars. And my question to you is, a lot of people ask: Is that fair for the CEO of a company that’s now bankrupt to have made that kind of money? It’s just unimaginable to so many people.

RICHARD FULD: I would say to you the 500 number is not accurate. I would say to you that although it’s still a large number, I think, for the years that you’re talking about here, I believe my cash compensation was close to $60 million, which you have indicated here. And I believe the amount that I took out of the company over and above that was, I believe, a little bit less than $250 million.

AMY GOODMAN: Your response to the last head of Lehman Brothers talking about his salary?

MATT TAIBBI: Well, first of all, there was a whistleblower within Lehman Brothers who wrote to the SEC before Lehman Brothers collapsed, talking about how Fuld had actually earned a significantly larger amount of money than he represented there in Congress. It’s quite possible that if the SEC had followed up on some of those complaints by that whistleblower, that they might have uncovered some of the corruption at Lehman Brothers ahead of time and maybe, possibly even headed off that disaster.

But what’s interesting—what’s symbolic about Richard Fuld is that here’s a guy who nearly blew up the planet by, you know, loading up his company with deadly leverage and making a string of irresponsible decisions to over-invest in subprime mortgages, and the collapse of the company resulted in all of us having to pay these enormous bailouts. But Fuld walked away with, by his count, $300 million, maybe $350 [million], but by the count of some others, more closer to half-a-billion dollars, and he kept the money. And that is a consistent theme of the financial crisis. Not only were these guys not prosecuted, they got to keep all of their money, all of the ill-gotten gains that they made during these periods.

AMY GOODMAN: You call that chapter “The Greatest Bank Robbery You Never Heard Of.”

MATT TAIBBI: Right, yeah. No, there was something that happened at Lehman Brothers at the end of the—you know, when the company went out of business. It was—there was essentially a merger with the British bank, Barclays, and there was an incredibly interesting episode where a series of Lehman insiders agreed to take upwards of $300 million in compensation—in future compensation from Barclays, before they did the process of valuating the company for sale to Barclays. I know that sounds complicated, but basically they took jobs at Barclays, and then they basically marked down the price of Barclays so that the Lehman creditors got less money in the end. So, if you were—if you lost money in the Lehman debacle, you can probably lay some of the blame at the feet of those executives.

AARON MATÉ: And it was so shady that didn’t most of this happen in the middle of the night?

MATT TAIBBI: Yeah, actually, they made—they struck many of the deals with these Lehman insiders before dawn on the day of the last board meeting. Literally before dawn, you had emails going back and forth between some of these Lehman Brothers executives saying, “Well, how much did you get? You know, I got $15 million,” and, you know, etc., etc.

AMY GOODMAN: You know, the way the media covers, and the prosecutors go after or don’t, these institutions, it’s all from the perspective of those who would be or should be charged. When it comes to people on the street, it’s always from the perspective of the victim.

MATT TAIBBI: Right.

AMY GOODMAN: Which, by the way, it should be.

MATT TAIBBI: Right.

AMY GOODMAN: I mean, if someone is raped or murdered, you should hear their story, their name—

MATT TAIBBI: Absolutely.

AMY GOODMAN: —and a person should be held responsible. But in this case, you never hear about the victims.

MATT TAIBBI: That’s right.

AMY GOODMAN: Instead, you are identifying with those who are charged. They say they have families; they’re really a wonderful person.

MATT TAIBBI: Right.

AMY GOODMAN: Talk about the victims of these crimes that JPMorgan Chase was fined for.

MATT TAIBBI: Well, I mean, we’re all victims of these crimes. I mean, that’s the difficult thing about this new era of financial corruption is that, you know, these crimes are executed on such a massive scale that we can all be victimized and basically not know it. If you think about something like the Libor scandal, right, where the world’s biggest banks got together and colluded to monkey around with world interest rates, well, that crime affected anybody who held a variable rate investment of any kind. So if you have a floating rate credit card or a floating mortgage, or if you’re a town that has swaps, you may be paying more, you may be paying less. It doesn’t know—you don’t know, but they’ve been affecting the amounts of your holdings. There have recently been charges that some of the banks have been monkeying around with the prices of things like metals, like aluminum and tin and zinc and copper. So if you go to buy a can of soda, you may be paying more than you would have otherwise.

In the subprime mortgage crisis, typically the victims were people who held pensions, because what would happen often was the banks would create these gigantic masses of essentially phony subprime loans. They would disguise them as AAA-rated investments. Then they would sell them to an institutional investor like a pension fund. So you’re some, you know, working stiff, a toll booth operator in Minnesota. You’ve got a state pension. And you wake up one morning, and 30 percent of your pension fund is gone. Well, you’re a victim of this stuff.

But it’s very hard to trace that back to these people. And it’s hard—and journalists don’t want to do the work of identifying who the victims are in these scandals, because it’s too complicated. And that’s why you often see these crimes described from the point of view of the perpetrator and not from the victim, because we’re all the victims. These crimes are ethereal. They’re existential. They’re on such a gigantic scope that it’s difficult for us to get a—wrap our heads around. And that’s a—so that’s a very good question to ask.

AARON MATÉ: You mentioned earlier people who are targeted for welfare fraud. In one case, you went to San Diego and profiled a woman who was targeted by this program P100—

MATT TAIBBI: Right.

AARON MATÉ: —a very invasive action in her home. Can you talk to us about that case?

MATT TAIBBI: Yeah, they have this program in San Diego where if you apply for welfare, the state gets to pre-emptively search your house to make sure that you’re not lying about, for instance, having a boyfriend. You know, so you’re a single mom. You go to the welfare office. You need financial assistance. You represent on the form that you’re not cohabiting with anybody. And just to check, they tell you to go sit tight in your house. And I’ve heard stories of people who waited, literally sitting in their house for a week, not knowing when the inspector is going to come, because if you’re not there when they come, you don’t get your welfare.

So, the person comes finally. It’s not a social worker. It’s very often a law enforcement official. They go in, and they search your house. I talked to a number of women who have recounted the experience of having their underwear drawers rifled through. You know, one woman talked about an inspector sticking his pencil end into the underwear drawer and picking out a pair of sexy panties and saying, you know, “Who do you need these for? If you don’t have a boyfriend, what’s this for?” And this is the kind of thing that people have to go through.

And I understand that, to many middle Americans, you know, welfare recipients are not—are perhaps not the most sympathetic people. But it’s very striking that, for instance, the recipients of bailouts, we don’t have the right to go in and check their books, but somebody who applies for federal assistance to feed their kids, we have the right to go through their underwear drawer. And I thought that was a striking comparison.

AMY GOODMAN: Matt, the cover of The Divide, of your book, American Injustice in the Age of the Wealth Gap, is very striking. And you have this artwork throughout your book. Explain who did this.

MATT TAIBBI: So this is Molly Crabapple. She’s a great artist. I met her during the Occupy protests. We had—we have a mutual friend, and Molly had done these amazing posters for the Occupy protests that were—that were based—some of them were based on my work, because there was a vampire squid theme to some of them.

AMY GOODMAN: Explain vampire squid.

MATT TAIBBI: Well, I had referred to Goldman Sachs as a great vampire squid wrapped around the face of humanity. So she had done these series of posters that were like, you know, “starve the vampire squid,” “stop the vampire squid.” So we got together, and she was—she ended up becoming sort of famous as like the semi-official artist of Occupy. And we decided to work together on this project. And what’s so perfect about her is that she really specializes in doing these kind of grotesque, horrifying, Boschian portraits of dysfunction, you know, like the cover. It actually looks quite beautiful from a distance, but if you look at it closely, it’s this horrifying image of people being ground up in this mindless justice machine. So it’s beautiful stuff, and Molly should get—she gets all the credit in the world, I think. They’re incredible images.

AARON MATÉ: At sentencing hearings, you have sometimes family members and friends coming to plead to the judge for leniency. And you sort of contrast this in your book. You have one scene where you have executives bringing in hundreds of people.

MATT TAIBBI: Mm-hmm.

AARON MATÉ: Can you compare what happens there to what happens to people on the bottom?

MATT TAIBBI: So this is interesting. Again, this is that same Gen Re case I talked about, the $750 million stock fraud where these guys all got off. And what was so interesting about that is—so, if you go to court, the judges almost never are from the same neighborhoods as the accused. But when you do have a case where it’s, you know, somebody from the suburbs who lives in Connecticut and the judge is also somebody who’s from the suburbs and lives in Connecticut, and he has members of the local PTA come out and say that, you know, “This guy is somebody who wouldn’t even jaywalk. You know, he’s a God-fearing person. Yes, maybe he might have committed a $750 million stock fraud, but he’s a very decent person,” they will very frequently—like, bail is never an issue for this kind of defendant, which is very, very important. You know, these—and beyond that, in that particular case, after they were convicted, all of these defendants were allowed to remain free pending appeal, which removed all of the leverage the state might have had to roll up these defendants up into higher targets, whereas that’s exactly the opposite of what happens to poor defendants, who are frequently thrown in jail. Their, you know, bail is set at a level that’s higher than they can afford. And then, while you’re in jail waiting for trial, you start to do the math, and you realize that you could stay in jail longer in bail than you would do if you were sentenced. And that’s one of the reasons why people plead out, even when they’re innocent, because the math just works in the state’s favor. They have all these tricks they can use to keep you in jail longer than you’re supposed to be.

AMY GOODMAN: Who was tougher on corporate America, President Obama or President Bush?

MATT TAIBBI: Oh, Bush, hands down. And this is an important point to make, because if you go back to the early 2000s, think about all these high-profile cases: Adelphia, Enron, Tyco, WorldCom, Arthur Andersen. All of these companies were swept up by the Bush Justice Department. And what’s interesting about this is that you can see a progression. If you go back to the savings and loan crisis in the late '80s, which was an enormous fraud problem, but it paled in comparison to the subprime mortgage crisis, we put about 800 people in jail during—in the aftermath of that crisis. You fast-forward 10 or 15 years to the accounting scandals, like Enron and Alelphia and Tyco, we went after the heads of some of those companies. It wasn't as vigorous as the S&L prosecutions, but we at least did it. At least George Bush recognized the symbolic importance of showing ordinary Americans that justice is blind, right?

Fast-forward again to the next big crisis, and how many people have we got—have we actually put in jail? Zero. And this was a crisis that was much huger in scope than the S&L crisis or the accounting crisis. I mean, it wiped out 40 percent of the world’s wealth, and nobody went to jail, so that we’re now in a place where we don’t even recognize the importance of keeping up appearances when it comes to making things look equal.

AMY GOODMAN: Can you end with the story of Patrick? And we just have a minute.

MATT TAIBBI: Sure, yeah. There was a saxophonist named Patrick Ocean Jewell who was assaulted by police here in New York City. They mistook a hand-rolled cigarette for a joint.

AMY GOODMAN: He had brought his girlfriend to the subway, liked to walk with her every morning.

MATT TAIBBI: Right.

AMY GOODMAN: He actually did not know who attacked him.

MATT TAIBBI: Right, yeah. No, the police can be anyone these days. That’s another thing that most people don’t know about. They don’t always come in uniform, and they don’t always come in those unmarked Plymouths that they used to drive. They can drive fancy cars. They can drive beaters. They can be dressed in plainclothes. They can be black, white. You don’t even know who the cops are anymore. And this guy was just sitting there at a train station smoking a hand-rolled cigarette, and all of a sudden he’s being beaten up by all these people, you know, and he only later figured out that they were cops.

AMY GOODMAN: When he called to a police officer, started crying for help.

MATT TAIBBI: Yeah, he’s crying for help, and a uniformed police officer comes and tells him to shut up. And that’s when he realizes that they were cops. But this is—this is sort of stop-and-frisk expanding its universe of targets. So, you know, now, even if you’re white and middle-class, you know, now you, too, can be part of this whole process. And that’s—

AMY GOODMAN: And your point in bringing—putting this in The Divide?

MATT TAIBBI: Is that—you know, is that this is now beginning to affect everybody. I think one of the problems that the increasing wealth gap is bringing to us is that there’s a smaller and smaller group of untouchables, and then there’s a sort of widening group of everybody else, and we all have the same lack of respect from the law enforcement.

AMY GOODMAN: Well, Matt Taibbi, I want to thank you for being with us, award-winning journalist. His book is called The Divide: American Injustice in the Age of the Wealth Gap.

This is Democracy Now!, When we come back, it’s Tax Day. What is one young medical student doing? Why isn’t she paying her federal taxes? Stay with us.