the divide. followed by question time with david cameron. later, a look at the recent afghan presidential election with the brookings institution's michael o'hanlon. >> this week on q&a, author and former rolling stone columnist matt taibbi discusses his new book, "the divide, american justice in the wealth gap".

>> i just want to read a couple post" did an article about you in 2005 and lines. tell us what your approach is. ohio.sswoman from who called martha a courd.

a wrinkly d to her >> >> one of the things that happens when you try to cover inside politics, a lot of these pics are basically inaccessible to broad audiences. if you want to talk about congressional procedure. inaccessible to

>> is this person that's that sort of character and there is a good guy over here and it allows them to follow the story . there is a term paper which will >> is this person that's that sort of character and there is a good guy over here and it allows them to follow the story . there is a term paper which will put them to sleep. >> the other side of the political system gets the same treatment, you say on harry reid, the senate democratic leader from nevada, quote a prolife mormon with a campaign chest full of casin know money. > another thing i know about this process is if the reader knows what your

the finances are really responding to, especially now when they see the news landscaping fractured more and more overtly in the republican camps. >> i know you're not with rolling stone anymore. how long did you write for them. to howg does you asked long you were there? >> i was there for 10 years. i loved working there. it was an iconic organization. i couldlly had the job write about anything i wanted. it was a fantastic job. it allows me.

they were going in and out of different places. i believe she is in the 100. they are allowed to principally search her house. fors say you are flying welfare and you are a single mom and he do not have any other source of income. they want to make sure you're not cohabiting. law allowed the state to come in and check around and see if there was

evidence of a man in the house. they would go through your underwear door, look for your to rush rack. korea was one of the will who had to go through one of the searches. did you talk to it? >> this is through her lawyer. there were not that many. it does not go back that far. she was one of the very first. >> what about her was interesting to you beyond what you party told us? mainly that i had access to her. discoveredthings i was things like welfare, housing. they had been arrested or charged with fraud or were on

welfare. their highly relet and to talk about their experience. it is very shaming. for me to trying to find people who have been through this program. i eventually found a couple of people who have been on the record about it. there was a lawsuit about this program. i got to talk about some of the plaintiffs. find peopleult to who will talk about their experiences. "thee book is named device." when did you start on it? >> ever since the 2000 eight crash, i have been primarily covering corruption on wall street. this is considered an accidental detour. left/right politics, that sort of thing. rollinge crash in 2008 stone decided to assign me a set the isstory what caused

what happened at aig. we got such a tremendous response to that story. i ended up essentially doing that and only that for the next five years or so. thise course of covering material, there was a theme that kept resurfacing. there are these awful crimes that would be committed. none of the individuals responsible with effort the prosecuted. the worst-case scenario was always the same. caught, theyy got would either simply promise never to do it again or they would have to pay.

i wanted to talk about justice inequally. there is one class of people that is non-jailable and another

class that is jailable. >> i want to show you a video that goes back to 2008 and it's richard fold who you devote a whole chapter to and then we can ask you about it. >> you've been able to pocket close to half a million dollars. is that fair although it's still a large number, i think for the years that you are 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. >> how does he fit into your book? >> i have a whole chearpt about all the sha unanimous gans that went on. but that particular episode was interesting for a number of reasons. first of all, there had been a whistle blower name oliver buddha who had gone to the s.e.c. about eight or nine months before that congressional hearing and told the s.e.c. that there were discrepancies in the way they were reporting his income and that his actual income was much higher than he was reporting to congressman waxman in that hearing. he said half a million and what he really meant was half a billion. and so the s.e.c. was aware that there was some abuse in terms of how leeman executives were counting their stock options, they are underreporting their

income but they ignored that warning from a highly placed whistle blower and ignored other warnings about the company. and right up until the time this massive bomb of leverage exploded and nearly destroyed the world economy. the other interesting thing about this is here is a guy who was a c.e.o. of a company that almost destroyed the entire world. the collapse of leeman pros was an event that you just can't understate the significant of it. it triggered a series of losses that wiped out 40% of the world's wealth. that's how much money disappeared in the 2008 crash and the triggering event was lehman. here is the c.e.o. of that company who engaged in irresponsible practices for years and years and years. it's definitely happened on his watch. and he's unapoll jet i can about

the fact he's taken hundreds of millions of dollars out of this company that he gets to keep even as the taxpayer now has to go in and spend as much as $7 trillion filling in the hole that was caused by the irresponsibility of executives like that. and that's what is really striking to me about the attitude of a lot of the people who worked on wall street. this total lack of shame or apology or any sense they had to bear any responsibility for any of it at all. and also the idea that it's totally natural that the government should come in and bail them out. this is what has to be done and they feel this way even as they feel it's totally outrageous for somebody's whose house is in foreclosure should they get any aid from the government in keeping their house because that would be rewarding somebody for

being irresponsible. they don't see the discrepancy between the two. >> why do you think they don't? >> because they live in a bubble. there are so many reasons this is the case. one is the financial press caters exclusively to people who work in the financial service industry. financial reporting if you are somebody who doesn't work on wall street, it's almost indesive rabble. if you are average joe who works in middle america and has some job unrelated to finances. if you pick up the wall street journal and try to read a story about derivatives clearing or high frequency trading, it might as well be in greek to you. they are -- the press that covers this group of people is very worshipful. it tends to agrandize anybody who is successful in making

himself a lot of money. you see this like with the treatment of jamie diamond who is line iced on wall street by financial reporters despite the fact his company paid out the single biggest settlement in the history of regulatory settlements because jamie diamond makes a lot of money for his company. >> $13 million in one lump sum to the united states government. >> and $20 billion overall for the year. >> what is the reason they are getting this kind of money out of a company like that? >> because they committed aon thishing misdeeds, engaging in subprime fraud to lying about the london whale episode where they had this suck hole of losses that was expanding within the company and they didn't

disclose this in time to their investors and shareholders. there were so many things that went on at chase and they were charged collectively with all of this stuff. they were burning off banker. they somehow missed the fact this gigantic hedge fund wasn't making any trades and they could have sounded the alarm years beforehand. >> this is jamie diamond testifying in 2012 with barney frank in the chair. >> you did say finally that there would be some callbacks for compensation. you've also taken some responsibility here. will the callbacks -- is your compensation on the table for callbacks? >> this will be reviewed by the board? >> just answer my question. >> my compensation is 100% up to my board. >> is it under -- you said there are going to be callbacks for people responsibility?

is your compensation in the pot being considered for that? >> they will seize what they see is appropriate. >> jamie diamond got a raise at the end of this year, again after having spureded a ship that stewarded a ship that had the big els settlement of settlements. >> how tough was he on somebody like j.p. morgan? >> the london whale episode, that may have opened the door for future regulatory actions. you can't blame it all at the feet of congress. i think congress on the whole has done a better job than the regulators have of examining a lot of these issues. i was at a couple of those hearings and i was struck by the fact that jamie diamond was bored during these proceedings.

there were numerous occasions where he was sitting back almost rolling his eyes while senators and congressmen were asking him these questions. because there isn't this sense of urgency that any of this really matters to these guys because they don't have to feel individually the pain for anything that they do wrong. and diamond is just a classic example. here is a company that was made sort of a symbol of corruption in the financial services sector. the department of justice and the obama administration superficially decided they were going to make an example out of chase and that led to this massive settlement, the $20 billion in fines. but how did chase pay for that? how did they handle that? first of all it only put a dent in half of their profits for the year. they still ended up in the black. but they laid off 7500 lower level employees and overall compensation for the upper level

employees still increased at the end of the year. and the people primarily responsible like jamie diamond not only didn't suffer or lose their jobs, they got raises. you have to contrast this with what happens in other countries. like in brain which wh we had the libor scandal which was this massive price fixing scandal involving the biggest banks in the world where they were manipulating interest rates, and they caught bark liss being involved with this. essentially the bank of england basically told the c.e.o. of barkley's that he had to go. his name is also diamond, bob diamond. and he was out. in the united states we can't just tell a guy he has to leave but jamie decimed still sitting there and sitting there with a raise.

this is a tremendous difference in approach between the structure there and here. >> mary joe white was here recently. here is a clip of what she had to say and she talks about this very thing about whether or not they can bring criminal cases. let's listen. >> the s.e.c. did you want have the criminal powers and i certainly understand the call for accountability in the financial crisis. i mean lots of people obviously tremendously damaged and harmed. but one thing you have to step back as a law enforcement person, criminal or civil, what is the evidence and can you make a case and can you make a criminal case. and so i think it's a matter of the s.e.c. in particular, i think has a very strong record. we're on

and that's what she explained. what did you think of her answer? >> this is the answer that i get all the time. it's just really too hard. these cases are very difficult to prove. it's hard from the outside to say that there is enough toveed put somebody in jail. here is my response to that. let's take a case like sbc which bot got a $1.9 billion settlement a year ago. and in that part of the deferred prosecution agreement for hsbc they admitted they had laundered $850 million for a pair of drug cartels. we are talking about not only did they commit minor financial infractions, we're talk k about

an organization that was operating at the top of the illegal narcotics pyramid. this is a major criminal enterprise and they admitted it. and if they didn't find the evidence to put those people in jail, that's on them. that's a failure of the regulatory system. if you have somebody you know is guilty that has admitted they were guilty who are in league with truly dangerous and violent people in helping them out with the worst kind of behavior a bank can be involved with and nobody does a single day in jail, that's outrageous. but it's even more outrageous when you look at it in comparison with who does go to jail in america and that's the people at the very bottom of the illegal pyramid. the consumers. people caught selling dime bags on the corner and they go to

jail for real time. five years, ten years. at the same time we are letting hsbc off with a total walk, nobody pays any individual penalty in that case. there was a racetrack owner in texas who got busted by the u.s. attorney's office for laundering money for another mexican drug cartel. and that guy got a ton of years. he got like 15 years for his sentence. these are enormous discrep sis between 20 years and nothing, 15 years and nothing. here is the other thing i would say about that: over and over again with these settlements, we have situations where companies approximate pay massive fines, in the case of chase $13 billion, goldman sachs pace $550 million for their role in the scandal a couple of years ago. we have instances of companies that have liability in the

hundreds of millions or billions and yet somehow there isn't enough evidence to prosecute criminally, to move ahead in a criminal case. that just -- maybe in one instance that might be true but it defice logic that you could have billions in liability and no criminal liability and not enough evidence of criminal linalt. i just don't believe it. >> a couple of weeks ago toyota was find over a billion dollars and seems like there have been a lot of fines in the billions for corporations. is it unusual? >> not just wall street, but this is another thing i talked about in the book. there are pharmaceutical companies. just last year there were three enormous settlements with pharmaceutical companies for things like mismarketing drugs they knew to be dangerous for con sums by addless nts.

and this is all part and parcel of this new strategy that is being employed by the regulatory structure and the justice department. and it's an outgrowth of something that eric holder came up with called collateral consequences. there are lots of twists and turns to it. but what it comes down to is the government looks at these big companies that commit misdeeds and they say if we charge this company criminally, it might result in lots of job losses, in the current financial climate if we charge a bank, it might also result in a chain reaction of losses, a new financial crisis. so what we don't want to do is willie nilly go in and charge somebody criminally where there might be drastic consequence of that action. this has also more fed into

we're not going to charge the companies but we're not charging individuals either from these companies. and decided instead on alternate forms of recourse and this tends to be very large fines. this is the way they've decided to go. there has been a huge spike in collection of fines since the mid 2,000's and this really started after author anderson did the accounting company, the government filed a single felony count against them for the role in the enron scandal. company went under. 27,000 jobs were lost and after that it sort of became a political given that charging companies of this size and of that importance with something you should only do in very very extreme circumstances and you should always seek some other form of recourse if you can. >> what mark would you give "the

new york times" or "washington journal" for their coverage of this same story? >> "the new york times" has done great stuff. they've been on top of this story from the beginning. i think there is a growing awareness in the main stream media that this is a serious problem. and it's something i talk about with other reporters from other organizations. you are starting to see more coverage of this. last year front line did a documentary on this and that resulted in senators calling for more action. but when jamie diamond got the raise, that broke the camel's back for a lot of reporters. they can see the rational for not yanking their bank charters, like hsbc they left the business

in company when they clearly had the power to wipe them out. you can see the rational behind that. you don't want to destroy but somebody has to pay. ? where did you learn how to do what you do? where did you learn how to figure out what is going on? and how many lawyers did you have to have to vet this book? >> first of all, lawyers were a lot of my sources for this book. a lot of the stories that i write about in the divide were legal stories. they are arcane financial tails of a company that was for instance and you tack by a series of short sellers and they nearly go out of business and they try for years and years to get the regulatory system interested in protecting them and they can't danny:. so lawyers for companies like that will reach out to me and

they will walk me through the whole process and i have to go through the whole process of finding out what is true and what isn't and reading all the evidence. but lawyers, it's a difficult thing. and this is another one of the problems with this story is that it's very difficult for sort of non-financial journalists to get up to speed on a lot of these issues quickly. you have to make a commitment of significant time, for instance to understand the libor scandal. that is something you aren't going to get in a day. it's going to take a while. you don't have that in modern news. you only have a few hours and that's one of the problems. >> i want to show video of your father. those who watch television may know who he is. i want you to talk about what influbse he may have on you. >> here is mike.

? he's covering the michael jackson trial. how much do you talk? >> i was there with him. i covered the michael jackson trial too for rolling stone back then. my father was an enormous influence on me. he's very old school. i talk about this a lot. i grew up around journalists my entire life. when i was a boy all of the people i knew were journalists or cameramen or photographers. at the journalism, the people who went into journalism was a very different group of people. way back when even before my father's time journalism was a trade mar than a profession.

you went despite when you were 16 or 17 years old almost like carp trifment you went in as a caller: boy or news boy and stayed in and you learned it -- and they had a chip on their shoulders. they were sardonic. they really lished this role of being this oppositional force that represented the people and represented the rest of society and kind of when they got a chance to stick it to the men, they never passed that chance. and then some were along the line that changed. journalism became kind of a superstar profession. maybe it was after wood ward and burn steen. i don't know what it was. but this new class of people started to come into the profession and it was upper league, upper class kids who

wanted to -- and what they were attracted to wasn't so much that old role that i saw growing up around my dad and his friends, but the role of being close, having some proximity to famous, powerful and rich people. they saw themselves, this new group of journalists see themselves as being a member of the ruling class in a weird kind of way. they are not separate and distinct from it and that's a major change. i learned the other way of looking at it from my father. >> this is from your wikipedia site. in march of 2001 as the editor of the magazine --

>> my dad would never do that. i was definitely younger then and doing a lot of drugs at the time and that was russia. >> you were in russia for what sfln >> i flived russia for ten years. i went to college there for a year and a half. after i graduated i basically just stayed there. i had my own newspaper in moscow for six years called the exile. i loved being in russia. it was a crazy time. it was a wild west atmosphere. believe me, that kind of thing wouldn't have made sense anywhere except for that country in that time period. >> what was michael's reaction? >> it wasn't positive, let's put it that way. i'm sure there were things about this that i wouldn't do if i had it to do over again.

but certainly that's not something my dad would have approved of. >> you mentioned the drugs thing. this generation, your generation seem to have been in the drugs more than previous generations, at least that's what we think. why? >> i don't know that's true actually. it seems to me having been on the campaign trail for two or three campaigns now, i never saw drugs on the campaign trail. i think people if you read hunter thompson, if you read back on the campaign trail of 1972 the entire press corp was whacked on speed entire time. i don't do drugs anymore. i don't think that is part of journalism culture anymore. but certainly in college it's probably more widespread than it used to be and it's different drugs too. >> where did you meet your wife speaking of not doing it anymore

and you are married and have a child. >> i do have a child. my wife is a doctor in manhattan. we met at a party ages ago and we just had our first child in december. his name is max. he's a beautiful little boifment i'm getting used to that whole thing too. >> how much has getting older influenced you and are you worried you are going to lose the edge? >> i definitely try to listen to your readers. i think that's an important thing to do. a lot of people don't read their hate mail because the internet people feel very free to say all kinds of things on the internet. and they will send you the worst kinds of abuse and a lot of people don't read their critics. i do. if somebody fake it is time to write me a -- takes the time to

write me a letter, i read it. a lot of times people are right about things. i've toned down profanity in my writing. i've tried to cut out gratuitous meanness. there were things i thought were funny that turned out to not be so funny. >> for instance, would you write the 52 funniest things about the upcoming dead pope again? >> probably no. probably wouldn't do that as a 44-year-old father, i probably wouldn't. but i wouldn't have terribly kind things to say about the pope either. when you get older -- outrage is an important things to have in this business. fur going to cover the news, the moment you start feeling like it doesn't matter and this is just the way the world is and we have to accept it you have to get out of it because you are no longer

of any use to anybody at that point. i've tried torks even though i might have changed some superficial things, i've tried to stay in touch with what is outrageous about this and what makes me angry and what should people be angry about and i don't want that to change. >> there have been a couple of deaths on the fringes of journalism. here is one a man you used to work with michael hastings who you used to work with and decide in a firey crash. >> matt is incredible. one of the main reasons i wanted to write for rolling stone was matt was there and i felt matt was doing incredible work. the great thing about matt and rolling stone is it's reporting. it's not a mystery. all these other magazines we need to do more opinion. we need to do more of this. rolling stone is invested in reporting and it pays off.

matt's criticism and humor is based in his reporting. the reason i can write a book like this is because the reporting is solid. >> he was responsible for stanley mccrystal leaving the military. what happened to him? >> i don't want to speak out of school. i didn't know michael all that well and i certainly wasn't in touch with him in the months before his passing so i can't speak to exactly what happened. i know there is a lot of speculation out there. i know there were a lot of people who were concerned that maybe unnatural happened with his death. but all i can say about that is that that was something that we looked atlanta rolling stone at the time -- looked at at rolling stone at the time and we didn't see reason to follow up on it.

it might be something somebody closer to michael should talk about it in the future. it's not our place to talk about it. >> he crashed into a tree at 4:00 mountain morning on the city streets. >> he did phrase you, are you aware of that? >> that makes me feel great. michael was -- he was such a natural reporter. i think maybe the difference between the two of us is i'm kind of a failed novelist. i never wanted to be a journalist growing up. i wanted to write funny novels and turned out my fiction is terrible and this is what i ended up doing for a living. mike sl a born reporter. if you read his books, there is a certain kind of person who has this mania for uncovering facts of all types. he was very per miscues in his search of facts and fact oids and his books are filled with

details you can only get by asking a million questions of people. it's kind of a rare talent. it doesn't sound as it should be but it is. he was a young man but he was very gifted in that respected and i think he had a great future ahead of him. it's a real shame. >> after the death of andrew bright bart in 20 12rks you wrote death of a douche, here is video. i want to ask you about this thing too. >> it's over. there is no such thing as a moderate democrat. so what do we get now in barack obama? i have videos of this election. this election we're going to vet him from his college days to show you why racial division and

class warfare are are are central to what hope and change were sold in 2008. >> sitting in a bar one night in los angeles, chatting, got up and walked outside and dropped dead of a heart attack. but he's on the right where michael hastings was on the left. what is going on here? are they living too fast a life? >> i think those things are unrelated accidents. it did you want sound to me like they were -- there was any common factor there. i will say that i don't see a real correlation between what andrew bright bart did for a living and what michael hastings did for a living. obviously the reporting on the progressive or the left side certainly has things about it that are worthy of criticism, that are sometimes ponderous,

sometimes humorless and sometimes overly focused on the misdeeds of the right. but the key difference i see between somebody like michael hastings and somebody like andrew bright bart. you would never see michael putting something out there he didn't know to be true. and i don't think that is true on the other side. there is an emphasis on message over ack si with guys like him that i think is regrettable. >> what led to you writing -- calling him the death of a douche, what was the reason? >> among other things he had intercepted a bunch of my private e mails and turned them over to the f.b.i. shortly before that. this was during the occupy protest and he was i guess trying to start up some kind of criminal investigation into the activities of myself and a bunch of my friends who we were just chatting about what the possible

objectives of the movement were. we didn't have any connection to the movement. we were just a bunch of journalists talking about occupy. then i found out bright bart and some of his cohorts had done this. and i was shocked and again, that was another i would say something that maybe i wouldn't do if it were this time around but i don't feel bad about andrew bright bart. >> let's go back to your book. in chapter four the greatest bank robbery you've never heard of. >> we talked about richard fold tnd lehman brothers. what's the deal. >> lehman brothers gets absorbed into barclays bank and the es seasons of this story a bunch of executives of lehman brothers who were in charge of evaluating

the company for it's acquisition by what turned out to be barclays, they surptitiously took job offers during that process from barclays and the evidence suggests that they seriously undervalued the company so that barclays could acquire lehman brothers for perhaps as much as $11 billion less than it was worth. so i talked to one lawyer involved in this whole situation. and if there would have been a bank robbery where $11 billion was taken, that would have been the biggest bank robbery in history and this was essentially a bank that had $11 billion taken out of it. >> bob diamond you mentioned early secured the revolt by agreeing to pay a small crew of

key insiders bonuses of millions of dollars a piece to do a secret job. what were -- what were your source and how did you find this story? >> this was a lawsuit. well, it wasn't exactly a lawsuit. essentially there was an action where some of the interested parties were trying to overturn the bankruptcy, the original bankruptcy settlement for lehman brothers. they believed that the evaluation of lehman brothers had been off when it had been acquired by barclays. and what came out in the course of all this testimony was that again the people who were still employed by lehman brothers technically at the time that they were evaluating this company for future acquisition by barclays, they had already accepted luck rative offers of future employment by barclays at

the. that's what i was talking about with bob diamond. he bought a dozen executives and they helped make the acquisition a lot cheaper for barclays. >> you say later on that page collectively just the nine men listed above would be offered $302.9 million that week. you gave the impression it was done in a 24 to 48 hour period. >> yeah. >> why would barclays want to buy lehman when it was going down? >> because the company was still worth -- it was a major american investment bank that had an enormously valuable operation here in america. the question is it was valuable if you got to buy it without all of its, without it's very toxic liabilities. if you got to buy it for a certain price. if you got to keep all of its cash and not talk on certain

obligations. then you have this functioning company with all sorts of infrastructure. it was a very valuable and profitable acquisition for barclays. in fact, they would subsequently report a significant profit on that transaction. but that wouldn't have been the case if they had paid $11 billion more for it. what came out in the course of these court proceedings is yes, this was all done in a period of days. in fact, some of these deals were some of these executives from lehman, they were actually striking these employment deals in the predawn hours of a tuesday before what would turn out to be lehman brothers last board meeting where they would approve this deal with barclays. so there were guys literally e-mailing and on the phone and

accepting job offers at 5:00 and 6:00 in the morning before this last board meeting and they never disclosed to anybody they had done this. >> did anybody lose their jobs in the process? did anybody go to jail? >> no, of course not. there was never even a criminal investigation. >> how could that be? >> there were a variety of reasons. no regulator took any particular interest in it. the only legal avenue for pursuing this was to try to get the judge who signed off on the original bankruptcy to overturn his own decision. it was the biggest bankruptcy in american history and for judge peck in that case to go back and say that he had been hoodwinked by a group of bankers and that he had to reopen this pandora's box and redistribute all these

assets would have been a huge undertaking. it just didn't happen that way. this is just an example of one of the thanges i talk about in the book where it seems wrong, it seems like somebody should go to jail for it. this is where mary joe might be right. there is a law against this? to an ordinary person on the street when you lay out the circumstances it sounds like all sorts of things like theft. but there may not be a specific statute against what happened in that case. >> who is judge peck? >> he was the judge who signed off on the original lee unanimous bankruptcy and was in charge of ruling when they reopened the case? >> when they reopened the case, what happened? >> he issued an opinion in the end that essentially said one talks about the fog of war and in this case we can talk about

the fog of lehman. what he was really saying when this disrupt si went down with lehman brothers in september of 2008, the world was melting down. we had to make decision on the fly that were going to have consequences all around the world and if we didn't get everything right, that's the fog of war. let sleeping dogs lie and that was his decision. >> you wrote this in that chapter, if you follow enough of these wall street cases you start to see this phenomenon all over the place. -- >> have you to basically learn a foreign language to understand these cases. have you to learn all these

financial terms and so the only people who are qualified to litigate any of these issues are are people who are fluent in the language. so you go into court and again, if the metaphor is it's all french then people on both sides are wearing berays and dressed like mimes. what happens is over time the natural outrage you might feel towards some of the things that go on on wall street is dull bid the process of having to learn how it all works, having to learn the culture which you must do if you are going to operate in that world. you start to see things from the point of view of these banks and their c.e.o.'s. and you stop seeing things from the point of view of the ordinary person. that's what i was trying to bring out in that passage. >> was the judge hoodwinked? >> i think so.

clearly there was an episode in that case where the lawyers for barclays said the deal is done but we're going to clarify a few things in a letter later on. in the letter they later filed to the judge, they significantly changed the program terse of the entire deal, they infered the judge of this by filing it to his courthouse with thousands of other documents. sort of like in raiders of the lost ark where they dump ark in a warehouse full of stuff. he wasn't going to find this letter of clarification and wasn't aware of it until years later. if he had known at the time what was going on and if he had known they devalued the company over the weekend, he might have had something to say about it. by the time it came to his attention, it was too late. >> you write about a guy gary? >> yeah. >> we covered a hearing in 2006.

we are going to show you him. teth he was a whistle blower and seated at the desk with him or at the table are people that were his bosses. but let's show him and then tell us how he fit into your book. >> that day they authorized me to meet the next day with the f.b.i. and the u.s. attorney and present the same facts to initiate a criminal investigation. now that is a serious matter. that's why i was so shocked when nine days later they would not permit the issue shunes of an administrative subpoena for mr. mag's testimony. of course something had changed during those nine days. on june 23 the waurnl announced that mr. mack would be a candidate as the c.e.o. for morgan stanley.

on june 22 or june 23 mr. hanson explained to me i could not issue that subpoena for mr. mack for one reason and he gave me one reason and that was his powerful political contacts. >> he answered it there and we're not showing that but what's the point of putting him in your book? >> that particular case i think was a classic example of what i'm trying to talk about. gary was referring to -- he had an investigation where he was pursuing an insider trading case against one of the most powerful figures on wall street, john mack. who was the once and future c.e.o. of morgan stanley. at the time he was in between. he would be in the future and had been in the past. he was still very powerful. gary had significant evidence that at least warranted an interview with mr. mack

suggesting that he might have been the source of a tip that led to an insider trade involving a hedge fund. he wanted -- all he wanted was permission to interview mack and he was denied permission by his spoirs. when he pressed the matter he was ultimately dismissed. now he won a wrongful termination suit for $755,000 later. but the key part of the story was that here it was guy sort of investigator trying to pursue what seemed like a pretty open and shut insider trading case against the high level wall street figure and he couldn't get the case made. >> where is he today? >> he's in private practice and represents other whistle blowers in san diego. the flip side of that story is the s.e.c. did pursue an insider trading case in that particular

-- for that particular trade but it involved two very minor players. it was an executive from one of the companies involved and his cung if you instructor and they made a trade that was really small. it was like $150,000. >> you write by 1996 bill clinton's biggest private campaign contributor would be goldman sachs. from your studies and i know you talk about republicans as much as you do democrats. how deep is this money pay to play? >> i think it's a significant factor in the way congress looks and also that the executive branch looks at pursuing criminal investigations against these companies. the financial services sector has been a primary cash cow for both the republicans and the democrats.

traditionally more so for the democrats especially since the early clinton years when bill clinton brought in people like bob ruben to help his tration. ruben of course was the former c.e.o. of goldman sachs. when he was brought in. and i think it's at least in the background of a lot of the decisions that they've made to either non-prosecute companies, to seek fines instead of criminal prosecutions, dodd-frank was the major act that was designed to reform wall street. it was significantly watered down at the start. instead of going through with sweeping reforms like f.d.r. did after the depression where they could force all derivatives to be traded on open exchanges the way stocks are. they didn't do that. they allowed for this piece mill approach that was complicated.

and i think that was influenced by the money. these people don't want to lose access to these contributions. >> you have a new job and what is it? >> i work for first look media which is the company that's founded by the ebay billionaire. you might have heard that he's already hired folks who have created a site intercept focused on national security issues. i'm going to have another mike crow site that is going to be focused on more domestic issues, finances, politics and sort of humorous as well. >> you went to bard and graduated what year? >> 1991. >> you live where? >> in jersey city, new jersey. >> and the cover of this book, who was the artist?

she has some unique work inside the book. >> molly crab apple. she's a friend of mine. she's just an amazing artist. very up and coming. she specializes in this paintings with figures that are bright and beautiful. it was a real coo for me when she said she would illustrate book. >> our guest has been matt taibbi. the name of the book is "divide american justice in the age of the wealth gap." >> thank you for joining us. >> thank you for having me.

and what is ahead for the health care law. and "washington journal" correspondent nick looks at the efforts in the senate to revive the mortgage forgiveness debt relief a