minister david cameron taking westerns from the british house of commons. after that, attorney general eric holder testifying before a senate subcommittee on the 2015 budget request. >> this week on q&a, author and former rolling stone columnist matt taibbi discusses his new book, "the divide: american injustice in the age of the wealth gap." >> matt taibbi, the "washington post" did an article about you in 2005, and they called you a "gonzo" journalist. is that the way you describe yourself and if so, what does it mean? >> i was approached by a

publishing company and asked to edit an anthology of gonzo journalism, and i took the project because i wanted to talk -- it gonzo journalism will only seems to apply to that one writer, hunter thompson. >> i want to read a couple lines, and tell us what your approaches, why you go this way. jean smit, from cincinnati ohio,

you refer to her as a wrinkly, which like woman with a penchant for dressing like a --, what are you doing there? i guess one of the things that happens when you try to , orr the inside of politics wall street, a lot of these basically inaccessible to broad audiences or really really difficult to sell to people if you want to talk about commercial and procedure. that one article is about the rules committee, and one of the things you have to do, i think, in order to get people interested in these topics is to turn it into a human drama. characters ande you have to use fiction technique to characterize people

so that people know that one person is a certain kind of her, and there is a good guy over here. it allows them to follow the story and consume more of the story. that's better than a term paper, which will put them to sleep. you say, on harry reid, the "nator leader from nevada, aid our campaign manager with a chest of casino money." another thing i think about this problem, is the reader knows exactly what your politics are, and he or she can predict how you are going to describe a politician ahead of time, then you have not done your job. you should be a little bit of skier to the reader, and you definitely should not a partisan.

oft eliminates the ability people to be interested in what you say. predictable. you have to use exactly the same techniques you would use for democrats that you would use for republicans. think that is an aesthetic that modern audiences really respond to. especially now that they see news being fractured more and more into pro-democrat to and pro-republican caps. >> how long did you write for the rolling stone? years.s there for 10 i loved working there. it is obviously an iconic organization. i got to travel around the country, and write about basically anything i wanted and it was a fantastic job.

it allowed me to, because i got to travel so much in see so much of america, and allowed me to do projects like this. is, -- >> ior believe she is in one of the chapters, she is one of the , where ifm california you apply for welfare, you are a are allowed to preemptively search your house. fromdea is to prevent you committing welfare fraud. what it really is, is that if you are applying for welfare and you are a single mom, they want to make sure you are not collaborating with another worker in the house. this law allows the state to

come in and check around and see if there is evidence of a man in the house, they would look through your underwear drawer and look through your toothbrush rack. this woman, maria, went through that search. -100ink it was called a p search. you call her a pioneer, why? was one of the very first people who had to go through it. why? mainly, because they had access to her. people were stopped and frisked. are people who are stopped

charged with fraud, they're on welfare, they are reluctant to talk about their experiences because of public shaming. it is hard to find people who have been through this row gram. i only found a couple people who ere on the record about it. it is difficult to find people who will talk about their experience. >> when did you start on the book? the 2000 eight crash, i have primarily been covering corruption on wall street. covered elections and that sort of thing. in 2000 eight, naturally barack obama got did, rolling stone decided to assign

me a story about what caused the crash. i did one story that was really year what happened in the 2008. we got such term and his response that i ended up essentially doing that and only that for the next five years. , therering this material was a theme that kept resurfacing. these that there were awful crimes committed, and none of the individuals responsible would ever be prosecuted. the worst-case scenario was always the same. gotas that if the company caught, which was very rare to begin with, they would either simply promise to never to do it again or they would have to pay some money. it was never actually out of their own pocket. it was the shareholders money,

the company's money. nobody was actually paying a criminal penalty for what almost everybody who covers the subject --ees, was the biggest white the biggest white crime wave in america's history. the flipside of that was that we were living through the other flipside, and exploding prison population, statistics of policing strategy being implemented in countries all ever america. the flipside was that it was easier and easier to go to jail every other place in america, but harder and harder to go to jail if you worked in a big tank in america. america a in america.bank in

>> i want to show you a video that goes back to 2008, and it's richard fuld, whom you devote a whole chapter to, and then we can ask you about it. >> you've been able to pocket close to half of 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 chapter about all the shenanigans 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 lehman executives were counting their stock options,

they were 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 lehman brothers 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 definitely happened on his watch. and he's unapologetic 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. that 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 inconceivable. 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. 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 dimon who is lionized 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 dimon makes a lot of money for his company. >> wait a second, $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 astonishing 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 dimon 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. i cannot tell my board what to do. >> jamie dimon got a raise at the end of this year, again after having stewarded a ship that had the biggest 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 dimon 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 dimon 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 dimon 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 great britian when 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 barclay's 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 dimon, bob dimon. and he was out. in the united states we can't just tell a guy he has to leave but jamie dimon still sitting there and sitting there with a raise.

this is a tremendous difference in approach between the regulatory 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 the civil side but we brought over.

and that's what she explained. >> 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 evidence to put somebody in jail. here is my response to that. let's take a case like sbc which 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 discrepancies 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, $20 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 defies logic that you could have billions in liability and no criminal liability and not enough evidence of criminality. i just don't believe it. >> a couple of weeks ago toyota was fined 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

consumption by adolescents. 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 way back in the clinton years, 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

go in 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 the "wall street journal" or "washington post" 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 dimon 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 a functional, viable commercial enterprise, 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. 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 influence he may have on you. >> here is mike.

he's covering the michael jackson trial. >> 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 more than a profession. you went despite when you were 16 or 17 years old almost like carpentry. you went in as a copy boy or news boy and stayed in and you learned it -- and they had a chip on their shoulders. they were sardonic. they relished 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, -- stick it to the man, 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 woodward and burnstein. 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 sees itself, 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? >> i lived in 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 boy. 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. do.

if somebody takes the 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 death of the 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 to, 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 -- died in a fiery 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 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 in the 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 promiscuous in his search of facts and factoids 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 brightbart in march of 2012, 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 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 does not sound to me like there was any common factor there. i will say that i don't see a real correlation between what andrew brightbart 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 breitbart. 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 accuracy 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 breitbart 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 breitbart. >> let's go back to your book. in chapter four the greatest bank robbery you've never heard of. >> we talked about richard fold and the lehman brothers. what's the deal.

>> this is the deal where lehman bros. essentially gets absorbed into barclays bank and the essence 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 surreptitiously 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.

>> let me read to you from your own book, and bob dimon 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 valuation 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 lucrative offers of future employment by barclays at

at the time. that's what i was talking about with bob dimon. 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. he would have had to admit to serious errors. it just didn't happen that way. this is just an example of one of the things i talk about in the book where it seems wrong, it seems like somebody should go to jail for it. this is where mary jo 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 bankruptcy went down with lehman brothers in september of 2008, the world was melting down. we had to make decisions 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. >> you 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 berets 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 dulled by 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 parameters of the entire deal, they informed 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 named gary aguirre? >> yeah. >> we covered a hearing in 2006. we are going to show you him. at the time 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 issuance of an administrative subpoena for mr. mack's testimony. of course something had changed during those nine days. on june 23 the "wall street journal" 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 superiors. when he pressed the matter he was ultimately dismissed. now he won a wrongful termination suit against the fcc, 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 administration. 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 sort of piecemeal 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 called the intercept focused on national security issues. i'm going to have another mike -- micro-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 crabapple. 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. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2014]