For all the clamor, criticism of what Taibbi’s actually written has been surprisingly weak. The best critics could offer was that Taibbi exaggerated Goldman’s particular role in this or that crisis and that financial crises are far too complex for this frame (or for them, I suspect, any frame at all) —that and make disparaging remarks about Taibbi’s alleged self-righteousness, amateurism, ignorance, etc. While the attacks on Taibbi aren’t couched as defenses of Goldman, the net effect is the same.
Moore, who with Gasparino, seems intent on playing the role of eye-rolling professional business writer to the hilt, made this comment, which found its way into a New York Times round-up of the reaction to Taibbi—one I suspect is widely shared in the MSM:
For the record, I don’t think any article that contains the line ‘vampire squid sucking the face of humanity’ is real journalism. That’s self-righteous editorializing. If Taibbi wanted to make his point, he would have done great to dig up some, like, “facts.”
The Atlantic’s Megan McArdle, who doesn’t lay a glove on Taibbi in this attack, is unintentionally revealing of a certain strain of financial journalism thinking:
Taibbi is a gifted narrative journalist, whose verbal talents I greatly admire. But financial meltdowns don’t offer villains, for the simple reason that no one person or even one group is powerful enough to take down a whole system.
“Financial meltdowns don’t offer villains?” Does anyone believe that?
And wait a minute: Are we really so sure that “one group,” Wall Street, was not central to this crisis and that its increasing influence over government at all levels—what gives, for instance, with ex-Goldmanite Neil Levin deciding as New York State banking commissioner in 2000 not to regulate credit default swaps as insurance?—was not decisive? And isn’t Goldman Wall Street’s leading firm?
Rather than dismiss Taibbi, the mainstream business press would do well first to read him, learn from him, and above all, refrain from all attempts to outwrite him, because that seems to be a losing game.
So here are a few things to think about.
First, it’s worth noting that the debate about “Bubble” hasn’t been about the accuracy of the facts in the piece (though it’s not, I’m sorry to say, problem-free, as we’ll see below). Instead, the discussion is about the arrangement of the facts and the conclusions drawn from them. Now, manipulation in bad faith of true facts is probably as bad a journalism sin as any other. Still, the facts here are really not the issue. So one question to think about is, when does being “technically right” become simply being “right,” at least in the sense that a piece makes valid points by marshaling true facts?
Indeed, subsequent reporting and events have only provided support for Taibbi’s basic argument—that Goldman and Wall Street have played important roles in a series of harmful events over the years (come to think of it, is this even controversial?). His idea that Goldman gamed the bailout, for instance, got backing from Joe Hagan’s recent piece in New York, which makes a strong case that the AIG bailout saved Goldman from disaster and was not, as some defenders weakly maintain, a matter of indifference to the bank:
Not a single Wall Street executive I spoke with, including several Goldman Sachs alumni, believe those hedges would have survived an overall collapse of the financial system. A large loss would have been inevitable as lending evaporated, and Goldman Sachs would have struggled to shrink the company to a fraction of its size overnight.
Hagan also argues that other government programs saved the firm’s bacon:
Salvation came on November 25, a few days after Goldman’s stock price plunged to $52 a share, down from the year’s high of $200 and the lowest price the company had seen since it went public. Again, the white knight was the government. It turned out that Goldman’s conversion to a garden-variety bank-holding company offered an amazing advantage: Goldman now had access to incredibly cheap money. Exploiting its new status, Goldman became the first financial institution to sell $5 billion in government-backed bonds through the Federal Deposit Insurance Corporation, which allowed Goldman to start doing deals when the markets were at a near standstill.”Goldman was desperate for it,” says a prominent Goldman alumnus.”Everybody knows it. Those FDIC notes they got were lifesaving because they couldn’t issue any debt. If it had gone on another week or two, Goldman would have failed, they would have gone the way of Lehman, and you’d be talking about Lloyd the way you talk about [Lehman CEO] Dick Fuld.”