Taibbi is just plain wrong, Chuck G says in his latest Daily Beast column:
But Taibbi has elevated a combination of half-truths, superstitions, and a lack of understanding about the financial crisis to what is fast becoming established as “fact”: that Goldman Sachs was the main culprit for the financial crisis and is now unfairly profiting from the various bailouts the crisis caused.
No rational person can deny the fact that Goldman is benefiting from its status as a government protected bank, as it makes big bucks ($3 billion in just the second quarter alone), acting like a hedge fund just after getting bailed out by the feds, and using its status as a commercial bank to borrow cheaply and make huge bond market bets. In fact, all of the banks are— Morgan Stanley is at the top of that list—it’s just that some, like Goldman, are doing it better than others.
It’s the other part of Taibbi’s story that I have a real problem with—that Goldman either single-handedly or with very little help, was responsible for the financial crisis and committed fraud along the way. And then when it bet wrong, when the markets turned against the firm in a way its rocket-scientist traders didn’t foresee, Goldman used its pull in Washington to get a bailout.
That storyline isn’t just wrong, it’s pretty naïve. But it’s gaining credibility following Taibbi’s Rolling Stone piece, first in the blogosphere and now with a growing number of what is commonly referred to as the mainstream media. It’s one thing to watch half-literate bloggers in desperate need of attention jump on the Goldman is the root of all evil story; it’s quite another to see respected news organisations with experienced reporters and presumably more experienced editors do it and in the process obscure the fact that Goldman, for all of its sins during the bubble years, was probably the least culpable for the system’s eventual collapse. And maybe more importantly, that Goldman and all the other banks are now overtly protected by the federal government and can still roll the dice and take risk only this time under the explicit protection of the American taxpayer.
All of which brings me back to Taibbi, who is usually a really good reporter, and a provocative storyteller. In addition to his Rolling Stone piece on Goldman, I watched his performance on WNYC. What’s interesting to me is (particularly after the WNYC appearance) is how much of what Taibbi is stating as fact or suggesting is probably true, is actually wrong.
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