Fernholz vs Taibbi

By Felix Salmon
December 11, 2009
Tim Fernholz has an intemperate attack on Matt Taibbi and his latest article, which is getting a lot of attention in the Twittersphere. It turns out that a lot of journalists don't like Taibbi, and love it when he gets taken down a peg.

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Tim Fernholz‘s intemperate attack on Matt Taibbi and his latest article is getting a lot of attention in the Twittersphere. It turns out that a lot of journalists don’t like Taibbi, and love it when he gets taken down a peg.

But Fernholz’s attack is weaker than it looks at first glance; a lot of it is simply a matter of slant and opinion. For instance:

“In the end, Frank not only agreed to exempt some 8,000 of the nation’s 8,200 banks from oversight by the castrated-in-advance agency, leaving most consumers unprotected.” The CFPA, while somewhat compromised, remains a strong agency that will protect consumers. In particular, all the banks in the country will be subject to the CFPA’s rules, and they will be able to inspect any bank they identify as problematic. You can also ask Elizabeth Warren, who came up with the idea, what she thinks of Frank’s proposal. Oh, I did.

Actually, Tim, the CFPA is not “a strong agency that will protect consumers”. In fact, it doesn’t even exist. And I clicked through; you didn’t ask Elizabeth Warren what she thinks of exempting 8,000 banks from CFPA oversight. And in any case there’s no doubt that if and when the CFPA does finally become reality, it will be smaller and weaker than when it was first proposed, especially now that it can’t mandate that banks offer plain-vanilla products. As Taibbi writes:

Frank’s last-minute reversal — made in consultation with Geithner — was such a transparent giveaway to the banks that even an economics writer for Reuters, hardly a far-left source, called it “the beginning of the end of meaningful regulatory reform.”

Um, thanks for making me sound respectable?

In any case, I feel that Fernholz is a bit like Heidi Moore: he’s missed the point of Taibbi’s polemical style. Taibbi is not interested in an writing an even-handed examination of Obama’s economic policies: he’s interested in writing an enjoyable screed which jumps off the page and which describes Alan Greenspan as “a staggeringly incompetent economic forecaster who was worshipped by four decades of politicians because he once dated Barbara Walters”. This stuff isn’t meant to be taken nearly as literally as Fernholz is taking it — but in any case, Fernholz’s game of gotcha comes up with precious little of real substance. Viz:

Michael Froman. His connection to Obama is through their time together on the Harvard Law Review, not through Rubin. He did indeed once work for Rubin, and was a member of Obama’s transition advisory board; he was not on the transition staff. His portfolio is international economic policy, he does not participate in domestic financial policymaking except in that strategic role; of late his main focus has been managing economic negotiations with China.

But here’s how Taibbi actually describes Froman:

Leading the search for the president’s new economic team was his close friend and Harvard Law classmate Michael Froman, a high-ranking executive at Citigroup. During the campaign, Froman had emerged as one of Obama’s biggest fundraisers, bundling $200,000 in contributions and introducing the candidate to a host of heavy hitters — chief among them his mentor Bob Rubin…

Joining Summers, Furman and Farrell at the NEC is Froman, who by then had been formally appointed to a unique position: He is not only Obama’s international finance adviser at the National Economic Council, he simultaneously serves as deputy national security adviser at the National Security Council. The twin posts give Froman a direct line to the president, putting him in a position to coordinate Obama’s international economic policy during a crisis.

Taibbi is quite explicit that Froman and Obama met at Harvard Law, and indeed claims that Froman introduced Obama to Rubin, not that Rubin introduced Obama to Froman. Taibbi says that Froman “went to work for” the Obama transition team; I think that’s probably true, even if Froman wasn’t on the formal transition staff. Taibbi also says that Froman’s role is that of international finance adviser; he never says that it’s domestic financial policymaking.

In other words, it’s worth cross-checking everything that Fernholz says against what Taibbi actually writes, because often Taibbi simply doesn’t say what Fernholz implies that he says.

All the schadenfreude over Fernholz’s attack on Taibbi is particularly weird since they seem to actually agree with each other. Here’s how Fernholz concludes:

Is it disconcerting that employees of the financial industry make a ton of money? Yes. Is it the revolving door between Washington and Wall Street problematic? Yes. Does the Administration take it too easy on the banks? Absolutely. Are White House advisers too centrist for progressive tastes? Sure. But when you try and tell that story with a lot of lies and innuendo, and misunderstand the basic policies that these people are producing, you don’t hurt them. Now anyone who criticizes the Administration will just be lumped in with Taibbi’s meandering conspiracy…

Doing the work is hard. But if you want to make a dent, you have to do it.

This is quite astonishing. Fernholz is basically saying that Taibbi is right, and that not only is he right but that he will now and henceforth utterly overshadow anyone else who’s criticizing the Obama administration from the left. At the same time, however, despite Taibbi’s astonishing ability to encapsulate and personify the entire group of people who criticize the administration, he’s not even going to manage to “make a dent”, because he’s not going about his job in an evenhanded J-school manner.

Personally, I love it that Taibbi exists, and I’m impressed that his 6,500-word screed (into which a great deal of work clearly went) in fact has very little in the way of factual errors, let alone “lies”. Yes, Taibbi is polemical and one-sided, and he exaggerates his thesis, and he’s entertaining; I daresay he’s learned a lot from watching Fox News. And no, I would never want to live in a world where everybody wrote like that. But Taibbi is one of a kind, and we can enjoy him and learn from him as such. He might not end up changing policy in Washington. But he’s doing a much better job of making the policy debate relevant to Rolling Stone‘s readership than anything Tim Fernholz has ever done.


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Well said. I shall add that Taibbi’s highly entertaining abrasive style is much more policy minded than it seems. He is, for my money, already THE reporter of the Obama era. His aticles are an important part of the conversation, and will be remembered as such for a long time. The same cannot be said of Fernholz’s bland, boring and frankly barely readable pieces for the American Prospect.

Posted by dave52 | Report as abusive

Reading Taibbi’s piece was surely satisfying in the sense that it let out some pent-up frustration I’ve had with the economic policies of the new Admin. I do object to the way he made it sound like Obama’s advisers and officials PURPOSELY mess things up to enrich their Wall Street buddies. Because, first, even if it’s true, it’s impossible to prove; second, I suspect it’s more probable that these people descended from the “Rubin school of economics” and are simply too cozy to the dysfunctional financial industry to be impartial and to be effective overseers/regulators. Oh how I’ve been hoping Geithner, Summers, Romer too, be replaced!!

Also wish Taibbi didn’t use so much foul language. He’s sound a bit like Michale Moore, a bit over the top, but not quite as bad, yet. I hope he doesn’t go too far. We don’t need people fuming with froth who distort facts to make our argument. There’s no need for that, facts are good enough and they are right there.

Posted by jian1312 | Report as abusive

I was happy to see this piece, I had “fact-checked” Tim Fernholz’s piece against Taibbi’s in several places and in each case found exactly what you did– it was in fact Taibbi’s that held up and Fernholz is doing exactly what he accuses Taibbi of, namely getting his facts wrong.

I noticed the error of Fernholz about what Taibbi had written about Fromer, as you did. He also responded to Taibbi’s line that Biden, and thus his adviser, didn’t work on financial regulatory reform by writing that Biden works on “stimulus and jobs”, which he somehow saw as a great refutation of Taibbi’s claim.


The whole extremely arrogant, “hoo boy, what a mess” pretension of Fernholz I actually found far more irritating and unprofessional than Matt Taibbi’s piece, not to mention far more unwarranted.

It’s interesting, even your comments about how “a lot of journalists don’t like Taibbi”. I would rephrase that: A lot of Beltway establishment journals like the hideously right wing New Republic masquerade as “liberal” journals, but are anything but.

I think since Taibbi uses words like “shit” and “idiot” in his pieces (in published journalism, not only in a blog which is often more casual) a lot of people underestimate him as a researcher and writer. He writes circles around most of them, so it’s no surprise really, but he’s no intellectual lightweight as they seem to think.

In this debate, I found Fernholz to fit that description far better.

Posted by BillEPilgrim | Report as abusive

For those who don’t know, Taibbi cut his journo teeth reporting in Russia in the 1990s as the co-editor of the eXile. His keen eye for robber barons and their essential connections to power come from that experience. In my view, Russia’s 1990s was the vanguard of true capitalism, and still is in many ways simply because Russia’s American counterparts don’t hide their thievery behind liberal pretensions and empty gestures toward “reform.”

My fear is that Fernholz’s “critique” is going to define the debate, which from Salmon’s retort to the retort shows. That is, instead of discussing the main thesis of Taibbi’s piece–the intimate personal connections between capital and government–the debate will revolve around the multitude of facts he did or didn’t get right.

I think there is an essential line in Taibbi’s article that requires remembering:

“The investment community feels very put-upon,” Fass explained. “They feel there is no reason why they shouldn’t earn $1 million to $200 million a year, and they don’t want to be held responsible for the global financial meltdown.”

Which makes sense. Shit, who could blame the investment community for the meltdown? What kind of assholes are we to put any of this on them?

It is the “investment community” as main constituency to the Obama administration that needs to be remembered, watched out for, and eventually, excoriated from the body politic.

Posted by seansrussiablog | Report as abusive

“Actually, Tim, the CFPA is not “a strong agency that will protect consumers”. In fact, it doesn’t even exist.”

So you’re going to play dumb? You’re going to act like you didn’t understand what he meant?

“This is quite astonishing. Fernholz is basically saying that Taibbi is right…”

That’s not astonishing in the least. He’s saying that Taibbi is right about some things and wrong about others. You can fathom such a situation, can’t you?

Posted by sorchalson | Report as abusive

I agree with dave52 that Taibbi is “THE reporter of the Obama era.” I am so disgusted with how Obama administration has sold out to the Wall Street money, and also disgusted at how the mass media has been failing to call Obama on his lies. Taibbi is one of few reporters with enough courage to point out the reality of corruption at Washington and Wall Street.

Instead of quibbling about Taibbi’s writing style, we should focus on his message. Obama and the Wall Street are violating average Americans and lying about it.

Posted by tkfayette | Report as abusive

Taibbi is to be commended for his willingness to take on the Obama Administration. Unfortunately, his apparent unwillingness to fact check opens his narrative up to criticism. Progressives rely on investigative reporters like Taibbi to produce material that is above reproach. Its far too easy to discredit someone’s analysis by pointing out a handful of factual errors. Taibbi seems willing to trade his journalistic integrity for a more freewheeling style that appeals to an audience seeking “the satisfying purity of indignation” (as another commenter quoted).

We could use more journalists who match Taibbi’s profile: watchdogs fueled by populist outrage willing to take on a President popular with moderates and many liberals. But Matt, if you’re reading this, you have to hold yourself to a higher standard than your peers. Too many people in power have an interest in seeing you fail.

Posted by benscot | Report as abusive

The hostility towards Taibbi reminds me of the hostility towards Krugman back in the early Bush administration. He’s an outsider, he didn’t come up through the ranks, he doesn’t observe the unwritten rules of political journalism, and he gets a lot of attention, so he must be cut down.

Posted by Fadoodle | Report as abusive

Aristotle said; No man can judge a society, a part of which he forms. And Fernholz is at least a “wannabe” part of the beltway/finance crowd.

Posted by Anonymous | Report as abusive

I like Taibbi’s writing style and am not put off by the language he uses–so what if he uses ‘fuck’ and ‘shit’ in his articles? Apparently it doesn’t violate his publisher’s editorial guidelines, and if it annoys Barbara Bush and her ilk, so much the better. I’d like to see more investigative journalism about the disastrous economic policies, advisers and appointments of Clinton and Obama.

Posted by nancycadet | Report as abusive

As a journalist who has covered securitization since the mid-1990s, in my opinion Taibbi is full of shit. I am a liberal and I love his colorful style, but his conspiracy-minded views of the financial world are idiotic.

His article about Goldman was the most stupid thing I have ever read by a liberal. He is a good example of how one can string together a bunch of unrelated facts and come up with a wrong conclusion.

I know people who don’t know a CMBS from an ABS from MBS from a derivative want to feel like that it is all one big scam, and Taibbi plays to that ignorance.

Posted by Anonymous | Report as abusive

Anonymous journalist who has covered securitization since the mid-1990s, didn’t you fail to expose the truth over the course of your career in such a fashion as Taibbi has done? Any articles that covered the same ground? Even a “mid career correction showing where it all went wrong” article to cite? Or is this missive the revenge of Hoocoodanode?
Since when is policy conspiracy? If you’re not benefiting from it, it seems to be a conspiracy; if you are getting rich and so are your friends, it’s a perfectly reasonable policy, right? Clearly the people chopping up the baby on Wall Street have picked some favorites. Perhaps you can’t see the patterns because you are in the weave?

Posted by Anonymous | Report as abusive

Can our journalist “who has covered securitization since the mid-1990s” and does “know a CMBS from an ABS from MBS from a derivative” explain how all of Taibbi’s facts that point to the same thing actually don’t.

Perhaps our journalist could also point to his work on CMBSs ABSs MBSs and derivatives where he explains how some of them, or the totality of them, could contribute to the destabilisation of the global financial system. I’d hate to think his oevre was just fanboy edits of press releases, but there was so much of that around – still is – that the suspicion can’t reasonably be ruled out.

Posted by AlanDownunder | Report as abusive

The CFPA doesn’t exist *yet*. In all fairness — and I think you know this — Fernholz was implying that the currently-proposed CFPA has not been rendered nugatory by compromises between legislators as to the authority and jurisdiction of the proposed agency.

Your criticism of Fernholz is semantical. Fernholz is saying that Taibbi is misleading and unfair. Your post concedes as much.

Posted by colinf | Report as abusive

Sorry – can’t take a “journalist” who purports to be an expert but posts anonymously seriously.

As for Taibbi, the argument here is not about is he right/wrong. It is about do you get him or not? Do you understand his style? If so, are you OK with it? I, for one, am fine with it.

For Christ’s sakes, he is writing for Rolling Stone, not the NY Times. That is not meant as a put down of Rolling Stone’s reporting, which I consider to be excellent. My point is that you are talking about two very different style guides. The “National Affairs” section of Rolling Stone is not meant to just report, it is meant to provoke a reaction from its readership. This is Hunter S. Thompson’s old stomping grounds. Taibbi doesn’t JUST want you to know the facts, he wants you to get angry about them, which he attempts by expressing his own anger at them.

Factually, everything I am reading here on both sides is semantics. The major difference is that Taibbi is not misleading, while Fernholz is very misleading. Fernholz attempts to claim that Taibbi is making factual errors simply by wording what Taibbi said differently while saying the same thing. Fernholz starts with the ONE fact that Taibbi got wrong, which Taibbi has admitted to and which is, in fact, not important to his overall argument. He then uses it to imply that it is the first in a list of things that Taibbi got wrong, but produces nothing of the kind – just things he would have worded differently. It is a cheap shot at its best.

Stylistically, Taibbi sets out to express an opinion and provides the facts to back it up. He succeeds. You may not SHARE his opinion, but he makes a reasonable argument using true facts.

Fernholz uses all of the same facts, and comes to an only slightly different conclusion than Taibbi, and in a different style. He just also chooses to attack a fellow writer for no good reason other than he concludes differently, and tries to discredit him for no good reason. It is reporters like Fernholz that make the progressive media’s arguements difficult to take seriously, not Taibbi.

Posted by dnorman | Report as abusive

This is my response to your shabby commentary Mr. Fernholtz:

Taibbi: “Geithner, in other words, is hired to head the U.S. Treasury by an executive from Citigroup — Michael Froman.”

Your commentary: Froman didn’t hire Geithner, Obama did, and the move had been expected long before Froman came on board the transition — Froman had little to do with it other than aiding in vetting. Geithner had impressed Obama while briefing him during the crisis when he was President of the New York Fed and had been a senior Treasury official during the Clinton administration. He has never worked for a bank.

My Response: Of course Obama ultimately made the hiring decision but who do you think was advising him on who to bring in as Treasury Secretary? Maybe it’s because of your youth Mr. Fernholtz but you either think your readers are very naive or you are. Further, that Geithner was president of the NY Fed both before and while the financial crisis was developing was good reason to NOT hire him as Treasury Chief.

· Taibbi: “Neil Barofsky, the inspector general charged with overseeing TARP, estimates that the total cost of the Wall Street bailouts could eventually reach $23.7 trillion.”
Your Commentary: It could, if every single loan guaranteed by the Federal government failed at once and all of the assets bought with those loans were destroyed – …”
My Response: And what if most of the debts are NOT paid back. More importantly, what moral hazard or precedent for Big Bailing Banks out in the future does this present with an even bigger bill for taxpayers?
· Taibbi: “A masterpiece of legislative chicanery, the measure would have given the White House permanent and unlimited authority to execute future bailouts of megaconglomerates like Citigroup and Bear Stearns.”

· Your Commentary: Er, no. It allows the government to liquidate megaconglomerates like Citigroup and Bear Stearns, just as the FDIC dissolves failing small banks. It’s not quite what we’re looking for, yet — there is a lot of legislating left to do — but here’s what the measure really does.

· My Response to your commentary: Taibbi said “the measure WOULD HAVE given”. For someone who is supposed to be a professional journalist it appears you haven’t learned the fine art of reading.Try it before you criticize the work of an investigative journalist who obviously put a lot of time into his work for the benefit of the pubic. I know this may be tough for boot-lickers who are trying to court favor with Rahm and the rest of the White House.
Your commentary, in my opinion, is either “scoop envy” or you simply don’t understand how the Washington/Wall Street connection works. If it is the second then I’m surprised you are able to sell any of your work.

Tom O’Keefe
President, The National Association of Investment Professionals

Posted by WSWatchdog | Report as abusive

Thanks for the unique perspective on this subject…