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Matt Taibbi takes on "the Wall Street Bubble Mafia" — investment bank Goldman Sachs. The piece has generated controversy, with Goldman Sachs firing back that Taibbi's piece is "an hysterical compilation of conspiracy theories" and a spokesman adding, "We reject the assertion that we are inflators of bubbles and profiteers in busts, and we are painfully conscious of the importance in being a force for good." Taibbi shot back: "Goldman has its alumni pushing its views from the pulpit of the U.S. Treasury, the NYSE, the World Bank, and numerous other important posts; it also has former players fronting major TV shows. They have the ear of the president if they want it." Here, now, are excerpts from Matt Taibbi's piece and video of Taibbi exploring the key issues.IThe first thing you need to know about Goldman Sachs is that it's everywhere. The world's most powerful investment bank is a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money.Any attempt to construct a narrative around all the former Goldmanites in influential positions quickly becomes an absurd and pointless exercise, like trying to make a list of everything. What you need to know is the big picture: If America is circling the drain, Goldman Sachs has found a way to be that drain — an extremely unfortunate loophole in the system of Western democratic capitalism, which never foresaw that in a society governed passively by free markets and free elections, organized greed always defeats disorganized democracy.They achieve this using the same playbook over and over again. The formula is relatively simple: Goldman positions itself in the middle of a speculative bubble, selling investments they know are crap. Then they hoover up vast sums from the middle and lower floors of society with the aid of a crippled and corrupt state that allows it to rewrite the rules in exchange for the relative pennies the bank throws at political patronage. Finally, when it all goes bust, leaving millions of ordinary citizens broke and starving, they begin the entire process over again, riding in to rescue us all by lending us back our own money at interest, selling themselves as men above greed, just a bunch of really smart guys keeping the wheels greased. They've been pulling this same stunt over and over since the 1920s — and now they're preparing to do it again, creating what may be the biggest and most audacious bubble yet.IIThe basic scam in the Internet Age is pretty easy even for the financially illiterate to grasp. Companies that weren't much more than pot-fueled ideas scrawled on napkins by up-too-late bong-smokers were taken public via IPOs, hyped in the media and sold to the public for megamillions. It was as if banks like Goldman were wrapping ribbons around watermelons, tossing them out 50-story windows and opening the phones for bids. In this game you were a winner only if you took your money out before the melon hit the pavement.It sounds obvious now, but what the average investor didn't know at the time was that the banks had changed the rules of the game, making the deals look better than they actually were. They did this by setting up what was, in reality, a two-tiered investment system — one for the insiders who knew the real numbers, and another for the lay investor who was invited to chase soaring prices the banks themselves knew were irrational. While Goldman's later pattern would be to capitalize on changes in the regulatory environment, its key innovation in the Internet years was to abandon its own industry's standards of quality control.Goldman's role in the sweeping global disaster that was the housing bubble is not hard to trace. Here again, the basic trick was a decline in underwriting standards, although in this case the standards weren't in IPOs but in mortgages. By now almost everyone knows that for decades mortgage dealers insisted that home buyers be able to produce a down payment of 10 percent or more, show a steady income and good credit rating, and possess a real first and last name. Then, at the dawn of the new millennium, they suddenly threw all that shit out the window and started writing mortgages on the backs of napkins to cocktail waitresses and ex-cons carrying five bucks and a Snickers bar.And what caused the huge spike in oil prices? Take a wild guess. Obviously Goldman had help — there were other players in the physical-commodities market — but the root cause had almost everything to do with the behavior of a few powerful actors determined to turn the once-solid market into a speculative casino. Goldman did it by persuading pension funds and other large institutional investors to invest in oil futures — agreeing to buy oil at a certain price on a fixed date. The push transformed oil from a physical commodity, rigidly subject to supply and demand, into something to bet on, like a stock. Between 2003 and 2008, the amount of speculative money in commodities grew from $13 billion to $317 billion, an increase of 2,300 percent. By 2008, a barrel of oil was traded 27 times, on average, before it was actually delivered and consumed.IIIThe history of the recent financial crisis, which doubles as a history of the rapid decline and fall of the suddenly swindled-dry American empire, reads like a Who's Who of Goldman Sachs graduates. By now, most of us know the major players. As George Bush's last Treasury secretary, former Goldman CEO Henry Paulson was the architect of the bailout, a suspiciously self-serving plan to funnel trillions of Your Dollars to a handful of his old friends on Wall Street. Robert Rubin, Bill Clinton's former Treasury secretary, spent 26 years at Goldman before becoming chairman of Citigroup — which in turn got a $300 billion taxpayer bailout from Paulson. There's John Thain, the asshole chief of Merrill Lynch who bought an $87,000 area rug for his office as his company was imploding; a former Goldman banker, Thain enjoyed a multibillion-dollar handout from Paulson, who used billions in taxpayer funds to help Bank of America rescue Thain's sorry company. And Robert Steel, the former Goldmanite head of Wachovia, scored himself and his fellow executives $225 million in golden-parachute payments as his bank was self-destructing. There's Joshua Bolten, Bush's chief of staff during the bailout, and Mark Patterson, the current Treasury chief of staff, who was a Goldman lobbyist just a year ago, and Ed Liddy, the former Goldman director whom Paulson put in charge of bailed-out insurance giant AIG, which forked over $13 billion to Goldman after Liddy came on board. The heads of the Canadian and Italian national banks are Goldman alums, as is the head of the World Bank, the head of the New York Stock Exchange, the last two heads of the Federal Reserve Bank of New York — which, incidentally, is now in charge of overseeing Goldman.But then, something happened. It's hard to say what it was exactly; it might have been the fact that Goldman's co-chairman in the early Nineties, Robert Rubin, followed Bill Clinton to the White House, where he directed the National Economic Council and eventually became Treasury secretary. While the American media fell in love with the story line of a pair of baby-boomer, Sixties-child, Fleetwood Mac yuppies nesting in the White House, it also nursed an undisguised crush on Rubin, who was hyped as without a doubt the smartest person ever to walk the face of the Earth, with Newton, Einstein, Mozart and Kant running far behind.Rubin was the prototypical Goldman banker. He was probably born in a $4,000 suit, he had a face that seemed permanently frozen just short of an apology for being so much smarter than you, and he exuded a Spock-like, emotion-neutral exterior; the only human feeling you could imagine him experiencing was a nightmare about being forced to fly coach. It became almost a national cliché that whatever Rubin thought was best for the economy — a phenomenon that reached its apex in 1999, when Rubin appeared on the cover of Time with his Treasury deputy, Larry Summers, and Fed chief Alan Greenspan under the headline the committee to save the world. And "what Rubin thought," mostly, was that the American economy, and in particular the financial markets, were over-regulated and needed to be set free. During his tenure at Treasury, the Clinton White House made a series of moves that would have drastic consequences for the global economy — beginning with Rubin's complete and total failure to regulate his old firm during its first mad dash for obscene short-term profits.IVAfter the oil bubble collapsed last fall, there was no new bubble to keep things humming — this time, the money seems to be really gone, like worldwide-depression gone. So the financial safari has moved elsewhere, and the big game in the hunt has become the only remaining pool of dumb, unguarded capital left to feed upon: taxpayer money. Here, in the biggest bailout in history, is where Goldman Sachs really started to flex its muscle.It began in September of last year, when then-Treasury secretary Paulson made a momentous series of decisions. Although he had already engineered a rescue of Bear Stearns a few months before and helped bail out quasi-private lenders Fannie Mae and Freddie Mac, Paulson elected to let Lehman Brothers — one of Goldman's last real competitors — collapse without intervention. ("Goldman's superhero status was left intact," says market analyst Eric Salzman, "and an investment-banking competitor, Lehman, goes away.") The very next day, Paulson greenlighted a massive, $85 billion bailout of AIG, which promptly turned around and repaid $13 billion it owed to Goldman. Thanks to the rescue effort, the bank ended up getting paid in full for its bad bets: By contrast, retired auto workers awaiting the Chrysler bailout will be lucky to receive 50 cents for every dollar they are owed.Immediately after the AIG bailout, Paulson announced his federal bailout for the financial industry, a $700 billion plan called the Troubled Asset Relief Program, and put a heretofore unknown 35-year-old Goldman banker named Neel Kashkari in charge of administering the funds. In order to qualify for bailout monies, Goldman announced that it would convert from an investment bank to a bank-holding company, a move that allows it access not only to $10 billion in TARP funds, but to a whole galaxy of less conspicuous, publicly backed funding — most notably, lending from the discount window of the Federal Reserve. By the end of March, the Fed will have lent or guaranteed at least $8.7 trillion under a series of new bailout programs — and thanks to an obscure law allowing the Fed to block most congressional audits, both the amounts and the recipients of the monies remain almost entirely secret.Converting to a bank-holding company has other benefits as well: Goldman's primary supervisor is now the New York Fed, whose chairman at the time of its announcement was Stephen Friedman, a former co-chairman of Goldman Sachs. Friedman was technically in violation of Federal Reserve policy by remaining on the board of Goldman even as he was supposedly regulating the bank; in order to rectify the problem, he applied for, and got, a conflict-of-interest waiver from the government. Friedman was also supposed to divest himself of his Goldman stock after Goldman became a bank-holding company, but thanks to the waiver, he was allowed to go out and buy 52,000 additional shares in his old bank, leaving him $3 million richer. Friedman stepped down in May, but the man now in charge of supervising Goldman — New York Fed president William Dudley — is yet another former Goldmanite.The collective message of all of this — the AIG bailout, the swift approval for its bank-holding conversion, the TARP funds — is that when it comes to Goldman Sachs, there isn't a free market at all. The government might let other players on the market die, but it simply will not allow Goldman to fail under any circumstances. Its edge in the market has suddenly become an open declaration of supreme privilege. "In the past it was an implicit advantage," says Simon Johnson, an economics professor at MIT and former official at the International Monetary Fund, who compares the bailout to the crony capitalism he has seen in Third World countries. "Now it's more of an explicit advantage."VFast-forward to today. It's early June in Washington, D.C. Barack Obama, a popular young politician whose leading private campaign donor was an investment bank called Goldman Sachs — its employees paid some $981,000 to his campaign — sits in the White House. Having seamlessly navigated the political minefield of the bailout era, Goldman is once again back to its old business, scouting out loopholes in a new government-created market with the aid of a new set of alumni occupying key government jobs.Gone are Hank Paulson and Neel Kashkari; in their place are Treasury chief of staff Mark Patterson and CFTC chief Gary Gensler, both former Goldmanites. (Gensler was the firm's co-head of finance.) And instead of credit derivatives or oil futures or mortgage-backed CDOs, the new game in town, the next bubble, is in carbon credits — a booming trillion- dollar market that barely even exists yet, but will if the Democratic Party that it gave $4,452,585 to in the last election manages to push into existence a groundbreaking new commodities bubble, disguised as an "environmental plan," called cap-and-trade. The new carbon-credit market is a virtual repeat of the commodities-market casino that's been kind to Goldman, except it has one delicious new wrinkle: If the plan goes forward as expected, the rise in prices will be government-mandated. Goldman won't even have to rig the game. It will be rigged in advance.Written by Matt TaibbiFrom Rolling Stone Issue 1082-1083July 9 - 23, 2009Watch Matt Taibbi's reaction to Goldman Sach's excuse
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He was the greatest writer of his generation - and also its most tormented. In the wake of his tragic suicide, his friends and family reveal the lifelong struggle of a beautiful mind.

Having only known of David Foster Wallace for being the genius behind Infinite Jest, I finally had the opportunity to see the human side of a very tormented soul.-SSAHe was six-feet-two, and on a good day he weighed 200 pounds. He wore granny glasses with a head scarf, points knotted at the back, a look that was both pirate-like and housewife-ish. He always wore his hair long. He had dark eyes, soft voice, caveman chin, a lovely, peak-lipped mouth that was his best feature. He walked with an ex-athlete's saunter, a roll from the heels, as if anything physical was a pleasure. David Foster Wallace worked surprising turns on nearly everything: novels, journalism, vacation. His life was an information hunt, collecting hows and whys. "I received 500,000 discrete bits of information today," he once said, "of which maybe 25 are important. My job is to make some sense of it." He wanted to write "stuff about what it feels like to live. Instead of being a relief from what it feels like to live." Readers curled up in the nooks and clearings of his style: his comedy, his brilliance, his humaneness.His life was a map that ends at the wrong destination. Wallace was an A student through high school, he played football, he played tennis, he wrote a philosophy thesis and a novel before he graduated from Amherst, he went to writing school, published the novel, made a city of squalling, bruising, kneecapping editors and writers fall moony-eyed in love with him. He published a thousand-page novel, received the only award you get in the nation for being a genius, wrote essays providing the best feel anywhere of what it means to be alive in the contemporary world, accepted a special chair at California's Pomona College to teach writing, married, published another book and, last month, hanged himself at age 46."The one thing that really should be said about David Foster Wallace is that this was a once-in-a-century talent," says his friend and former editor Colin Harrison. "We may never see a guy like this again in our lifetimes — that I will shout out. He was like a comet flying by at ground level."His 1996 novel, Infinite Jest, was Bible-size and spawned books of interpretation and commentary, like Understanding David Foster Wallace — a book his friends might have tried to write and would have lined up to buy. He was clinically depressed for decades, information he limited to family and his closest friends. "I don't think that he ever lost the feeling that there was something shameful about this," his father says. "His instinct was to hide it."After he died on September 12th, readers crowded the Web with tributes to his generosity, his intelligence. "But he wasn't Saint Dave," says Jonathan Franzen, Wallace's best friend and the author of The Corrections. "This is the paradox of Dave: The closer you get, the darker the picture, but the more genuinely lovable he was. It was only when you knew him better that you had a true appreciation of what a heroic struggle it was for him not merely to get along in the world, but to produce wonderful writing."David grew up in Champaign, Illinois. His father, Jim, taught philosophy at the University of Illinois. His mother, Sally, taught English at a local community college. It was an academic household — poised, considerate — language games in the car, the rooms tidy, the bookcase the hero. "I have these weird early memories," Wallace told me during a series of interviews in 1996. "I remember my parents reading Ulysses out loud to each other in bed, holding hands and both lovin' something really fiercely." Sally hated to get angry — it took her days to recover from a shout. So the family developed a sort of interoffice conflict mail. When his mother had something stern to say, she'd write it up in a letter. When David wanted something badly — raised allowance, more liberal bedtime — he'd slide a letter under his parents' door.David was one of those eerie, perfect combinations of two parents' skills. The titles of his father's books — Ethical Norms, Particular Cases — have the sound of Wallace short-story titles. The tone of his mother's speaking voice contains echoes of Wallace's writing voice: Her textbook, Practically Painless English, sounds like a Wallace joke. She uses phrases like "perishing hot" for very hot, "snoof" for talking in your sleep, "heave your skeleton" for go to bed. "David and I both owe a huge debt to my mother," says his sister, Amy, two years younger. "She has a way of talking that I've never heard anywhere else."David was, from an early age, "very fragile," as he put it. He loved TV, and would get incredibly excited watching a program like Batman or The Wild Wild West. (His parents rationed the "rough" shows. One per week.) David could memorize whole shows of dialogue and predict, like a kind of plot weatherman, when the story was going to turn, where characters would end up. No one saw or treated him as a genius, but at age 14, when he asked what his father did, Jim sat David down and walked him through a Socratic dialogue. "I was astonished by how sophisticated his understanding was," Jim says. "At that point, I figured out that he really, really was extraordinarily bright."David was a big-built kid; he played football — quarterback — until he was 12 or 13, and would always speak like an athlete, the disappearing G's, "wudn't," "dudn't" and "idn't" and "sumpin'." "The big thing I was when I was little was a really serious jock," Wallace told me. "I mean, I had no artistic ambition. I played citywide football. And I was really good. Then I got to junior high, and there were two guys in the city who were better quarterbacks than me. And people started hitting each other a lot harder, and I discovered that I didn't really love to hit people. That was a huge disappointment." After his first day of football practice at Urbana High School, he came home and chucked it. He offered two explanations to his parents: They expected him to practice every day, and the coaches did too much cursing.He had also picked up a racket. "I discovered tennis on my own," Wallace said, "taking public-park lessons. For five years, I was seriously gonna be a pro tennis player. I didn't look that good, but I was almost impossible to beat. I know that sounds arrogant. It's true." On court, he was a bit of a hustler: Before a match, he'd tell his opponent, "Thank you for being here, but you're just going to cream me."By the time he was 14, he felt he could have made nationals. "Really be in the junior show. But just at the point it became important to me, I began to choke. The more scared you get, the worse you play." Plus it was the Seventies — Pink Floyd, bongs. "I started to smoke a lot of pot when I was 15 or 16, and it's hard to train." He laughed. "You don't have that much energy."It was around this time that the Wallaces noticed something strange about David. He would voice surprising requests, like wanting to paint his bedroom black. He was constantly angry at his sister. When he was 16, he refused to go to her birthday party. "Why would I want to celebrate her birthday?" he told his parents."David began to have anxiety attacks in high school," his father recalls. "I noticed the symptoms, but I was just so unsophisticated about these matters. The depression seemed to take the form of an evil spirit that just haunted David." Sally came to call it the "black hole with teeth." David withdrew. "He spent a lot of time throwing up junior year," his sister remembers. One wall of his bedroom was lined with cork, for magazine photos of tennis stars. David pinned an article about Kafka to the wall, with the headline THE DISEASE WAS LIFE ITSELF."I hated seeing those words," his sister tells me, and starts to cry. "They seemed to sum up his existence. We couldn't understand why he was acting the way he was, and so of course my parents were exasperated, lovingly exasperated."David graduated high school with perfect grades. Whatever his personal hurricane was, it had scattered trees and moved on. He decided to go to Amherst, which is where his father had gone, too. His parents told him he would enjoy the Berkshire autumn. Instead, he missed home — the farms and flat horizons, roads stretching contentedly nowhere. "It's fall," David wrote back. "The mountains are pretty, but the landscape isn't beautiful the way Illinois is."Wallace had lugged his bags into Amherst the fall of 1980 — Reagan coming in, the Seventies capsized, preppies everywhere. He brought a suit to campus. "It was kind of a Sears suit, with this Scotch-plaid tie," says his college roommate and close friend Mark Costello, who went on to become a successful novelist himself. "Guys who went to Amherst, who came from five prep schools, they always dress a notch down. No one's bringing a suit. That was just the Wallace sense that going East is a big deal, and you have to not embarrass us. My first impression was that he was really very out of step."Costello came from working-class Massachusetts, seven kids, Irish-Catholic household. He and Wallace connected. "Neither of us fit into the Gatsby-ite mold," Costello says. At Amherst David perfected the style he would wear for the rest of his life: turtleneck, hoodie, big basketball shoes. The look of parking-lot kids who in Illinois were called Dirt Bombs. "A slightly tough, slightly waste-product-y, tennis-playing persona," Costello says. Wallace was also amazingly fast and good company, even just on a walk across campus. "I'd always wanted to be an impressionist," Wallace said, "but I just didn't have an agile enough vocal and facial register to do it." Crossing a green, it was The Dave Show. He would recount how people walked, talked, held their heads, pictured their lives. "Just very connected to people," Costello recalls. "Dave had this ability to be inside someone else's skin."Observing people from afar, of course, can be a way of avoiding them up close. "I was a complete just total banzai weenie studier in college," Wallace recalled. "I was really just scared of people. For instance, I would brave the TV pit — the central TV room — to watch Hill Street Blues, 'cause that was a really important show to me."One afternoon, April of sophomore year, Costello came back to the dorm they shared and found Wallace seated in his chair. Desk clean, bags packed, even his typewriter, which weighed as much as the clothes put together."Dave, what's going on?" Costello asked."I'm sorry, I'm so sorry," Wallace said. "I know I'm really screwing you."He was pulling out of college. Costello drove him to the airport. "He wasn't able to talk about it," Costello recalls. "He was crying, he was mortified. Panicky. He couldn't control his thoughts. It was mental incontinence, the equivalent of wetting his pants.""I wasn't very happy there," Wallace told me later. "I felt kind of inadequate. There was a lot of stuff I wanted to read that wasn't part of any class. And Mom and Dad were just totally cool."Wallace went home to hospitalization, explanations to his parents, a job. For a while, he drove a school bus. "Here he was, a guy who was really shaky, kind of Holden Caulfield, driving a school bus through lightning storms," Costello recalls. "He wrote me a letter all outraged, about the poor screening procedures for school-bus drivers in central Illinois."Wallace would visit his dad's philosophy classes. "The classes would turn into a dialogue between David and me," his father remembers. "The students would just sit looking around, 'Who is this guy?' " Wallace devoured novels — "pretty much everything I've read was read during that year." He also told his parents how he'd felt at school. "He would talk about just being very sad, and lonely," Sally says. "It didn't have anything to do with being loved. He just was very lonely inside himself."He returned to Amherst in the fall, to room with Costello, shaky but hardened. "Certain things had been destroyed in his head," Costello says. "In the first half of his Amherst career, he was trying to be a regular person. He was on the debate team, the sort of guy who knows he's going to be a success." Wallace had talked about going into politics; Costello recalls him joking, "No one is going to vote for somebody who's been in a nuthouse." Having his life fall apart narrowed his sense of what his options were — and the possibilities that were left became more real to him. In a letter to Costello, he wrote, "I want to write books that people will read 100 years from now."Back at school junior year, he never talked much about his breakdown. "It was embarrassing and personal," Costello says. "A zone of no jokes." Wallace regarded it as a failure, something he should have been able to control. He routinized his life. He'd be the first tray at the dining hall for supper, he'd eat, drink coffee dipped with tea bags, library study till 11, head back to the room, turn on Hawaii Five-O, then a midnight gulp from a scotch bottle. When he couldn't turn his mind off, he'd say, "You know what? I think this is a two-shot night," slam another and sleep.In 1984, Costello left for Yale Law School; Wallace was alone senior year. He double-majored — English and philosophy, which meant two big writing projects. In philosophy, he took on modal logic. "It looked really hard, and I was really scared about it," he said. "So I thought I'd do this kind of jaunty, hundred-page novel." He wrote it in five months, and it clocked in at 700 pages. He called it The Broom of the System.Wallace published stories in the Amherst literary magazine. One was about depression and a tricyclic anti-anxiety medication he had been on for two months. The medication "made me feel like I was stoned and in hell," he told me. The story dealt with the in-hell parts:You are the sickness yourself.... You realize all this...when you look at the black hole and it's wearing your face. That's when the Bad Thing just absolutely eats you up, or rather when you just eat yourself up. When you kill yourself. All this business about people committing suicide when they're "severely depressed;" we say, "Holy cow, we must do something to stop them from killing themselves!" That's wrong. Because all these people have, you see, by this time already killed themselves, where it really counts.... When they "commit suicide," they're just being orderly.It wasn't just writing the novel that made Wallace realize his future would lie in fiction. He also helped out friends by writing their papers. In a comic book, this would be his origin story, the part where he's bombarded with gamma rays, bitten by the spider. "I remember realizing at the time, 'Man, I'm really good at this. I'm a weird kind of forger. I can sound kind of like anybody.' "Grad school was next. Philosophy would be an obvious choice. "My dad would have limbs removed without anesthetic before ever pushing his kids about anything," Wallace said. "But I knew I was gonna have to go to grad school. I applied to these English programs instead, and I didn't tell anybody. Writing The Broom of the System, I felt like I was using 97 percent of me, whereas philosophy was using 50 percent."After Amherst, Wallace went to the University of Arizona for an MFA. It was where he picked up the bandanna: "I started wearing them in Tucson because it was a hundred degrees all the time, and I would perspire so much I would drip on the page." The woman he was dating thought the bandanna was a wise move. "She was like a Sixties lady, a Sufi Muslim. She said there were various chakras, and one of the big ones she called the spout hole, at the very top of your cranium. Then I began thinking about the phrase 'Keeping your head together.' It makes me feel kind of creepy that people view it as a trademark or something — it's more a recognition of a weakness, which is that I'm just kind of worried that my head's gonna explode."Arizona was a strange experience: the first classrooms where people weren't happy to see him. He wanted to write the way he wanted to write — funny and overstuffed and nonlinear and strange. The teachers were all "hardass realists." That was the first problem. Problem two was Wallace. "I think I was kind of a prick," he said. "I was just unteachable. I had that look — 'If there were any justice, I'd be teaching this class' — that makes you want to slap a student." One of his stories, "Here and There," went on to win a 1989 O. Henry Prize after it was published in a literary magazine. When he turned it in to his professor, he received a chilly note back: "I hope this isn't representative of the work you're hoping to do for us. We'd hate to lose you.""What I hated was how disingenuous it was," Wallace recalled. "'We'd hate to lose you.' You know, if you're gonna threaten, say that."Wallace sent his thesis project out to agents. He got a lot of letters back: "Best of luck in your janitorial career." Bonnie Nadell was 25, working a first job at San Francisco's Frederick Hill Agency. She opened a letter from Wallace, read a chapter from his book. "I loved it so much," Nadell says. It turned out there was a writer named David Rains Wallace. Hill and Nadell agreed that David should insert his mother's maiden name, which is how he became David Foster Wallace. She remained his agent for the rest of his life. "I have this thing, the nearest Jewish mother, I will simply put my arms around her skirt and just attach myself," Wallace said. "I don't know what it means. Maybe sort of WASP deprivation."Viking won the auction for the novel, "with something like a handful of trading stamps." Word spread; professors turned nice. "I went from borderline ready-to-get-kicked-out to all these tight-smiled guys being, 'Glad to see you, we're proud of you, you'll have to come over for dinner.' It was so delicious: I felt kind of embarrassed for them, they didn't even have integrity about their hatred."Wallace went to New York to meet his editor, Gerry Howard, wearing a U2 T-shirt. "He seemed like a very young 24," Howard says. The shirt impressed him. "U2 wasn't really huge then. And there's a hypersincerity to U2, which I think David was in tune with — or that he really wanted to be sincere, even though his brain kept turning him in the direction of the ironic." Wallace kept calling Howard — who was only 36 — "Mr. Howard," never "Gerry." It would become his business style: a kind of mock formality. People often suspected it was a put-on. What it was was Midwestern politeness, the burnout in the parking lot still nodding "sir" to the vice principal. "There was kind of this hum of superintelligence behind the 'aw, shucks' manner," Howard recalls.The Broom of the System was published in January of 1987, Wallace's second and last year at Arizona. The title referred to something his mother's grandmother used to say, as in, "Here, Sally, have an apple, it's the broom of the system." "I wasn't aware David had picked up on that," his mother says. "I was thrilled that a family expression became the title of his book."The novel hit. "Everything you could hope for," Howard says. "Critics praised it, it sold quite well, and David was off to the races."His first brush with fame was a kind of gateway experience. Wallace would open The Wall Street Journal, see his face transmuted into a dot-cartoon. "Some article like 'Hotshot's Weird New Novel,' " he said. "I'd feel really good, really cool, for exactly 10 seconds. Probably not unlike a crack high, you know? I was living an incredibly American life: 'Boy, if I could just achieve X, Y and Z, everything would be OK.' " Howard bought Wallace's second book, Girl With Curious Hair, a collection of the stories he was finishing up at Arizona. But something in Wallace worried him. "I have never encountered a mind like David's," he says. "It functioned at such an amazingly high level, he clearly lived in a hyperalert state. But on the other hand, I felt that David's emotional life lagged far behind his mental life. And I think he could get lost in the gap between the two."Wallace was already drifting into the gap. He won a Whiting Writers' Award — stood on a stage with Eudora Welty — graduated Arizona, went to an artists' colony, met famous writers, knew the famous writers were seeing his name in more magazines ("absolutely exhilarating and really scary at the same time"), finished the stories. And then he was out of ideas. He tried to write in a cabin in Tucson for a while, then returned home to write — Mom and Dad doing the grocery shopping. He accepted a one-year slot teaching philosophy at Amherst, which was strange: Sophomores he had known were now his students. In the acknowledgments for the book he was completing, he thanks "The Mr. and Mrs. Wallace Fund for Aimless Children."He was balled up, tied up. "I started hating everything I did," he said. "Worse than stuff I'd done in college. Hopelessly confused, unbelievably bad. I was really in a panic, I didn't think I was going to be able to write anymore. And I got this idea: I'd flourished in an academic environment — my first two books had sort of been written under professors." He applied to graduate programs in philosophy, thinking he could write fiction in his spare time. Harvard offered a full scholarship. The last thing he needed to reproduce his college years was to reactivate Mark Costello."So he comes up with this whole cockamamie plan," Costello recalls. "He says, 'OK, you're going to go back to Boston, practice law, and I'm going to go to Harvard. We'll live together — it'll be just like the house we had at Amherst.' It all ended up being a train wreck."They found an apartment in Somerville. Student ghetto: rickety buildings, outdoor staircases. Costello would come home with his briefcase, click up the back stairs, David would call out, "Hi, honey, how was your day?" But Wallace wasn't writing fiction. He had thought course work would be a sideline; but professors expected actual work.Not writing was the kind of symptom that presents a problem of its own. "He could get himself into places where he was pretty helpless," Costello says. "Basically it was the same symptoms all along: this incredible sense of inadequacy, panic. He once said to me that he wanted to write to shut up the babble in his head. He said when you're writing well, you establish a voice in your head, and it shuts up the other voices. The ones that are saying, 'You're not good enough, you're a fraud.' ""Harvard was just unbelievably bleak," Wallace said. It became a substance marathon: drinking, parties, drugs. "I didn't want to feel it," he said. "It was the only time in my life that I'd gone to bars, picked up women I didn't know." Then for weeks, he would quit drinking, start mornings with a 10-mile run. "You know, this kind of very American sports training — I will fix this by taking radical action." Schwarzenegger voice: "If there's a problem, I will train myself out of it. I will work harder."Various delays were holding up the publication of his short-story collection Girl With Curious Hair. He started to feel spooked. "I'm this genius writer," he remembered. "Everything I do's gotta be ingenious, blah, blah, blah, blah." The five-year clock was ticking again. He'd played football for five years. Then he'd played high-level tennis for five years. Now he'd been writing for five years. "What I saw was, 'Jesus, it's the same thing all over again.' I'd started late, showed tremendous promise — and the minute I felt the implications of that promise, it caved in. Because see, by this time, my ego's all invested in the writing. It's the only thing I've gotten food pellets from the universe for. So I feel trapped: 'Uh-oh, my five years is up, I've gotta move on.' But I didn't want to move on."Costello watched while Wallace slipped into a depressive crisis. "He was hanging out with women who were pretty heavily into drugs — that was kind of alluring to Dave — skanking around Somerville, drinking himself blotto."It was the worst period Wallace had ever gone through. "It may have been what in the old days was called a spiritual crisis," he said. "It was just feeling as though every axiom of your life turned out to be false. And there was nothing, and you were nothing — it was all a delusion. But you were better than everyone else because you saw that it was a delusion, and yet you were worse because you couldn't function."By November, the anxieties had become locked and fixed. "I got really worried I was going to kill myself. And I knew, that if anybody was fated to fuck up a suicide attempt, it was me." He walked across campus to Health Services and told a psychiatrist, "Look, there's this issue. I don't feel real safe.""It was a big deal for me, because I was so embarrassed," Wallace said. "But it was the first time I ever treated myself like I was worth something."By making his announcement, Wallace had activated a protocol: Police were notified, he had to withdraw from school. He was sent to McLean, which, as psychiatric hospitals go, is pedigreed: Robert Lowell, Sylvia Plath, Anne Sexton all put in residences there; it's the setting for the memoir Girl, Interrupted. Wallace spent his first day on suicide watch. Locked ward, pink room, no furniture, drain in the floor, observation slot in the door. "When that happens to you," David said, smiling, "you get unprecedentedly willing to examine other alternatives for how to live."Wallace spent eight days in McLean. He was diagnosed as a clinical depressive and was prescribed a drug, called Nardil, developed in the 1950s. He would have to take it from then on. "We had a brief, maybe three-minute audience with the psychopharmacologist," his mother says. Wallace would have to quit drinking, and there was a long list of foods — certain cheeses, pickles, cured meats — he would have to stay away from.He started to clean up. He found a way to get sober, worked very hard at it, and wouldn't drink for the rest of his life. Girl With Curious Hair finally appeared in 1989. Wallace gave a reading in Cambridge; 13 people showed up, including a schizophrenic woman who shrieked all the way through his performance. "The book's coming out seemed like a kind of shrill, jagged laugh from the universe, this thing sort of lingering behind me like a really nasty fart."What followed was a phased, deliberate return to the world. He worked as a security guard, morning shift, at Lotus Software. Polyester uniform, service baton, walking the corridors. "I liked it because I didn't have to think," he said. "Then I quit for the incredibly brave reason that I got tired of getting up so early in the morning."Next, he worked at a health club in Auburndale, Massachusetts. "Very chichi," he said. "They called me something other than a towel boy, but I was in effect a towel boy. I'm sitting there, and who should walk in to get their towel but Michael Ryan. Now, Michael Ryan had received a Whiting Writers' Award the same year I had. So I see this guy that I'd been up on the fucking rostrum with, having Eudora Welty give us this prize. It's two years later — it's the only time I've literally dived under something. He came in, and I pretended not very subtly to slip, and lay facedown, and didn't respond. I left that day, and I didn't go back."He wrote Bonnie Nadell a letter; he was done with writing. That wasn't exactly her first concern. "I was worried he wasn't going to survive," she says. He filled in Howard, too. "I contemplated the circumstance that the best young writer in America was handing out towels in a health club," Howard says. "How fucking sad."Wallace met Jonathan Franzen in the most natural way for an author: as a fan. He sent Franzen a nice letter about his first novel, The Twenty-Seventh City. Franzen wrote back, they arranged to meet in Cambridge. "He just flaked," Franzen recalls. "He didn't show up. That was a fairly substance-filled period of his life."By April of 1992, both were ready for a change. They loaded Franzen's car and headed for Syracuse to scout apartments. Franzen needed "somewhere to relocate with my wife where we could both afford to live and not have anyone tell us how screwed up our marriage was." Wallace's need was simpler: cheap space, for writing. He had been researching for months, haunting rehab facilities and halfway houses, taking quiet note of voices and stories, people who had fallen into the gaps like him. "I got very assertive research- and finagle-wise," he said. "I spent hundreds of hours at three halfway houses. It turned out you could just sit in the living room — nobody is as gregarious as somebody who has recently stopped using drugs."He and Franzen talked a lot about what writing should be for. "We had this feeling that fiction ought to be good for something," Franzen says. "Basically, we decided it was to combat loneliness." They would talk about lots of Wallace's ideas, which could abruptly sharpen into self-criticism. "I remember this being a frequent topic of conversation," Franzen says, "his notion of not having an authentic self. Of being just quick enough to construct a pleasing self for whomever he was talking to. I see now he wasn't just being funny — there was something genuinely compromised in David. At the time I thought, 'Wow, he's even more self-conscious than I am.' "Wallace spent a year writing in Syracuse. "I lived in an apartment that was seriously the size of the foyer of an average house. I really liked it. There were so many books, you couldn't move around. When I'd want to write, I'd have to put all the stuff from the desk on the bed, and when I'd want to sleep, I would have to put all the stuff on the desk."Wallace worked longhand, pages piling up. "You look at the clock and seven hours have passed and your hand is cramped," Wallace said. He'd have pens he considered hot — cheap Bic ballpoints, like batters have bats that are hot. A pen that was hot he called the orgasm pen.In the summer of 1993, he took an academic job 50 miles from his parents, at Illinois State University at Normal. The book was three-quarters done. Based on the first unruly stack of pages, Nadell had been able to sell it to Little, Brown. He had put his whole life into it — tennis, and depression, and stoner afternoons, and the precipice of rehab, and all the hours spent with Amy watching TV. The plot motor is a movie called Infinite Jest, so soothing and perfect it's impossible to switch off: You watch until you sink into your chair, spill your bladder, starve, die. "If the book's about anything," he said, "it's about the question of why am I watching so much shit? It's not about the shit. It's about me: Why am I doing it? The original title was A Failed Entertainment, and the book is structured as an entertainment that doesn't work" — characters developing and scattering, chapters disordered — "because what entertainment ultimately leads to is 'Infinite Jest,' that's the star it's steering by."Wallace held classes in his house, students nudging aside books like Compendium of Drug Therapy and The Emergence of the French Art Film, making jokes about Mount Manuscript, David's pile of novel. He had finished and collected the three years of drafts, and finally sat down and typed the whole thing. Wallace didn't really type; he input the giant thing twice, with one finger. "But a really fast finger."It came to almost 1,700 pages. "I was just terrified how long it would end up being," he said. Wallace told his editor it would be a good beach book, in the sense that people could use it for shade.It can take a year to edit a book, re-edit it, print it, publicize it, ship it, the writer all the time checking his watch. In the meantime, Wallace turned to nonfiction. Two pieces, published in Harper's, would become some of the most famous pieces of journalism of the past decade and a half.Colin Harrison, Wallace's editor at Harper's, had the idea to outfit him with a notebook and push him into perfectly American places — the Illinois State Fair, a Caribbean cruise. It would soak up the side of Wallace that was always on, always measuring himself. "There would be Dave the mimic, Dave the people-watcher," Costello says. "Asking him to actually report could get stressful and weird and complicated. Colin had this stroke of genius about what to do with David. It was a much simpler solution than anyone ever thought."In the pieces, Wallace invented a style writers have plundered for a decade. The unedited camera, the feed before the director in the van starts making choices and cuts. The voice was humane, a big, kind brain tripping over its own lumps. "The Harper's pieces were me peeling back my skull," Wallace said. "You know, welcome to my mind for 20 pages, see through my eyes, here's pretty much all the French curls and crazy circles. The trick was to have it be honest but also interesting — because most of our thoughts aren't all that interesting. To be honest with a motive." He laughed. "There's a certain persona created, that's a little stupider and schmuckier than I am."The cruise-ship piece ran in January 1996, a month before David's novel was published. People photocopied it, faxed it to each other, read it over the phone. When people tell you they're fans of David Foster Wallace, what they're often telling you is that they've read the cruise-ship piece; Wallace would make it the title essay in his first collection of journalism, A Supposedly Fun Thing I'll Never Do Again. In a way, the difference between the fiction and the nonfiction reads as the difference between Wallace's social self and his private self. The essays were endlessly charming, they were the best friend you'd ever have, spotting everything, whispering jokes, sweeping you past what was irritating or boring or awful in humane style. Wallace's fiction, especially after Infinite Jest, would turn chilly, dark, abstract. You could imagine the author of the fiction sinking into a depression. The nonfiction writer was an impervious sun.The novel came out in February of 1996. In New York Magazine, Walter Kirn wrote, "The competition has been obliterated. It's as though Paul Bunyan had joined the NFL, or Wittgenstein had gone on Jeopardy! The novel is that colossally disruptive. And that spectacularly good." He was in Newsweek, Time, Hollywood people appeared at his readings, women batted their eyelashes, men in the back rows scowled, envied. A FedEx guy rang his bell, watched David sign for delivery, asked, "How's it feel to be famous?"At the end of his book tour, I spent a week with David. He talked about the "greasy thrill of fame" and what it might mean to his writing. "When I was 25, I would've given a couple of digits off my non-use hand for this," he said. "I feel good, because I wanna be doing this for 40 more years, you know? So I've got to find some way to enjoy this that doesn't involve getting eaten by it."He was astonishingly good, quick company, making you feel both wide awake and as if your shoes had been tied together. He'd say things like, "There's good self-consciousness, and then there's toxic, paralyzing, raped-by-psychic-Bedouins self-consciousness." He talked about a kind of shyness that turned social life impossibly complicated. "I think being shy basically means being self-absorbed to the point that it makes it difficult to be around other people. For instance, if I'm hanging out with you, I can't even tell whether I like you or not because I'm too worried about whether you like me."He said one interviewer had devoted tons of energy to the genius question. "That was his whole thing, 'Are you normal?' 'Are you normal?' I think one of the true ways I've gotten smarter is that I've realized that there are ways other people are a lot smarter than me. My biggest asset as a writer is that I'm pretty much like everybody else. The parts of me that used to think I was different or smarter or whatever almost made me die."It had been difficult, during the summer, to watch his sister get married. "I'm almost 35. I would like to get married and have kids. I haven't even started to work that shit out yet. I've come close a few times, but I tend to be interested in women that I turn out to not get along very well with. I have friends who say this is something that would be worth looking into with someone that you pay."Wallace was always dating somebody. "There were a lot of relationships," Amy says. He dated in his imaginative life too: When I visited him, one wall was taped with a giant Alanis Morissette poster. "The Alanis Morissette obsession followed the Melanie Griffith obsession — a six-year obsession," he said. "It was preceded by something that I will tell you I got teased a lot for, which was a terrible Margaret Thatcher obsession. All through college: posters of Margaret Thatcher, and ruminations on Margaret Thatcher. Having her really enjoy something I said, leaning forward and covering my hand with hers."He tended to date high-strung women — another symptom of his shyness. "Say what you want about them, psychotics tend to make the first move." Owning dogs was less complicated: "You don't get the feeling you're hurting their feelings all the time."His romantic anxieties were full-spectrum, every bit of the mechanics individually examined. He told me a joke:What does a writer say after sex?Was it as good for me as it was for you?"There is, in writing, a certain blend of sincerity and manipulation, of trying always to gauge what the particular effect of something is gonna be," he said. "It's a very precious asset that really needs to be turned off sometimes. My guess is that writers probably make fun, skilled, satisfactory, and seemingly considerate partners for other people. But that the experience for them is often rather lonely."One night Wallace met the writer Elizabeth Wurtzel, whose depression memoir, Prozac Nation, had recently been published. She thought he looked scruffy — jeans and the bandanna — and very smart. Another night, Wallace walked her home from a restaurant, sat with her in her lobby, spent some time trying to talk his way upstairs. It charmed Wurtzel: "You know, he might have had this enormous brain, but at the end of the day, he still was a guy."Wallace and Wurtzel didn't really talk about the personal experience they had in common — depression, a substance history, consultations at McLean — but about their profession, about what to do with fame. Wallace, again, had set impossible standards for himself. "It really disturbed him, the possibility that success could taint you," she recalls. "He was very interested in purity, in the idea of authenticity — the way some people are into the idea of being cool. He had keeping it real down to a science."When Wallace wrote her, he was still curling through the same topic. "I go through a loop in which I notice all the ways I am self-centered and careerist and not true to standards and values that transcend my own petty interests, and feel like I'm not one of the good ones. But then I countenance the fact that at least here I am worrying about it, noticing all the ways I fall short of integrity, and I imagine that maybe people without any integrity at all don't notice or worry about it; so then I feel better about myself. It's all very confusing. I think I'm very honest and candid, but I'm also proud of how honest and candid I am — so where does that put me?"Success can be as difficult to recover from as failure. "You know the tic big-league pitchers have," his mother says, "when they know that they've pitched a marvelous game — but gee, can they do it again, so they keep flexing that arm? There was some of that. Where he said, 'OK. Good, that came out well. But can I do it again?' That was the feeling I got. There was always the shadow waiting."Wallace saw it that way too. "My big worry," he said, "is that this will just up my expectations for myself. And expectations are a very fine line. Up to a certain point they can be motivating, can be kind of a flamethrower held to your ass. Past that point they're toxic and paralyzing. I'm scared that I'll fuck up and plunge into a compressed version of what I went through before."Mark Costello was also worried. "Work got very hard. He didn't get these gifts from God anymore, he didn't get these six-week periods where he got exactly the 120 pages he needed. So he found distraction in other places." He would get engaged, then unengaged. He would call friends: "Next weekend, Saturday, you gotta be in Rochester, Minnesota, I'm getting married." But then it would be Sunday, or the next week, and he'd have called it off."He almost got married a few times," Amy says. "I think what ultimately happened is he was doing it more for the other person than himself. And he realized that wasn't doing the other person any favors."Wallace told Costello about a woman he had become involved with. "He said, 'She gets mad at me because I never want to leave the house.' 'Honey, let's go to the mall.' 'No, I want to write.' 'But you never do write.' 'But I don't know if I'm going to write. So I have to be here in case it happens.' This went on for years."In 2000, Wallace wrote a letter to his friend Evan Wright, a Rolling Stone contributor: "I know about still having trouble with relationships. (Boy oh boy, do I.) But coming to enjoy my own company more and more — most of the time. I know about some darkness every day (and some days, it's all dark for me)." He wrote about meeting a woman, having things move too easily, deciding against it. "I think whatever the pull is for me is largely composed of wanting the Big Yes, of wanting someone else to want you (Cheap Trick lives). . . . So now I don't know what to do. Probably nothing, which seems to be the Sign that the universe or its CEO is sending me."In the summer of 2001, Wallace relocated to Claremont, California, to become the Roy Edward Disney Chair in Creative Writing, at Pomona College. He published stories and essays, but was having trouble with his work. After he reported on John McCain's 2000 presidential campaign for this magazine, he wrote his agent that it would show his editor that "I'm still capable of good work (my own insecurities, I know)."Wallace had received a MacArthur "genius" award in 1997. "I don't think it did him any favors," says Franzen. "It conferred the mantle of 'genius' on him, which he had of course craved and sought and thought was his due. But I think he felt, 'Now I have to be even smarter.' " In late 2001, Costello called Wallace. "He was talking about how hard the writing was. And I said, lightheartedly, 'Dave, you're a genius.' Meaning, people aren't going to forget about you. You're not going to wind up in a Wendy's. He said, 'All that makes me think is that I've fooled you, too.'"Wallace met Karen Green a few months after moving to Claremont. Green, a painter, admired David's work. It was a sort of artistic exchange, an inter-disciplinary blind date. "She wanted to do some paintings based on some of David's stories," his mother says. "They had a mutual friend, and she thought she would ask permission.""He was totally gaga," Wright recalls. "He called, head over heels, he was talking about her as a life-changing event." Franzen met Green the following year. "I felt in about three minutes that he'd finally found somebody who was up to the task of living with Dave. She's beautiful, incredibly strong, and a real grown-up — she had a center that was not about landing the genius Dave Wallace."They made their debut as a couple with Wallace's parents in July 2003, attending the Maine culinary festival that would provide the title for his last book, Consider the Lobster. "They were both so quick," his father says. "They would get things and look at each other and laugh, without having to say what had struck them as funny." The next year, Wallace and Green flew to his parents' home in Illinois, where they were married two days after Christmas. It was a surprise wedding. David told his mother he wanted to take the family to what he called a "high-gussy" lunch. Sally Wallace assumed it was Karen's influence. "David does not do high gussy," she says. "His notion of high gussy is maybe long pants instead of shorts or a T-shirt with two holes instead of 18." Green and Wallace left the house early to "run errands," while Amy figured out a pretext to get their parents to the courthouse on the way to the lunch. "We went upstairs," Sally says, "and saw Karen with a bouquet, and David dressed up with a flower in his buttonhole, and we knew. He just looked so happy, just radiating happiness." Their reception was at an Urbana restaurant. "As we left in the snow," Sally says, "David and Karen were walking away from us. He wanted us to take pictures, and Jim did. David was jumping in the air and clicking his heels. That became the wedding announcement."According to Wallace's family and friends, the last six years — until the final one — were the best of his life. The marriage was happy, university life good, Karen and David had two dogs, Warner and Bella, they bought a lovely house. "Dave in a real house," Franzen says, laughing, "with real furniture and real style."To Franzen's eye, he was watching Wallace grow up. There had been in David a kind of purposeful avoidance of the normal. Once, they'd gone to a literary party in the city. They walked in the front door together, but by the time Franzen got to the kitchen, he realized Wallace had disappeared. "I went back and proceeded to search the whole place," Franzen recalled. "He had walked into the bathroom to lose me, then turned on his heels and walked right back out the front door."Now, that sort of thing had stopped. "He had reason to hope," Franzen said. "He had the resources to be more grown-up, a wholer person."And then there were the dogs. "He had a predilection for dogs who'd been abused, and unlikely to find other owners who were going to be patient enough for them," Franzen says. "Whether through a sense of identification or sympathy, he had a very hard time disciplining them. But you couldn't see his attentiveness to the dogs without getting a lump in your throat."Because Wallace was secure, he began to talk about going off Nardil, the antidepressant he had taken for nearly two decades. The drug had a long list of side effects, including the potential of very high blood pressure. "It had been a fixture of my morbid fear about Dave — that he would not last all that long, with the wear and tear on his heart," Franzen says. "I worried that I was going to lose him in his early 50s." Costello said that Wallace complained the drug made him feel "filtered." "He said, 'I don't want to be on this stuff for the rest of my life.' He wanted to be more a member of the human race."In June of 2007, Wallace and Green were at an Indian restaurant with David's parents in Claremont. David suddenly felt very sick — intense stomach pains. They stayed with him for days. When he went to doctors, he was told that something he'd eaten might have interacted with the Nardil. They suggested he try going off the drug and seeing if another approach might work."So at that point," says his sister Amy, with an edge in her voice, it was determined, 'Oh, well, gosh, we've made so much pharmaceutical progress in the last two decades that I'm sure we can find something that can knock out that pesky depression without all these side effects.' They had no idea that it was the only thing that was keeping him alive."Wallace would have to taper off the old drug and then taper on to a new one. "He knew it was going to be rough," says Franzen. "But he was feeling like he could finally afford a year to do the job. He figured that he was going to go on to something else, at least temporarily. He was a perfectionist, you know? He wanted to be perfect, and taking Nardil was not perfect."That summer, David began to phase out the Nardil. His doctors began prescribing other medications, none of which seemed to help. "They could find nothing," his mother says softly. "Nothing." In September, David asked Amy to forgo her annual fall-break visit. He wasn't up to it. By October, his symptoms had become bad enough to send him to the hospital. His parents didn't know what to do. "I started worrying about that," Sally says, "but then it seemed OK." He began to drop weight. By that fall, he looked like a college kid again: longish hair, eyes intense, as if he had just stepped out of an Amherst classroom.When Amy talked to him on the phone, "sometimes he was his old self," she says. "The worst question you could ask David in the last year was 'how are you?' And it's almost impossible to have a conversation with someone you don't see regularly without that question." Wallace was very honest with her. He'd answer, "I'm not all right. I'm trying to be, but I'm not all right."Despite his struggle, Wallace managed to keep teaching. He was dedicated to his students: He would write six pages of comments to a short story, joke with his class, fight them to try harder. During office hours, if there was a grammar question he couldn't answer, he'd phone his mother. "He would call me and say, 'Mom, I've got this student right here. Explain to me one more time why this is wrong.' You could hear the student sort of laughing in the background. 'Here's David Foster Wallace calling his mother.' "In early May, at the end of the school year, he sat down with some graduating seniors from his fiction class at a nearby cafe. Wallace answered their jittery writer's-future questions. "He got choked up at the end," recalls Bennett Sims, one of his students. "He started to tell us how much he would miss us, and he began to cry. And because I had never seen Dave cry, I thought he was just joking. Then, awfully, he sniffled and said, 'Go ahead and laugh — here I am crying — but I really am going to miss all of you.' "His parents were scheduled to visit the next month. In June, when Sally spoke with her son, he said, "I can't wait, it'll be wonderful, we'll have big fun." The next day, he called and said, "Mom, I have two favors to ask you. Would you please not come?" She said OK. Then Wallace asked, "Would your feelings not be hurt?"No medications had worked; the depression wouldn't lift. "After this year of absolute hell for David," Sally says, "they decided to go back to the Nardil." The doctors also administered 12 courses of electroconvulsive therapy, waiting for Wallace's medication to become effective. "Twelve," Sally repeats. "Such brutal treatments," Jim says. "It was clear then things were bad."Wallace had always been terrified of shock therapy. "It scares the shit out of me," he told me in 1996. "My brain's what I've got. But I could see that at a certain point, you might beg for it."In late June, Franzen, who was in Berlin, grew worried. "I actually woke up one night," he says. "Our communications had a rhythm, and I thought, 'It's been too long since I heard from Dave.' " When Franzen called, Karen said to come immediately: David had tried to kill himself.Franzen spent a week with Wallace in July. David had dropped 70 pounds in a year. "He was thinner than I'd ever seen him. There was a look in his eyes: terrified, terribly sad, and far away. Still, he was fun to be with, even at 10 percent strength." Franzen would sit with Wallace in the living room and play with the dogs, or step outside with David while he smoked a cigarette. "We argued about stuff. He was doing his usual line about, 'A dog's mouth is practically a disinfectant, it's so clean. Not like human saliva, dog saliva is marvelously germ-resistant.'" Before he left, Wallace thanked him for coming. "I felt grateful that he allowed me to be there," Franzen says.Six weeks later, Wallace asked his parents to come to California. The Nardil wasn't working. It can happen with an antidepressant; a patient goes off, returns, and the medication has lost its efficacy. Wallace couldn't sleep. He was afraid to leave the house. He asked, "What if I meet one of my students?" "He didn't want anyone to see him the way he was," his father says. "It was just awful to see. If a student saw him, they would have put their arms around him and hugged him, I'm sure."His parents stayed for 10 days. "He was just desperate," his mother says. "He was afraid it wasn't ever going to work. He was suffering. We just kept holding him, saying if he could just hang on, it would straighten. He was very brave for a very long time."Wallace and his parents would get up at six in the morning and walk the dogs. They watched DVDs of The Wire, talked. Sally cooked David's favorite dishes, heavy comfort foods — pot pies, casseroles, strawberries in cream. "We kept telling him we were so glad he was alive," his mother recalls. "But my feeling is that, even then, he was leaving the planet. He just couldn't take it."One afternoon before they left, David was very upset. His mother sat on the floor beside him. "I just rubbed his arm. He said he was glad I was his mom. I told him it was an honor."At the end of August, Franzen called. All summer long he had been telling David that as bad as things were, they were going to be better, and then he'd be better than he'd ever been. David would say, "Keep talking like that — it's helping." But this time it wasn't helping. "He was far away," Franzen says. A few weeks later, Karen left David alone with the dogs for a few hours. When she came home that night, he had hanged himself."I can't get the image out of my head," his sister says. "David and his dogs, and it's dark. I'm sure he kissed them on the mouth, and told them he was sorry."[From Issue 1064 -- October 30, 2008]Winner: Rolling Stone: Jann Wenner, editor and publisher; Will Dana, managing editor, for The Lost Years & Last Days of David Foster Wallace, by David Lipsky, October 30.
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The Big Takeover: Wall Street Coup d'Etat

Think the big banks begging for government handouts are down and out? Think again. They're taking over the government - not the other way around. How Wall Street insiders are using the bailout to stage a revolution. The global economic crisis isn't about money - it's about power.It's over — we're officially, royally fucked. No empire can survive being rendered a permanent laughingstock, which is what happened as of a few weeks ago, when the buffoons who have been running things in this country finally went one step too far. It happened when Treasury Secretary Timothy Geithner was forced to admit that he was once again going to have to stuff billions of taxpayer dollars into a dying insurance giant called AIG, itself a profound symbol of our national decline — a corporation that got rich insuring the concrete and steel of American industry in the country's heyday, only to destroy itself chasing phantom fortunes at the Wall Street card tables, like a dissolute nobleman gambling away the family estate in the waning days of the British Empire.The latest bailout came as AIG admitted to having just posted the largest quarterly loss in American corporate history — some $61.7 billion. In the final three months of last year, the company lost more than $27 million every hour. That's $465,000 a minute, a yearly income for a median American household every six seconds, roughly $7,750 a second. And all this happened at the end of eight straight years that America devoted to frantically chasing the shadow of a terrorist threat to no avail, eight years spent stopping every citizen at every airport to search every purse, bag, crotch and briefcase for juice boxes and explosive tubes of toothpaste. Yet in the end, our government had no mechanism for searching the balance sheets of companies that held life-or-death power over our society and was unable to spot holes in the national economy the size of Libya (whose entire GDP last year was smaller than AIG's 2008 losses).So it's time to admit it: We're fools, protagonists in a kind of gruesome comedy about the marriage of greed and stupidity. And the worst part about it is that we're still in denial — we still think this is some kind of unfortunate accident, not something that was created by the group of psychopaths on Wall Street whom we allowed to gang-rape the American Dream. When Geithner announced the new $30 billion bailout, the party line was that poor AIG was just a victim of a lot of shitty luck — bad year for business, you know, what with the financial crisis and all. Edward Liddy, the company's CEO, actually compared it to catching a cold: "The marketplace is a pretty crummy place to be right now," he said. "When the world catches pneumonia, we get it too." In a pathetic attempt at name-dropping, he even whined that AIG was being "consumed by the same issues that are driving house prices down and 401K statements down and Warren Buffet's investment portfolio down."Liddy made AIG sound like an orphan begging in a soup line, hungry and sick from being left out in someone else's financial weather. He conveniently forgot to mention that AIG had spent more than a decade systematically scheming to evade U.S. and international regulators, or that one of the causes of its "pneumonia" was making colossal, world-sinking $500 billion bets with money it didn't have, in a toxic and completely unregulated derivatives market.Nor did anyone mention that when AIG finally got up from its seat at the Wall Street casino, broke and busted in the afterdawn light, it owed money all over town — and that a huge chunk of your taxpayer dollars in this particular bailout scam will be going to pay off the other high rollers at its table. Or that this was a casino unique among all casinos, one where middle-class taxpayers cover the bets of billionaires.People are pissed off about this financial crisis, and about this bailout, but they're not pissed off enough. The reality is that the worldwide economic meltdown and the bailout that followed were together a kind of revolution, a coup d'état. They cemented and formalized a political trend that has been snowballing for decades: the gradual takeover of the government by a small class of connected insiders, who used money to control elections, buy influence and systematically weaken financial regulations.The crisis was the coup de grâce: Given virtually free rein over the economy, these same insiders first wrecked the financial world, then cunningly granted themselves nearly unlimited emergency powers to clean up their own mess. And so the gambling-addict leaders of companies like AIG end up not penniless and in jail, but with an Alien-style death grip on the Treasury and the Federal Reserve — "our partners in the government," as Liddy put it with a shockingly casual matter-of-factness after the most recent bailout.The mistake most people make in looking at the financial crisis is thinking of it in terms of money, a habit that might lead you to look at the unfolding mess as a huge bonus-killing downer for the Wall Street class. But if you look at it in purely Machiavellian terms, what you see is a colossal power grab that threatens to turn the federal government into a kind of giant Enron — a huge, impenetrable black box filled with self-dealing insiders whose scheme is the securing of individual profits at the expense of an ocean of unwitting involuntary shareholders, previously known as taxpayers.I. PATIENT ZEROThe best way to understand the financial crisis is to understand the meltdown at AIG. AIG is what happens when short, bald managers of otherwise boring financial bureaucracies start seeing Brad Pitt in the mirror. This is a company that built a giant fortune across more than a century by betting on safety-conscious policyholders — people who wear seat belts and build houses on high ground — and then blew it all in a year or two by turning their entire balance sheet over to a guy who acted like making huge bets with other people's money would make his dick bigger.That guy — the Patient Zero of the global economic meltdown — was one Joseph Cassano, the head of a tiny, 400-person unit within the company called AIG Financial Products, or AIGFP. Cassano, a pudgy, balding Brooklyn College grad with beady eyes and way too much forehead, cut his teeth in the Eighties working for Mike Milken, the granddaddy of modern Wall Street debt alchemists. Milken, who pioneered the creative use of junk bonds, relied on messianic genius and a whole array of insider schemes to evade detection while wreaking financial disaster. Cassano, by contrast, was just a greedy little turd with a knack for selective accounting who ran his scam right out in the open, thanks to Washington's deregulation of the Wall Street casino. "It's all about the regulatory environment," says a government source involved with the AIG bailout. "These guys look for holes in the system, for ways they can do trades without government interference. Whatever is unregulated, all the action is going to pile into that."The mess Cassano created had its roots in an investment boom fueled in part by a relatively new type of financial instrument called a collateralized-debt obligation. A CDO is like a box full of diced-up assets. They can be anything: mortgages, corporate loans, aircraft loans, credit-card loans, even other CDOs. So as X mortgage holder pays his bill, and Y corporate debtor pays his bill, and Z credit-card debtor pays his bill, money flows into the box.The key idea behind a CDO is that there will always be at least some money in the box, regardless of how dicey the individual assets inside it are. No matter how you look at a single unemployed ex-con trying to pay the note on a six-bedroom house, he looks like a bad investment. But dump his loan in a box with a smorgasbord of auto loans, credit-card debt, corporate bonds and other crap, and you can be reasonably sure that somebody is going to pay up. Say $100 is supposed to come into the box every month. Even in an apocalypse, when $90 in payments might default, you'll still get $10. What the inventors of the CDO did is divide up the box into groups of investors and put that $10 into its own level, or "tranche." They then convinced ratings agencies like Moody's and S&P to give that top tranche the highest AAA rating — meaning it has close to zero credit risk.Suddenly, thanks to this financial seal of approval, banks had a way to turn their shittiest mortgages and other financial waste into investment-grade paper and sell them to institutional investors like pensions and insurance companies, which were forced by regulators to keep their portfolios as safe as possible. Because CDOs offered higher rates of return than truly safe products like Treasury bills, it was a win-win: Banks made a fortune selling CDOs, and big investors made much more holding them.The problem was, none of this was based on reality. "The banks knew they were selling crap," says a London-based trader from one of the bailed-out companies. To get AAA ratings, the CDOs relied not on their actual underlying assets but on crazy mathematical formulas that the banks cooked up to make the investments look safer than they really were. "They had some back room somewhere where a bunch of Indian guys who'd been doing nothing but math for God knows how many years would come up with some kind of model saying that this or that combination of debtors would only default once every 10,000 years," says one young trader who sold CDOs for a major investment bank. "It was nuts."Now that even the crappiest mortgages could be sold to conservative investors, the CDOs spurred a massive explosion of irresponsible and predatory lending. In fact, there was such a crush to underwrite CDOs that it became hard to find enough subprime mortgages — read: enough unemployed meth dealers willing to buy million-dollar homes for no money down — to fill them all. As banks and investors of all kinds took on more and more in CDOs and similar instruments, they needed some way to hedge their massive bets — some kind of insurance policy, in case the housing bubble burst and all that debt went south at the same time. This was particularly true for investment banks, many of which got stuck holding or "warehousing" CDOs when they wrote more than they could sell. And that's were Joe Cassano came in.Known for his boldness and arrogance, Cassano took over as chief of AIGFP in 2001. He was the favorite of Maurice "Hank" Greenberg, the head of AIG, who admired the younger man's hard-driving ways, even if neither he nor his successors fully understood exactly what it was that Cassano did. According to a source familiar with AIG's internal operations, Cassano basically told senior management, "You know insurance, I know investments, so you do what you do, and I'll do what I do — leave me alone." Given a free hand within the company, Cassano set out from his offices in London to sell a lucrative form of "insurance" to all those investors holding lots of CDOs. His tool of choice was another new financial instrument known as a credit-default swap, or CDS.The CDS was popularized by J.P. Morgan, in particular by a group of young, creative bankers who would later become known as the "Morgan Mafia," as many of them would go on to assume influential positions in the finance world. In 1994, in between booze and games of tennis at a resort in Boca Raton, Florida, the Morgan gang plotted a way to help boost the bank's returns. One of their goals was to find a way to lend more money, while working around regulations that required them to keep a set amount of cash in reserve to back those loans. What they came up with was an early version of the credit-default swap.In its simplest form, a CDS is just a bet on an outcome. Say Bank A writes a million-dollar mortgage to the Pope for a town house in the West Village. Bank A wants to hedge its mortgage risk in case the Pope can't make his monthly payments, so it buys CDS protection from Bank B, wherein it agrees to pay Bank B a premium of $1,000 a month for five years. In return, Bank B agrees to pay Bank A the full million-dollar value of the Pope's mortgage if he defaults. In theory, Bank A is covered if the Pope goes on a meth binge and loses his job.When Morgan presented their plans for credit swaps to regulators in the late Nineties, they argued that if they bought CDS protection for enough of the investments in their portfolio, they had effectively moved the risk off their books. Therefore, they argued, they should be allowed to lend more, without keeping more cash in reserve. A whole host of regulators — from the Federal Reserve to the Office of the Comptroller of the Currency — accepted the argument, and Morgan was allowed to put more money on the street.What Cassano did was to transform the credit swaps that Morgan popularized into the world's largest bet on the housing boom. In theory, at least, there's nothing wrong with buying a CDS to insure your investments. Investors paid a premium to AIGFP, and in return the company promised to pick up the tab if the mortgage-backed CDOs went bust. But as Cassano went on a selling spree, the deals he made differed from traditional insurance in several significant ways. First, the party selling CDS protection didn't have to post any money upfront. When a $100 corporate bond is sold, for example, someone has to show 100 actual dollars. But when you sell a $100 CDS guarantee, you don't have to show a dime. So Cassano could sell investment banks billions in guarantees without having any single asset to back it up.Secondly, Cassano was selling so-called "naked" CDS deals. In a "naked" CDS, neither party actually holds the underlying loan. In other words, Bank B not only sells CDS protection to Bank A for its mortgage on the Pope — it turns around and sells protection to Bank C for the very same mortgage. This could go on ad nauseam: You could have Banks D through Z also betting on Bank A's mortgage. Unlike traditional insurance, Cassano was offering investors an opportunity to bet that someone else's house would burn down, or take out a term life policy on the guy with AIDS down the street. It was no different from gambling, the Wall Street version of a bunch of frat brothers betting on Jay Feely to make a field goal. Cassano was taking book for every bank that bet short on the housing market, but he didn't have the cash to pay off if the kick went wide.In a span of only seven years, Cassano sold some $500 billion worth of CDS protection, with at least $64 billion of that tied to the subprime mortgage market. AIG didn't have even a fraction of that amount of cash on hand to cover its bets, but neither did it expect it would ever need any reserves. So long as defaults on the underlying securities remained a highly unlikely proposition, AIG was essentially collecting huge and steadily climbing premiums by selling insurance for the disaster it thought would never come.Initially, at least, the revenues were enormous: AIGFP's returns went from $737 million in 1999 to $3.2 billion in 2005. Over the past seven years, the subsidiary's 400 employees were paid a total of $3.5 billion; Cassano himself pocketed at least $280 million in compensation. Everyone made their money — and then it all went to shit.II. THE REGULATORSCassano's outrageous gamble wouldn't have been possible had he not had the good fortune to take over AIGFP just as Sen. Phil Gramm — a grinning, laissez-faire ideologue from Texas — had finished engineering the most dramatic deregulation of the financial industry since Emperor Hien Tsung invented paper money in 806 A.D. For years, Washington had kept a watchful eye on the nation's banks. Ever since the Great Depression, commercial banks — those that kept money on deposit for individuals and businesses — had not been allowed to double as investment banks, which raise money by issuing and selling securities. The Glass-Steagall Act, passed during the Depression, also prevented banks of any kind from getting into the insurance business.But in the late Nineties, a few years before Cassano took over AIGFP, all that changed. The Democrats, tired of getting slaughtered in the fundraising arena by Republicans, decided to throw off their old reliance on unions and interest groups and become more "business-friendly." Wall Street responded by flooding Washington with money, buying allies in both parties. In the 10-year period beginning in 1998, financial companies spent $1.7 billion on federal campaign contributions and another $3.4 billion on lobbyists. They quickly got what they paid for. In 1999, Gramm co-sponsored a bill that repealed key aspects of the Glass-Steagall Act, smoothing the way for the creation of financial megafirms like Citigroup. The move did away with the built-in protections afforded by smaller banks. In the old days, a local banker knew the people whose loans were on his balance sheet: He wasn't going to give a million-dollar mortgage to a homeless meth addict, since he would have to keep that loan on his books. But a giant merged bank might write that loan and then sell it off to some fool in China, and who cared?The very next year, Gramm compounded the problem by writing a sweeping new law called the Commodity Futures Modernization Act that made it impossible to regulate credit swaps as either gambling or securities. Commercial banks — which, thanks to Gramm, were now competing directly with investment banks for customers — were driven to buy credit swaps to loosen capital in search of higher yields. "By ruling that credit-default swaps were not gaming and not a security, the way was cleared for the growth of the market," said Eric Dinallo, head of the New York State Insurance Department.The blanket exemption meant that Joe Cassano could now sell as many CDS contracts as he wanted, building up as huge a position as he wanted, without anyone in government saying a word. "You have to remember, investment banks aren't in the business of making huge directional bets," says the government source involved in the AIG bailout. When investment banks write CDS deals, they hedge them. But insurance companies don't have to hedge. And that's what AIG did. "They just bet massively long on the housing market," says the source. "Billions and billions."In the biggest joke of all, Cassano's wheeling and dealing was regulated by the Office of Thrift Supervision, an agency that would prove to be defiantly uninterested in keeping watch over his operations. How a behemoth like AIG came to be regulated by the little-known and relatively small OTS is yet another triumph of the deregulatory instinct. Under another law passed in 1999, certain kinds of holding companies could choose the OTS as their regulator, provided they owned one or more thrifts (better known as savings-and-loans). Because the OTS was viewed as more compliant than the Fed or the Securities and Exchange Commission, companies rushed to reclassify themselves as thrifts. In 1999, AIG purchased a thrift in Delaware and managed to get approval for OTS regulation of its entire operation.Making matters even more hilarious, AIGFP — a London-based subsidiary of an American insurance company — ought to have been regulated by one of Europe's more stringent regulators, like Britain's Financial Services Authority. But the OTS managed to convince the Europeans that it had the muscle to regulate these giant companies. By 2007, the EU had conferred legitimacy to OTS supervision of three mammoth firms — GE, AIG and Ameriprise.That same year, as the subprime crisis was exploding, the Government Accountability Office criticized the OTS, noting a "disparity between the size of the agency and the diverse firms it oversees." Among other things, the GAO report noted that the entire OTS had only one insurance specialist on staff — and this despite the fact that it was the primary regulator for the world's largest insurer!"There's this notion that the regulators couldn't do anything to stop AIG," says a government official who was present during the bailout. "That's bullshit. What you have to understand is that these regulators have ultimate power. They can send you a letter and say, 'You don't exist anymore,' and that's basically that. They don't even really need due process. The OTS could have said, 'We're going to pull your charter; we're going to pull your license; we're going to sue you.' And getting sued by your primary regulator is the kiss of death."When AIG finally blew up, the OTS regulator ostensibly in charge of overseeing the insurance giant — a guy named C.K. Lee — basically admitted that he had blown it. His mistake, Lee said, was that he believed all those credit swaps in Cassano's portfolio were "fairly benign products." Why? Because the company told him so. "The judgment the company was making was that there was no big credit risk," he explained. (Lee now works as Midwest region director of the OTS; the agency declined to make him available for an interview.)In early March, after the latest bailout of AIG, Treasury Secretary Timothy Geithner took what seemed to be a thinly veiled shot at the OTS, calling AIG a "huge, complex global insurance company attached to a very complicated investment bank/hedge fund that was allowed to build up without any adult supervision." But even without that "adult supervision," AIG might have been OK had it not been for a complete lack of internal controls. For six months before its meltdown, according to insiders, the company had been searching for a full-time chief financial officer and a chief risk-assessment officer, but never got around to hiring either. That meant that the 18th-largest company in the world had no one checking to make sure its balance sheet was safe and no one keeping track of how much cash and assets the firm had on hand. The situation was so bad that when outside consultants were called in a few weeks before the bailout, senior executives were unable to answer even the most basic questions about their company — like, for instance, how much exposure the firm had to the residential-mortgage market.III. THE CRASHIronically, when reality finally caught up to Cassano, it wasn't because the housing market crapped but because of AIG itself. Before 2005, the company's debt was rated triple-A, meaning he didn't need to post much cash to sell CDS protection: The solid creditworthiness of AIG's name was guarantee enough. But the company's crummy accounting practices eventually caused its credit rating to be downgraded, triggering clauses in the CDS contracts that forced Cassano to post substantially more collateral to back his deals.By the fall of 2007, it was evident that AIGFP's portfolio had turned poisonous, but like every good Wall Street huckster, Cassano schemed to keep his insane, Earth-swallowing gamble hidden from public view. That August, balls bulging, he announced to investors on a conference call that "it is hard for us, without being flippant, to even see a scenario within any kind of realm of reason that would see us losing $1 in any of those transactions." As he spoke, his CDS portfolio was racking up $352 million in losses. When the growing credit crunch prompted senior AIG executives to re-examine its liabilities, a company accountant named Joseph St. Denis became "gravely concerned" about the CDS deals and their potential for mass destruction. Cassano responded by personally forcing the poor sap out of the firm, telling him he was "deliberately excluded" from the financial review for fear that he might "pollute the process."The following February, when AIG posted $11.5 billion in annual losses, it announced the resignation of Cassano as head of AIGFP, saying an auditor had found a "material weakness" in the CDS portfolio. But amazingly, the company not only allowed Cassano to keep $34 million in bonuses, it kept him on as a consultant for $1 million a month. In fact, Cassano remained on the payroll and kept collecting his monthly million through the end of September 2008, even after taxpayers had been forced to hand AIG $85 billion to patch up his fuck-ups. When asked in October why the company still retained Cassano at his $1 million-a-month rate despite his role in the probable downfall of Western civilization, CEO Martin Sullivan told Congress with a straight face that AIG wanted to "retain the 20-year knowledge that Mr. Cassano had." (Cassano, who is apparently hiding out in his lavish town house near Harrods in London, could not be reached for comment.)What sank AIG in the end was another credit downgrade. Cassano had written so many CDS deals that when the company was facing another downgrade to its credit rating last September, from AA to A, it needed to post billions in collateral — not only more cash than it had on its balance sheet but more cash than it could raise even if it sold off every single one of its liquid assets. Even so, management dithered for days, not believing the company was in serious trouble. AIG was a dried-up prune, sapped of any real value, and its top executives didn't even know it.On the weekend of September 13th, AIG's senior leaders were summoned to the offices of the New York Federal Reserve. Regulators from Dinallo's insurance office were there, as was Geithner, then chief of the New York Fed. Treasury Secretary Hank Paulson, who spent most of the weekend preoccupied with the collapse of Lehman Brothers, came in and out. Also present, for reasons that would emerge later, was Lloyd Blankfein, CEO of Goldman Sachs. The only relevant government office that wasn't represented was the regulator that should have been there all along: the OTS."We sat down with Paulson, Geithner and Dinallo," says a person present at the negotiations. "I didn't see the OTS even once."On September 14th, according to another person present, Treasury officials presented Blankfein and other bankers in attendance with an absurd proposal: "They basically asked them to spend a day and check to see if they could raise the money privately." The laughably short time span to complete the mammoth task made the answer a foregone conclusion. At the end of the day, the bankers came back and told the government officials, gee, we checked, but we can't raise that much. And the bailout was on.A short time later, it came out that AIG was planning to pay some $90 million in deferred compensation to former executives, and to accelerate the payout of $277 million in bonuses to others — a move the company insisted was necessary to "retain key employees." When Congress balked, AIG canceled the $90 million in payments.Then, in January 2009, the company did it again. After all those years letting Cassano run wild, and after already getting caught paying out insane bonuses while on the public till, AIG decided to pay out another $450 million in bonuses. And to whom? To the 400 or so employees in Cassano's old unit, AIGFP, which is due to go out of business shortly! Yes, that's right, an average of $1.1 million in taxpayer-backed money apiece, to the very people who spent the past decade or so punching a hole in the fabric of the universe!"We, uh, needed to keep these highly expert people in their seats," AIG spokeswoman Christina Pretto says to me in early February."But didn't these 'highly expert people' basically destroy your company?" I ask.Pretto protests, says this isn't fair. The employees at AIGFP have already taken pay cuts, she says. Not retaining them would dilute the value of the company even further, make it harder to wrap up the unit's operations in an orderly fashion.The bonuses are a nice comic touch highlighting one of the more outrageous tangents of the bailout age, namely the fact that, even with the planet in flames, some members of the Wall Street class can't even get used to the tragedy of having to fly coach. "These people need their trips to Baja, their spa treatments, their hand jobs," says an official involved in the AIG bailout, a serious look on his face, apparently not even half-kidding. "They don't function well without them."IV. THE POWER GRABSo that's the first step in wall street's power grab: making up things like credit-default swaps and collateralized-debt obligations, financial products so complex and inscrutable that ordinary American dumb people — to say nothing of federal regulators and even the CEOs of major corporations like AIG — are too intimidated to even try to understand them. That, combined with wise political investments, enabled the nation's top bankers to effectively scrap any meaningful oversight of the financial industry. In 1997 and 1998, the years leading up to the passage of Phil Gramm's fateful act that gutted Glass-Steagall, the banking, brokerage and insurance industries spent $350 million on political contributions and lobbying. Gramm alone — then the chairman of the Senate Banking Committee — collected $2.6 million in only five years. The law passed 90-8 in the Senate, with the support of 38 Democrats, including some names that might surprise you: Joe Biden, John Kerry, Tom Daschle, Dick Durbin, even John Edwards.The act helped create the too-big-to-fail financial behemoths like Citigroup, AIG and Bank of America — and in turn helped those companies slowly crush their smaller competitors, leaving the major Wall Street firms with even more money and power to lobby for further deregulatory measures. "We're moving to an oligopolistic situation," Kenneth Guenther, a top executive with the Independent Community Bankers of America, lamented after the Gramm measure was passed.The situation worsened in 2004, in an extraordinary move toward deregulation that never even got to a vote. At the time, the European Union was threatening to more strictly regulate the foreign operations of America's big investment banks if the U.S. didn't strengthen its own oversight. So the top five investment banks got together on April 28th of that year and — with the helpful assistance of then-Goldman Sachs chief and future Treasury Secretary Hank Paulson — made a pitch to George Bush's SEC chief at the time, William Donaldson, himself a former investment banker. The banks generously volunteered to submit to new rules restricting them from engaging in excessively risky activity. In exchange, they asked to be released from any lending restrictions. The discussion about the new rules lasted just 55 minutes, and there was not a single representative of a major media outlet there to record the fateful decision.Donaldson OK'd the proposal, and the new rules were enough to get the EU to drop its threat to regulate the five firms. The only catch was, neither Donaldson nor his successor, Christopher Cox, actually did any regulating of the banks. They named a commission of seven people to oversee the five companies, whose combined assets came to total more than $4 trillion. But in the last year and a half of Cox's tenure, the group had no director and did not complete a single inspection. Great deal for the banks, which originally complained about being regulated by both Europe and the SEC, and ended up being regulated by no one.Once the capital requirements were gone, those top five banks went hog-wild, jumping ass-first into the then-raging housing bubble. One of those was Bear Stearns, which used its freedom to drown itself in bad mortgage loans. In the short period between the 2004 change and Bear's collapse, the firm's debt-to-equity ratio soared from 12-1 to an insane 33-1. Another culprit was Goldman Sachs, which also had the good fortune, around then, to see its CEO, a bald-headed Frankensteinian goon named Hank Paulson (who received an estimated $200 million tax deferral by joining the government), ascend to Treasury secretary.Freed from all capital restraints, sitting pretty with its man running the Treasury, Goldman jumped into the housing craze just like everyone else on Wall Street. Although it famously scored an $11 billion coup in 2007 when one of its trading units smartly shorted the housing market, the move didn't tell the whole story. In truth, Goldman still had a huge exposure come that fateful summer of 2008 — to none other than Joe Cassano.Goldman Sachs, it turns out, was Cassano's biggest customer, with $20 billion of exposure in Cassano's CDS book. Which might explain why Goldman chief Lloyd Blankfein was in the room with ex-Goldmanite Hank Paulson that weekend of September 13th, when the federal government was supposedly bailing out AIG.When asked why Blankfein was there, one of the government officials who was in the meeting shrugs. "One might say that it's because Goldman had so much exposure to AIGFP's portfolio," he says. "You'll never prove that, but one might suppose."Market analyst Eric Salzman is more blunt. "If AIG went down," he says, "there was a good chance Goldman would not be able to collect." The AIG bailout, in effect, was Goldman bailing out Goldman.Eventually, Paulson went a step further, elevating another ex-Goldmanite named Edward Liddy to run AIG — a company whose bailout money would be coming, in part, from the newly created TARP program, administered by another Goldman banker named Neel Kashkari.V. REPO MENThere are plenty of people who have noticed, in recent years, that when they lost their homes to foreclosure or were forced into bankruptcy because of crippling credit-card debt, no one in the government was there to rescue them. But when Goldman Sachs — a company whose average employee still made more than $350,000 last year, even in the midst of a depression — was suddenly faced with the possibility of losing money on the unregulated insurance deals it bought for its insane housing bets, the government was there in an instant to patch the hole. That's the essence of the bailout: rich bankers bailing out rich bankers, using the taxpayers' credit card.The people who have spent their lives cloistered in this Wall Street community aren't much for sharing information with the great unwashed. Because all of this shit is complicated, because most of us mortals don't know what the hell LIBOR is or how a REIT works or how to use the word "zero coupon bond" in a sentence without sounding stupid — well, then, the people who do speak this idiotic language cannot under any circumstances be bothered to explain it to us and instead spend a lot of time rolling their eyes and asking us to trust them.That roll of the eyes is a key part of the psychology of Paulsonism. The state is now being asked not just to call off its regulators or give tax breaks or funnel a few contracts to connected companies; it is intervening directly in the economy, for the sole purpose of preserving the influence of the megafirms. In essence, Paulson used the bailout to transform the government into a giant bureaucracy of entitled assholedom, one that would socialize "toxic" risks but keep both the profits and the management of the bailed-out firms in private hands. Moreover, this whole process would be done in secret, away from the prying eyes of NASCAR dads, broke-ass liberals who read translations of French novels, subprime mortgage holders and other such financial losers.Some aspects of the bailout were secretive to the point of absurdity. In fact, if you look closely at just a few lines in the Federal Reserve's weekly public disclosures, you can literally see the moment where a big chunk of your money disappeared for good. The H4 report (called "Factors Affecting Reserve Balances") summarizes the activities of the Fed each week. You can find it online, and it's pretty much the only thing the Fed ever tells the world about what it does. For the week ending February 18th, the number under the heading "Repurchase Agreements" on the table is zero. It's a significant number.Why? In the pre-crisis days, the Fed used to manage the money supply by periodically buying and selling securities on the open market through so-called Repurchase Agreements, or Repos. The Fed would typically dump $25 billion or so in cash onto the market every week, buying up Treasury bills, U.S. securities and even mortgage-backed securities from institutions like Goldman Sachs and J.P. Morgan, who would then "repurchase" them in a short period of time, usually one to seven days. This was the Fed's primary mechanism for controlling interest rates: Buying up securities gives banks more money to lend, which makes interest rates go down. Selling the securities back to the banks reduces the money available for lending, which makes interest rates go if you look at the weekly H4 reports going back to the summer of 2007, you start to notice something alarming. At the start of the credit crunch, around August of that year, you see the Fed buying a few more Repos than usual — $33 billion or so. By November, as private-bank reserves were dwindling to alarmingly low levels, the Fed started injecting even more cash than usual into the economy: $48 billion. By late December, the number was up to $58 billion; by the following March, around the time of the Bear Stearns rescue, the Repo number had jumped to $77 billion. In the week of May 1st, 2008, the number was $115 billion — "out of control now," according to one congressional aide. For the rest of 2008, the numbers remained similarly in the stratosphere, the Fed pumping as much as $125 billion of these short-term loans into the economy — until suddenly, at the start of this year, the number drops to nothing. Zero.The reason the number has dropped to nothing is that the Fed had simply stopped using relatively transparent devices like repurchase agreements to pump its money into the hands of private companies. By early 2009, a whole series of new government operations had been invented to inject cash into the economy, most all of them completely secretive and with names you've never heard of. There is the Term Auction Facility, the Term Securities Lending Facility, the Primary Dealer Credit Facility, the Commercial Paper Funding Facility and a monster called the Asset-Backed Commercial Paper Money Market Mutual Fund Liquidity Facility (boasting the chat-room horror-show acronym ABCPMMMFLF). For good measure, there's also something called a Money Market Investor Funding Facility, plus three facilities called Maiden Lane I, II and III to aid bailout recipients like Bear Stearns and AIG.While the rest of America, and most of Congress, have been bugging out about the $700 billion bailout program called TARP, all of these newly created organisms in the Federal Reserve zoo have quietly been pumping not billions but trillions of dollars into the hands of private companies (at least $3 trillion so far in loans, with as much as $5.7 trillion more in guarantees of private investments). Although this technically isn't taxpayer money, it still affects taxpayers directly, because the activities of the Fed impact the economy as a whole. And this new, secretive activity by the Fed completely eclipses the TARP program in terms of its influence on the economy.No one knows who's getting that money or exactly how much of it is disappearing through these new holes in the hull of America's credit rating. Moreover, no one can really be sure if these new institutions are even temporary at all — or whether they are being set up as permanent, state-aided crutches to Wall Street, designed to systematically suck bad investments off the ledgers of irresponsible lenders."They're supposed to be temporary," says Paul-Martin Foss, an aide to Rep. Ron Paul. "But we keep getting notices every six months or so that they're being renewed. They just sort of quietly announce it."None other than disgraced senator Ted Stevens was the poor sap who made the unpleasant discovery that if Congress didn't like the Fed handing trillions of dollars to banks without any oversight, Congress could apparently go fuck itself — or so said the law. When Stevens asked the GAO about what authority Congress has to monitor the Fed, he got back a letter citing an obscure statute that nobody had ever heard of before: the Accounting and Auditing Act of 1950. The relevant section, 31 USC 714(b), dictated that congressional audits of the Federal Reserve may not include "deliberations, decisions and actions on monetary policy matters." The exemption, as Foss notes, "basically includes everything." According to the law, in other words, the Fed simply cannot be audited by Congress. Or by anyone else, for that matter.VI. WINNERS AND LOSERSStevens isn't the only person in Congress to be given the finger by the Fed. In January, when Rep. Alan Grayson of Florida asked Federal Reserve vice chairman Donald Kohn where all the money went — only $1.2 trillion had vanished by then — Kohn gave Grayson a classic eye roll, saying he would be "very hesitant" to name names because it might discourage banks from taking the money."Has that ever happened?" Grayson asked. "Have people ever said, 'We will not take your $100 billion because people will find out about it?'""Well, we said we would not publish the names of the borrowers, so we have no test of that," Kohn answered, visibly annoyed with Grayson's meddling.Grayson pressed on, demanding to know on what terms the Fed was lending the money. Presumably it was buying assets and making loans, but no one knew how it was pricing those assets — in other words, no one knew what kind of deal it was striking on behalf of taxpayers. So when Grayson asked if the purchased assets were "marked to market" — a methodology that assigns a concrete value to assets, based on the market rate on the day they are traded — Kohn answered, mysteriously, "The ones that have market values are marked to market." The implication was that the Fed was purchasing derivatives like credit swaps or other instruments that were basically impossible to value objectively — paying real money for God knows what."Well, how much of them don't have market values?" asked Grayson. "How much of them are worthless?""None are worthless," Kohn snapped."Then why don't you mark them to market?" Grayson demanded."Well," Kohn sighed, "we are marking the ones to market that have market values."In essence, the Fed was telling Congress to lay off and let the experts handle things. "It's like buying a car in a used-car lot without opening the hood, and saying, 'I think it's fine,'" says Dan Fuss, an analyst with the investment firm Loomis Sayles. "The salesman says, 'Don't worry about it. Trust me.' It'll probably get us out of the lot, but how much farther? None of us knows."When one considers the comparatively extensive system of congressional checks and balances that goes into the spending of every dollar in the budget via the normal appropriations process, what's happening in the Fed amounts to something truly revolutionary — a kind of shadow government with a budget many times the size of the normal federal outlay, administered dictatorially by one man, Fed chairman Ben Bernanke. "We spend hours and hours and hours arguing over $10 million amendments on the floor of the Senate, but there has been no discussion about who has been receiving this $3 trillion," says Sen. Bernie Sanders. "It is beyond comprehension."Count Sanders among those who don't buy the argument that Wall Street firms shouldn't have to face being outed as recipients of public funds, that making this information public might cause investors to panic and dump their holdings in these firms. "I guess if we made that public, they'd go on strike or something," he muses.And the Fed isn't the only arm of the bailout that has closed ranks. The Treasury, too, has maintained incredible secrecy surrounding its implementation even of the TARP program, which was mandated by Congress. To this date, no one knows exactly what criteria the Treasury Department used to determine which banks received bailout funds and which didn't — particularly the first $350 billion given out under Bush appointee Hank Paulson.The situation with the first TARP payments grew so absurd that when the Congressional Oversight Panel, charged with monitoring the bailout money, sent a query to Paulson asking how he decided whom to give money to, Treasury responded — and this isn't a joke — by directing the panel to a copy of the TARP application form on its website. Elizabeth Warren, the chair of the Congressional Oversight Panel, was struck nearly speechless by the response."Do you believe that?" she says incredulously. "That's not what we had in mind."Another member of Congress, who asked not to be named, offers his own theory about the TARP process. "I think basically if you knew Hank Paulson, you got the money," he says.This cozy arrangement created yet another opportunity for big banks to devour market share at the expense of smaller regional lenders. While all the bigwigs at Citi and Goldman and Bank of America who had Paulson on speed-dial got bailed out right away — remember that TARP was originally passed because money had to be lent right now, that day, that minute, to stave off emergency — many small banks are still waiting for help. Five months into the TARP program, some not only haven't received any funds, they haven't even gotten a call back about their applications."There's definitely a feeling among community bankers that no one up there cares much if they make it or not," says Tanya Wheeless, president of the Arizona Bankers Association.Which, of course, is exactly the opposite of what should be happening, since small, regional banks are far less guilty of the kinds of predatory lending that sank the economy. "They're not giving out subprime loans or easy credit," says Wheeless. "At the community level, it's much more bread-and-butter banking."Nonetheless, the lion's share of the bailout money has gone to the larger, so-called "systemically important" banks. "It's like Treasury is picking winners and losers," says one state banking official who asked not to be identified.This itself is a hugely important political development. In essence, the bailout accelerated the decline of regional community lenders by boosting the political power of their giant national competitors.Which, when you think about it, is insane: What had brought us to the brink of collapse in the first place was this relentless instinct for building ever-larger megacompanies, passing deregulatory measures to gradually feed all the little fish in the sea to an ever-shrinking pool of Bigger Fish. To fix this problem, the government should have slowly liquidated these monster, too-big-to-fail firms and broken them down to smaller, more manageable companies. Instead, federal regulators closed ranks and used an almost completely secret bailout process to double down on the same faulty, merger-happy thinking that got us here in the first place, creating a constellation of megafirms under government control that are even bigger, more unwieldy and more crammed to the gills with systemic risk.In essence, Paulson and his cronies turned the federal government into one gigantic, half-opaque holding company, one whose balance sheet includes the world's most appallingly large and risky hedge fund, a controlling stake in a dying insurance giant, huge investments in a group of teetering megabanks, and shares here and there in various auto-finance companies, student loans, and other failing businesses. Like AIG, this new federal holding company is a firm that has no mechanism for auditing itself and is run by leaders who have very little grasp of the daily operations of its disparate subsidiary operations.In other words, it's AIG's rip-roaringly shitty business model writ almost inconceivably massive — to echo Geithner, a huge, complex global company attached to a very complicated investment bank/hedge fund that's been allowed to build up without adult supervision. How much of what kinds of crap is actually on our balance sheet, and what did we pay for it? When exactly will the rent come due, when will the money run out? Does anyone know what the hell is going on? And on the linear spectrum of capitalism to socialism, where exactly are we now? Is there a dictionary word that even describes what we are now? It would be funny, if it weren't such a nightmare.VII. YOU DON'T GET ITThe real question from here is whether the Obama administration is going to move to bring the financial system back to a place where sanity is restored and the general public can have a say in things or whether the new financial bureaucracy will remain obscure, secretive and hopelessly complex. It might not bode well that Geithner, Obama's Treasury secretary, is one of the architects of the Paulson bailouts; as chief of the New York Fed, he helped orchestrate the Goldman-friendly AIG bailout and the secretive Maiden Lane facilities used to funnel funds to the dying company. Neither did it look good when Geithner — himself a protégé of notorious Goldman alum John Thain, the Merrill Lynch chief who paid out billions in bonuses after the state spent billions bailing out his firm — picked a former Goldman lobbyist named Mark Patterson to be his top aide.In fact, most of Geithner's early moves reek strongly of Paulsonism. He has continually talked about partnering with private investors to create a so-called "bad bank" that would systemically relieve private lenders of bad assets — the kind of massive, opaque, quasi-private bureaucratic nightmare that Paulson specialized in. Geithner even refloated a Paulson proposal to use TALF, one of the Fed's new facilities, to essentially lend cheap money to hedge funds to invest in troubled banks while practically guaranteeing them enormous profits.God knows exactly what this does for the taxpayer, but hedge-fund managers sure love the idea. "This is exactly what the financial system needs," said Andrew Feldstein, CEO of Blue Mountain Capital and one of the Morgan Mafia. Strangely, there aren't many people who don't run hedge funds who have expressed anything like that kind of enthusiasm for Geithner's ideas.As complex as all the finances are, the politics aren't hard to follow. By creating an urgent crisis that can only be solved by those fluent in a language too complex for ordinary people to understand, the Wall Street crowd has turned the vast majority of Americans into non-participants in their own political future. There is a reason it used to be a crime in the Confederate states to teach a slave to read: Literacy is power. In the age of the CDS and CDO, most of us are financial illiterates. By making an already too-complex economy even more complex, Wall Street has used the crisis to effect a historic, revolutionary change in our political system — transforming a democracy into a two-tiered state, one with plugged-in financial bureaucrats above and clueless customers below.The most galling thing about this financial crisis is that so many Wall Street types think they actually deserve not only their huge bonuses and lavish lifestyles but the awesome political power their own mistakes have left them in possession of. When challenged, they talk about how hard they work, the 90-hour weeks, the stress, the failed marriages, the hemorrhoids and gallstones they all get before they hit 40."But wait a minute," you say to them. "No one ever asked you to stay up all night eight days a week trying to get filthy rich shorting what's left of the American auto industry or selling $600 billion in toxic, irredeemable mortgages to ex-strippers on work release and Taco Bell clerks. Actually, come to think of it, why are we even giving taxpayer money to you people? Why are we not throwing your ass in jail instead?"But before you even finish saying that, they're rolling their eyes, because You Don't Get It. These people were never about anything except turning money into money, in order to get more money; valueswise they're on par with crack addicts, or obsessive sexual deviants who burgle homes to steal panties. Yet these are the people in whose hands our entire political future now rests.Good luck with that, America. And enjoy tax season.Written by Matt Taibbi[From Rolling Stone Issue 1075 — April 2, 2009]THE DIRTY DOZEN:

The EnablerALAN GREENSPANWAS: Chairman of the Federal Reserve (1987-2006)WHAT HE DID: Pushed for sweeping power to regulate Wall Street — and then failed to use it. Fueled "irrational" bubble with low interest rates.WORST MOVE: Called derivatives like CDOs "extraordinarily useful"; regulating them would be a "mistake."NOW ADMITS: He was "partially" wrong to not impose tougher oversight.

The PioneerSANDY WEILLWAS: CEO of Citigroup (1998-2003)WHAT HE DID: Created the first too-big-to-fail company, Citigroup. Led the boom in subprime mortgages.RECENTLY: Celebrated $45 billion taxpayer bailout of Citi by taking Mexican vacation on Citigroup jet, complete with $13,000 carpets, pillows made from Hermés scarves, and Baccarat crystal glassware.

The IdeologuePHIL GRAMMWAS: Senate Banking Committee chair (1995-2000)KNOWN AS: "High priest of deregulation"WHAT HE DID: Pushed repeal of Glass-Steagall Act, leading to rise of megabanks.WORST MOVE: Wrote law that exempted disastrous CDS deals from all regulation.NOW ADMITS: Nothing. Says there is "no evidence" his laws caused crash, which he dismissed as a "mental recession."

The ArsonistJOE CASSANOWAS: Chief of AIG Financial Products (2001-2008)WHAT HE DID: Blew a $500 billion hole in fabric of the universe by placing massive bet on the bubble economy with money he didn't have.WORST MOVE: In August 2007 told investors his CDS deals could not lose even "$1"; lost $352 million that quarter.NOW: Enjoying his $280 million in earnings.

The BagmanROBERT RUBINWAS: Treasury secretary (1995-1999)WHAT HE DID: Opposed regulation of credit swaps; fought to overturn Glass-Steagall Act, leading to creation of Citigroup, where he later made $115 million.WORST MOVE: Asked Treasury to pressure ratings agencies to delay downgrading Enron, a Citigroup debtor.NOW: Still on Citi's board; mentor of Treasury Secretary Geithner.

The Card SharkJIMMY CAYNEWAS: CEO of Bear Stearns (1993-2008)WHAT HE DID: Took card-playing vacations and allegedly smoked weed while Bear went bankrupt.WORST MOVE: Cashed out his $61 million share after resigning shortly before Bear's sale to J.P. Morgan Chase.NOW: SAYS Of Treasury Secretary Geithner: "The guy thinks he's got a big dick. He's got nothing, except maybe a boyfriend."

Mr. Buck PasserCHRISTOPHER COXWAS: Chairman of the SEC (2005-2009)WHAT HE DID: Gave the market a free ride, waiting until far too late to reverse the disastrous "voluntary regulation" program of 2004 and police the ratings agencies.LAME EXCUSE: Insisted it wasn't his fault, claiming deregulatory policies tied his hands.NOW SAYS: His "greatest contribution" during the crisis was staying "calm."

The PredatorANGELO MOZILOWAS: Head of Countrywide Financial (1969-2008)WHAT HE DID: Biggest provider of subprime mortgages; specialized in predatory loans that put broke people in mansions.WORST MOVE: "Friends of Angelo" program gave favorable mortgages to Sens. Chris Dodd and Kent Conrad.NOW SAYS: Called plea from homeowner facing foreclosure "disgusting."

The DecoratorJOHN THAINWAS: Chief of Merrill Lynch (2007-2009)WHAT HE DID: Concealed $15 billion hole in Merrill balance sheet until government subsidized the sale of his company. Went skiing in Vail just before revealing losses.WORST MOVE: Proposed $10 million bonus for himself as company imploded; OK'd $1.2 million office refurbishing.IS NOW: Facing class-action suit for concealing losses.

The MaestroHENRY PAULSONWAS: CEO of Goldman Sachs (1999-2006); Treasury secretary (2006-2009)WHAT HE DID: Pushed for end to debt restrictions for banks like Goldman, then arranged big bailout for Goldman.WORST MOVE: TARP proposal just three pages long; made his decisions "non-reviewable."NOW SAYS: "I don't think we've made mistakes on the major decisions."

The Big LoserDICK FULDWAS: CEO of Lehman Brothers (1993-2008)WHAT HE DID: Piloted Lehman to largest bankruptcy in U.S. history; earned $22 million the year firm went bust.WORST MOVE: Tried to avoid lawsuits by selling his $13 million Florida home to his wife for $100.NOW SAYS: Feels "horrible" about Lehman, but insists his management was "prudent and appropriate."

Mr. Too BigKEN LEWISIS: CEO of Bank of America (2001-present)WHAT HE DID: Created ultimate too-big-to-fail company, buying up Fleet, MBNA, Countrywide and Merrill Lynch.WORST MOVE: Failed to catch a $15 billion loss at Merrill before buying the firm; needed $20 billion bailout to close deal.NOW SAYS: It's a false "claim" to say "the banks that caused this mess must be held accountable."
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