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Matt Taibbi has a new article on Rolling Stone on the recent hearings in the U.S. Senate and whether or not Goldman Sachs executives should be facing criminal trials or not in the wake of ongoing investigations into their part in the financial meltdown we went through a few years ago. CNN decided to bring in the Atlantic Monthly's Wall Street apologist Megan McArdle to debate Taibbi on Your Money.

I'm no financial expert and a lot of this stuff is over my head, but McArdle's arguments to me here seemed to be that all of these laws are just too terribly difficult to understand, therefore it's too difficult to figure out if they did anything wrong and to prosecute them, but the people they were selling these toxic assets to should have known better and understood what they were buying. Looks like a classic case of blame the victim to me.

FDL's TBogg weighed in on the segment here -- McBambi vs. Taibbzilla (Updated).

Mark Ames at AlterNet took her apart in this article -- Anti-Government Ideologue Megan McArdle's Amnesia About Her Privileged, Govt.-Funded Upbringing.

AlterNet's Chris Lehmann was critical of her glib dismissal of Taibbi's earlier reporting on Goldman Sachs here -- Matt Taibbi's Great Squid Hunt.

And Eric Salzman went into some specifics on why he disagreed with that same article of McArdle's -- Matt Taibbi Gets His Sarah Palin On in his post here -- Taking Megan McArdle Apart - Part II.

So for any of you wonks on the financial industry out there, if you take issue with any of the articles I posted here, I welcome the input, because I'm not an expert on the financial industry and don't claim to be. That said, from a layman's perspective, what she did during this interview sure looked like a whole lot of apologizing for Goldman Sachs' behavior to me and exactly what CNN expected to get from her by bringing her on to counter Taibbi.

Transcript via CNN below the fold.

VELSHI: If you've been waiting to see a criminal conviction in the wake of the financial crisis, this was a good week for you. Raj Rajaratnam, the hedge fund titan accused of insider trading was found guilty Wednesday of conspiracy and securities fraud. Some of his information was obtained from a Goldman Sachs board member providing yet another headache for the investment firm itself dealing with an ongoing investigation.

Matt Taibbi is a contributing editor at "Rolling Stone." He built a case against Goldman Sachs long before anyone in Congress started sniffing around.

Matt, Carl Levin Senate committee says it's got enough evidence to move forward with criminal charges against Goldman Sachs. Our own Eliot Spitzer says in your latest article that based on that he'd be dropping subpoenas by the truckloads.

But the Justice Department still seems reluctant to move forward. Assuming that the viewers today have not read the article, lay out your case in short form.

MATT TAIBBI, CONTRIBUTING EDITOR, ROLLING STONE: Well, the Levin report is a 650-page document, and to put that into as short a hand as I can possibly make it, they're saying that late in 2006, Goldman Sachs realized they were sitting on a time bomb of toxic mortgage assets.

That they conspired to unload those assets on their clients and then bet against them at the same time, and then later on, the report also sort of lays out that in the process of investigating this issue, the Senate questioned Goldman.

They also had testimony in Congress and it lays out that they believed that Goldman lied about some of these activities --

VELSHI: Lied to congress. All right, let's bring in Megan McArdle. She's the business and economics editor at "The Atlantic." Megan, you've read the articles. Matt laid out a convincing case?

MEGAN MCARDLE, BUSINESS AND ECONOMIC EDITOR, THE ATLANTIC: I think it's really tough. These cases are incredibly difficult to bring and when. If you notice, Eliot Spitzer didn't in fact secure a lot of convictions despite all the subpoenas he laid down.

What he did was he got settlements from firms and in some cases, it wasn't really clear that the firms had done anything wrong.

The problem is that a firm that's dependent on capital for its lifeblood, once you drop a subpoena, they kind of have to settle a deal even if they didn't do anything because otherwise --

VELSHI: Goldman has done that elsewhere. They've come up with a settlement, but, Matt, you've been on this case a long before a lot of people thought. I mean, one might think you've got some kind of an issue with Goldman. But you definitely think they've done something wrong?

TAIBBI: Yes, absolutely. I don't think anybody could read this report and not see that Goldman definitely conspired to sell assets that it itself did not believe in on unsuspecting clients.

One of the great e-mails in this entire document came after they sold $10 million worth of a deal called Timberwolf on an Australian hedge fund and they're celebrating afterwards.

And one guy says, we found a white elephant, a unicorn and a flying pig all at the same time. In other words, we found the ultimate sucker and this kind of stuff is all throughout the report.

VELSHI: Now, Megan, while regular people were actually affected by these toxic assets that Goldman was dealing in because they might have been in their pension funds or might have been their city that invested in them and lost money.

Generally speaking the other side of the deal, one of those Goldman deals, was always an institutional investor. Why - let just put the argument for - why wouldn't those institutional investors have done the necessary homework to understand that Goldman was selling them junk?

MCARDLE: Well, I think the fair argument is these investments are incredibly complicated and it's very hard to know what happened. But the fact is that we generally assume that an institutional investor, like a pension fund or a hedge fund has the intelligence, the know-how and the motivation to figure out what's going on in the other side. So we don't offer them the same protections as we offer ordinary investors.

VELSHI: That's not true anymore, right? I mean, now I think we've probably learned that it seems they don't --

TAIBBI: If I could jump in there, Ali. There's definitely a legal standard that requires an investment bank like Goldman Sachs to disclose adverse elements of the deal, like for instance, they had a $2 billion short position against --

VELSHI: Let's spell that out, you're saying that they had a legal obligation to tell somebody they were selling an investment to they had a $2 billion bet against that investment?

TAIBBI: Absolutely.

MCARDLE: If I could jump in here --

TAIBBI: Goldman actually in that deal even said affirmatively that their interests were aligned with the client because they had a $6 million stake in that same deal. But they didn't disclose they had a $2 billion bet against the deal.

VELSHI: Megan?

MCARDLE: Look, inherently someone who is selling you an asset is going short that asset, right? They aren't owning it anymore and you presume that there is a reason for that. Markets are made by people betting one way or the other and what you have to do --

VELSHI: I'm not sure that makes sense for an investment firm, though.

MCARDLE: What we have to do is disclose. It's perfectly legal for a dealership to sell me a car I'm not going to like or that's too expensive for me. It's not legal for them to sell me a car that's not what they represented it as.

And we set certain legal minimum standards and that's what happened here. At least, John Losera and all the devils who are here argues that he actually has gone through these documents and says that a lot of these things were disclosed. That in fact Goldman laid out in very lengthy detail all of the ways in which this could go wrong. I haven't read the disclosure documents personally.

TAIBBI: I have.

MCARDLE: There are two competing versions of the story.

VELSHI: Matt, you've read them?

TAIBBI: Well, I've read all the documents in this report and I've also talked to some of the principals in this entire story. I definitely know some of the client that is Goldman was talking about were completely blindsided by the fact that, for instance.

They were buying assets out of Goldman's own book when they were told that Goldman was buying these assets off the street. They definitely did not make key disclosures that they were legally obligated to make.

VELSHI: Megan, I think Matt wants to see somebody from Goldman arrested or charged with something. What do you think has to happen?

Because clearly whether or not you think Goldman broke any laws, any of us who followed this got the impression that they were perhaps not dealing in the best interests of some of their clients.

MCARDLE: I think they probably aren't, just like most vendors aren't always -- look to their own interests before the interests of their clients.

But here's the thing. I think there is a real desire to have a sense of closure on this, a desire to track down a villain, figure out who did this to us.

And I think that really underweight the power of human stupidity and poor system design. It can produce terrible results even without anyone doing --

TAIBBI: You're not ashamed to do the job that you do. How you were not ashamed to apologize for these billionaires who ripped off ordinary people. I can't believe that --

MCARDLE: There weren't ordinary people. A hedge fund is not an ordinary --

TAIBBI: How about this? They ripped off a billion dollar from Morgan Stanley, which then in turn took a $10 billion bailout from the taxpayer ergo they ripped us off. How do you answer that?

MCARDLE: How do I answer that? I think that, you know, in fact, they do deals with big banks. There are questions about how we should have done those bailouts.

But the fact is it's not Goldman Sachs' responsibility to make sure that Morgan Stanley makes money. More than it's the Atlantic's responsibility to make sure that Rolling Stone makes money.

VELSHI: It's a good point, yes. I think I'll just leave it right there.

TAIBBI: I don't know how that makes sense on any planet in any universe. That is just insane.

VELSHI: Last word to you, Megan?

MCARDLE: Well, you know, I think that it's very morally satisfying to try to track down people who did things to us. But I think in the end, justice wants to make a case that Goldman didn't just do something that we don't like.

They want to make a case that Goldman did something that was actually illegal at the time when they did and that's a lot harder standard to meet. In fact like in the aftermath of this crisis, what you get is a lot of cases brought that fail

Eliot Spitzer didn't make his cases. A lot of Rudy Giuliani's cases ultimately fell apart. Even some of the Enron stuff has been falling apart. And so it's actually a lot more difficult to track down --

VELSHI: Not that this conversation could have been a lot better, but we would hope was that somebody from Goldman Sachs would participate in the conversation. They didn't.

We reached out to them and they gave us the following statement. Let me read it for you, with respect to Senator Levin's remarks about misleading testimony with respect to the big short, the testimony we gave was truthful and accurate and this is confirmed by the subcommittee's own report.

The report references testimony from Goldman Sachs witnesses who repeatedly and consistently acknowledge that they were intermittently net short during 2007. We did not have massive net short positions because our short positions were largely offset by our long positions. And our financial results clearly demonstrate this point.

I will just explain to our viewers obviously that long positions mean you're buying something with the understanding or hope that it will increase in value. When you are short on something, you are betting that it is going to lose value and that's what this hinges on.

Matt Taibbi is a contributing editor with "Rolling Stone." Megan McArdle is business and economics editor with "The Atlantic." Obviously, the article's worth a read because it stirs the pot a little bit.