Why didn't Charlie Gasparino give early warning of Wall Street's implosion? Perhaps because his on-air reporting isn't hard hitting. On the topic of Wall Street, the only "f-bomb" Gasparino failed to drop at CNBC is the fraud pulled off by Wall Street fueling massive problems for the American economy. Let's hope he does a better job at Fox Business News.
Gasparino may break some Wall Street gossip, but don't look to him for cutting-edge insightful analysis. Here's an example of his early insights on Bear Stearns: "Jimmy Cayne built Bear Stearns from the ground up with one key ingredient: guts. We induct a Wall Street icon."*
Meanwhile, financial journalist Matthew Goldstein raised early questions about Bear Stearns's CDOs (in 2005), and he and Bloomberg News's Jody Shenn broke the story about the Bear Stearns Asset Management's doomed IPO (May 2007), the harbinger of the Bear Stearns collapse one year later.
Footwork Needs Work
After-the-fact reporting is not the same as being "ahead" of everyone else. As we discussed Merrill Lynch in October 2007, Gasparino asserted: "When we reported [Merrill's write-downs] here three weeks ago...ahead of anyone else" right after I point out I wrote an article, "The Predator's Fall,"about Merrill's coming write-downs ten months earlier (and gave warnings about Wall Street's phony products, overrated products, and excessive leverage much earlier than that).
It's a good thing Charlie, a former pugilist, didn't try for the Golden Gloves, because he cannot take what he dishes out. Gasparino's reputation for poor on air etiquette is well deserved, and during another interview, I gave him a taste of his own medicine. Charlie protested to me: "Would you just let me finish, would you just let me finish! You sound like me, now...let me finish." Squawk Box's Joe Kernen laughed: "So you know you do it, I didn't know you knew you did it, Charlie!"
The topic was my assertion that troubled bond insurers Ambac and MBIA would have to settle their credit derivatives contracts with Wall Street at a discount. Gasparino held a different point of view. He was wrong again. [He also tried to mischaracterize my position on the rating agencies, of which I have been a trenchant critic.] Those bond insurers ended up settling many of the contracts for ten cents on the dollar. On the other hand, crony capitalists got 100 cents on the dollar from AIG, after taxpayer money bailed it out.
Gasparino's Shadow Boxing
Gasparino said he normally doesn't respond to "people who do not matter on Wall Street" (people like me who have appeared with him on CNBC) and called me a "publicity hound." He said it to Dealbreaker, a Wall Street tabloid, because it was looking for something to publicize.
(Near the end of 2007, a producer for CNBC's Squawk Box asked me if I wanted to go on regularly with Charlie, because I took him in stride. I declined.)
A character in Oscar Wilde's play, A Woman of No Importance, remarked: "It is perfectly monstrous the way people go about nowadays, saying things against one behind one's back that are absolutely and entirely true." I agree. It is past time to openly raise problems about our financial system that are entirely true.
Serious Issues for Serious People
We are in the middle of the worst financial crisis in history. Looking back on true early warnings and how those who made them were discredited and dismissed helps us understand the issues now threatening the global economy and the failings in our system. Too often our financial media has not been up to the task of determining what matters.
* Charles Gasparino in Trader Monthly Jun-Jul 2007. Trader Monthly ended operations February 2009.
** "Subprime Mortgages: The Predators' Fall," by Janet Tavakoli, Global Risk Review (renamed Risk Professional), March-April 2007.