04/20/2009 05:12 am ET Updated May 25, 2011

In Cramer We Trust?

CNBC is another casualty of America's economic meltdown. But in time the journalism profession could benefit from the brutal criticism being unleashed on that network. At the heart of the controversy is the question of how so many financial industry TV pundits morphed into lapdog cheerleaders for corporate America at a time when they should have been journalists.

CNBC's Jim Cramer in the last two weeks has been vilified to the point that his TV ratings are already in the tank. The financial networks need to make the decision about whether they are journalists with a duty to investigate, or whether they want to perpetuate their image as an airtime-filler entertainment industry.

The Cramer, Larry Kudlow-styled financial pundits are now in an uncomfortable spotlight. They run the risk of forever losing their value as serious financial advisors. Without some adjustments, they will justifiably be regarded as a gang of Wall Street insiders who leveraged their credibility as severely as Bear Stearns and Lehman leveraged their entire companies.

A new story about how badly the financial networks did their jobs as journalists surfaces almost everyday. We can think of them as embedded journalists, only these reporters are being manipulated by Wall Street rather than the Pentagon. Old financial news reruns show us the story of the most revered gurus in the financial pundit business urging viewers to buy more Bear Stearns stock just weeks before that company failed. When we look back at just how pitiful TV pundit advice has been in the last few years, we see images of Kudlow as early as April of 2008 telling his viewers that the subprime mortgage meltdown was over and they should aggressively move back into the stock market.

While Kudlow day after day was babbling about the worst being behind us, the Dow continued to fall to the 7,000 range. Spend a few minutes on the Internet looking back at the pundits telling their viewers that Lehman is too big to fail or that Merrill Lynch has plenty of capital to flourish or that a 35 to 1 leveraged position is no problem for a company like Bear Stearns. There are only a few conclusions you can reach as you listen. You might conclude that a guy like CNBC's Cramer is pimping for corporate America as he stands in front of his camera screaming at the top of his voice to buy now. Advertisers, after all, like to see conviction in their pitchman.

The darker, more cynical suspicion about these TV wizards is that there was, in some cases, collusion between some pitchmen and some corporate CEO's intent on manipulating stock values. But I'm inclined to believe that most of the pundit misinformation occurred because investigative reporting in the news industry is dead. This new breed of financial TV pitchmen weren't paid to ask tough questions of the Bernie Madoff-Wall Street crowd that ran capitalism into the ground these last 10 years. Instead, responsible journalism has been replaced by the Cramers and the Kudlows put in front of a camera to entertain their misinformed viewers as they advise them on how to best squander their 401ks.