Gasparino’s Glass Jaw is CNBC’s Draw

CNBC is financial entertainment. Guests and watchers should take it in the same spirit they reserve for Dilbert cartoons. Why expect more than it can deliver? Comic relief has its place, and in finance, that place is CNBC (and often Comedy Central’s Daily Show).

Why didn’t CNBC give early warning of Wall Street’s implosion? Perhaps because CNBC’s on air reporting usually isn’t hard hitting, despite what media articles may say. It’s a good thing CNBC’s Charlie Gasparino didn’t try for the Golden Gloves.

Gasparino’s July 14 rant about Goldman Sachs was very late to the party. On the topic of Wall Street, the only “f‐bomb” CNBC fails to drop is the fraud pulled off by Wall Street firms when they failed to properly mark their books and fueled massive problems for the American economy. On July 20, Gasparino was easily fooled by Goldman’s assertion it is responsible for a public service (liquidity and a backstop) and failed to analyze the key legitimate issues that need to be addressed by reformers: Goldman’s (and Wall Street’s) undue influence over Treasury and Fed officials and Wall Street’s need to make reparations to the U.S. Treasury.

Goldman runs a hedge fund. This observation isn’t new, and Goldman is not alone among o large banks in running invisible hedge funds. Many others raised substantive issues about Goldman and Wall Street long before Gasparino, and they haven’t caved.

There are many good reporters who actually read documents, analyze them, and know how to sift good information from bad, but Gasparino isn’t one of them these days. Here’s a tiny Bear Stearns sample:

“Jimmy Cayne built Bear Stearns from the ground up* with one key ingredient: guts. We induct a Wall Street icon” by Charles Gasparino Trader Monthly Jun‐Jul 2007 [Trader Monthly ended operations February 2009]. At the beginning of August 2007, Gasparino’s mantra was:” “When I had dinner with Jimmy Cayne on Sunday night.”

Compare that with this 2005 Bear Stearns CDO expose or this May 2007 BSAM related subprime CDO / IPO expose [Matt Goldstein, the articles’ author, is now a journalist for Reuters.] or with Jody Shenn’s work on Bear at Bloomberg News.

[Disclosure: I was quoted in these articles, which is why I had the examples handy. There are many other good reporters in financial media.]

Footwork Needs Work

After‐the‐fact reporting is not the same as being “ahead” of everyone else. Here’s Charlie in Oct 2007 with me discussing Merrill. Not only was CNBC very late to the party regarding the meltdown, Gasparino makes a typical assertion: “When we reported [Merrill’s write‐downs] here three weeks ago…ahead of anyone else…” right after I point out I wrote an article about Merrill’s short‐able positions, “The Predators’ Fall,” ten months earlier (and gave warnings about Wall Street’s phony products, overrated products, and excessive leverage much earlier than that).

VIDEO: Inside Merrill Lynch – CNBC – October 24, 2007

Gasparino Can’t Take a Punch

As for Gasparino’s on air etiquette, Squawk Box’s Joe Kernen has the right attitude. In this January 2008 clip, around 3:44 minutes in, Charlie protests to me: “Would you just let me finish, would you just let me finish! You sound like me, now…let me finish.”

Joe Kernen laughs: “So you know you do it, I didn’t know you knew you did it, Charlie!”

VIDEO: The Bigger Problem for Bonds – CNBC – January 25, 2008

[Disclosure: 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.]

About Janet Tavakoli 34 Articles

Affiliation: Tavakoli Structured Finance, Inc.

Janet Tavakoli is the founder and president of Tavakoli Structured Finance, Inc. (TSF), a Chicago based consulting firm providing expert experience and knowledge about maximizing value in the capital markets in the face of complexity and uncertainty. TSF provides consulting services to financial institutions, institutional investors, and hedge funds.

Ms. Tavakoli was years ahead of the financial industry predicting lax underwriting and misrating of structured financial products would result in the collapse of the global credit bubble. She also predicted the collapse of the thrift industry, Long Term Capital Management, and First Alliance Mortgage prompting Business Week to profile her as "The Cassandra of Credit Derivatives." [2008].

Ms. Tavakoli pointed out grave flaws in the methodology for rating structured financial products in her books, Structured Finance & Collateralized Debt Obligations (2003, 2008), and Credit Derivatives (1998, 2001). She wrote the first letter the SEC posted in February 2007 in response to its proposed rules for the credit rating agencies; she made the case that the NRSRO designation for the rating agencies should be revoked for structured financial products.

Ms. Tavakoli is frequently published and quoted in financial journals including The Wall Street Journal, The Financial Times, Business Week, Fortune, Global Risk Review, RISK, IDD, Chicago Tribune, Los Angeles Times, LIPPER HedgeWorld, Asset Securitization Report, Journal of Structured Finance, Investor Dealers' Digest, International Securitization Report, Bloomberg News, Bloomberg Magazine, Credit, Derivatives Week,, Finance World, and others.

Frequent television appearances include CNN, CNBC, BNN, CBS Evening News, Bloomberg TV, First Business Morning News, Fox, ABC, and BBC.

Tavakoli is a former adjunct associate professor of finance at Chicago Booth (the University of Chicago's Graduate School of Business) where she taught "Derivatives: Futures, Forwards, Options and Swaps".

Janet Tavakoli is the former Executive Director, Head of Financial Engineering in the Global Financial Markets Division at Westdeutsche Landesbank in London. She headed market risk management for the capital markets group for Bank One in Chicago. Tavakoli headed the asset swap trading desk at Merrill Lynch in New York, headed mortgage backed securities marketing for Merrill Lynch in New York, and headed mortgage backed securities marketing to Japanese clients for PaineWebber in New York. She also worked for Bear Stearns heading marketing for quantitative research.

She is the author of: Credit Derivatives & Synthetic Structures (1998, 2001), Collateralized Debt Obligations & Structured Finance (2003), Structured Finance & Collateralized Debt Obligations (John Wiley & Sons, September 2008), and Dear Mr. Buffett: What An Investor Learns 1,269 Miles From Wall Street (Wiley, 2009).

During her career, she has been registered and licensed with the SFA, NASD, ASE, CBOE, NYSE, PSE and the NFA and has passed the series 7, 63 and 3 qualifying exams.

Ms. Tavakoli has a B.S. in Chemical Engineering from Illinois Institute of Technology and an MBA in Finance from University of Chicago Graduate School of Business.

Visit: Tavakoli Structured Finance

2 Comments on Gasparino’s Glass Jaw is CNBC’s Draw

  1. Charlie is a bag of wind .

    He thinks that yelling louder , talking over someone else’s statements , and being an on air bully , makes him a reporter .

    He’s not ….. just a bag of wind

  2. Excuse me J said : BUT how is that any different from the MEDIA screaming only 1 point of view and a very bigoted one at that? That Propaganda is far worse then actually letting one try to have a differing opinion and letting it at least get out there for others to decide upon. This made me laugh what Janet said :

    There are many good reporters who actually read documents, analyze them, and know how to sift good information from bad,

    ???WHERE???? Sift through goood and bad information?? MORE LIKE trash the info that they want to hide and prop up the miniscue points they want to present no matter how false they may be… J and Janet are full of HOT AIR.

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