the audit

CNBC: kid gloves for bankers, boxing gloves for bank critics

Interviews with Barofsky, Spitzer, and Krugman underscore the network's capture
August 29, 2012

We’re all for aggressively skeptical interviewing—I’ve often wished we could import Brits to do our presidential interviews, for instance. But it’s a problem when one group of people get interviewed adversarially and another group gets deferential treatment.

That contrast has been clear on CNBC in the last few weeks in a series of interviews with liberal bank critics Neil Barofsky, Paul Krugman, and Eliot Spitzer. The comparison to how the network has recently treated the bankers who actually created the financial crisis is striking.

Barofsky, the former special inspector general of the TARP, is one of a very few prominent government officials to take a sharply skeptical stance toward the big banks. He went on CNBC’s Squawk Box last week to talk his new book Bailout, which makes the case that the TARP bailouts staved off a complete financial collapse but failed to fulfill its mandate to spur lending and help homeowners. In other words, he says Treasury rescued and, importantly, re-empowered Wall Street, while “foaming the runway” for the banks with most everyone else (besides the car companies).

This shouldn’t be controversial or hard to understand, but then you have to actually listen to Barofsky’s argument instead of interrupting him when he tries to answer, as Steve Liesman repeteadly does.

At one point, when Barofsky criticizes “the general attitude, which was this level of deference to the banks. And it’s extended over the past two years to program after program… Again and again it was always from the perspective of Wall Street,” he might as well have been talking about CNBC instead of the Obama Treasury.

Here’s a clip of Becky Quick lecturing Barofsky that “Wall Street made good on its side of the bargain” on TARP because it paid back its megabailouts plus a bit of interest:

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Here’s Steve Liesman interrupting Barofsky repeatedly and mischaracterizing his statements, apparently unable to comprehend that Barofsky can criticize TARP while also saying that it averted financial collapse (note that these screen caps are the same, but the clips are different):

Then there’s this snide question from Liesman, which Barofsky bats down with a nod to SIGAUDIT Dean Starkman:

Shortly after his interview, Barofsky wrote on Twitter that he “definitely got Krugmanned.”

He was referring to Paul Krugman’s appearance on Squawk Box a few weeks earlier where the Nobel-winning economist and NYT columnist was bombarded by zombie lies and called a “unicorn” and never asked about his book, which was the ostensible purpose of the interview.

Krugman afterward wrote, “Among other things, people getting their news from sources like that are probably getting terrible advice about any kind of investment that depends on macroeconomics. But it’s amazing just how skewed the policy views are too.”

But if Barofsky got Krugmanned, at least he didn’t get Spitzered. Check out how CNBC’s Maria Bartiromo treated Eliot Spitzer two days after the Krugman interview:

Bartiromo is offended that Spitzer says former AIG CEO Hank Greenberg committed fraud.

At one point, Bartiromo wags her pen at Spitzer and actually says this, “Some people say that the collapse of AIG lays at your feet, because if Hank Greenberg were there he would not have allowed some of that craziness and that risk being taken on,” in a way that makes it clear that she is one of those “some people.” Those “some people” would be The Wall Street Journal editorial page, naturally, and the idea’s insane.

The next minute she’s yelling at Spitzer, saying, “You can’t say ‘fraudulent’ because there is no indictment, you can’t just throw around the word fraud.”

This is just flat wrong. As Spitzer tried to note and which he reported on his own Current show later, Greenberg paid $15 million to settle an SEC fraud complaint against him, which he has miraculously spun as absolving him of fraud. AIG kicked Greenberg out of the company, settled SEC, DOJ and New York state charges for a whopping $1.6 billion shortly thereafter. It makes no sense that this is just a Spitzer thing (Matt Taibbi has more on this).

So there’s how prominent liberal bank critics have been grilled on CNBC lately. Now let’s take a look at how CNBC acts when the perpetrators of the crisis come on the air.

(A note: This obviously isn’t a scientific survey—who could watch that much CNBC? If you’ve seen a tough recent CNBC interview of major bankers, send it my way. Regardless, these examples are telling):

When Sandy Weill, predatory lending architect of the biggest bailout recipient of them all, Citigroup, came to Englewood Cliffs last month, he got a guest host spot on Squawk Box for two hours and was fawned over by part-time New York Times guy Andrew Ross Sorkin and Weill’s own daughter, who was brought on to pontificate for seven minutes on pops and the markets.

Weill is, of course, the father of Too Big to Fail and the undertaker of Glass Steagall, who built a $2 trillion goliath from a subprime and predatory lending core. It would go on to need the biggest bailout of them all, less than three years after he left Citi.

When Becky Quick set up her first question to the “philanthropist, financier, author, and most importantly, the former chairman and CEO of Citigroup,” she forgot to call Weill’s Citigroup a fraud-ridden, predatory lending, subprime innovating, tech bubble blowing, housing bubble instigating primary architect of the financial crisis, all of which it was. Instead:

You are a man who built Citigroup. You’ve been hailed as someone who was a visionary at looking at some of those financial supermarket big banks that have come through. I just wonder in retrospect—very few people saw the financial crisis coming—but in looking back, do you think that the megabanks played a role, in terms of too big to fail, for what happened with the financial crisis—or not?

That was the tone of the interview, including after Weill made big news by telling Quick and part-time NYT editor Andrew Ross Sorkin that he now supports a sort of Glass Steagall II that would split off investment banking from deposit taking banks. This is a guy, as Fox Business reporter (and former CNBCer) Charlie Gasparino says, whose “record as a banker… should banish him from ever dispensing advice on the business he helped destroy.” CNBC, by contrast, welcomed him as a “visionary” and a “philanthropist” and treated him with the utmost deference, even after his epic flip-flop.

This deference to bankers is not an aberration. Watch Gary Kaminsky’s embarrassing April interview with Goldman Sachs’s CEO Lloyd Blankfein. To call it “softball” would be too kind. This is tee ball journalism:

Here’s one representative question, about the infamous Greg Smith op-ed in The New York Times:

Just to put this issue to bed, you did this investigation, you looked through emails. This idea of Muppets and calling clients “Muppets.” Can we categorically say that you’ve done the thorough investigation and that this was typically a one-off?

Here’s a craven February interview of Alan Schwartz, who was CEO when it collapsed and had been a top executive there for years. Watch and marvel as Joe Kernen absolves Schwartz and all of Wall Street for the collapse:

Way to speak truth to power there, Joe.

Finally, we don’t have to wonder what a Maria Bartiromo interview of Hank Greenberg would be like compared to her sandbagging of Eliot Spitzer. She interviewed Greenberg last summer, deferring to him even as he rambled on about how AIG supposedly got wronged by the gubmint in its bailout.

Their journalistic compass is off by 180 degrees over there. Everyone should be skeptically interviewed, but especially the bankers who run the show. To adversarially question the overseers and critics while obsequiously chatting with the bankers who were critical in creating the worst recession since the 1930s is just upside down.

You have to wonder who’s more captured: The regulators or CNBC?

(To clarify: Clearly, I’m not talking about former regulators Barofsky and Spitzer being captured. They’re the exceptions to the rule)

Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR’s business section. If you see notable business journalism, give him a heads-up at Follow him on Twitter at @ryanchittum.