the audit

CNBC Editor: The People Are Revolting!

Santelli plays Mel Brooks playing Louis XVI
February 19, 2009

In the annals of CNBC cluelessness, this morning’s outburst by the channel’s Rick Santelli is up there with the worst.

This is an example of what’s wrong with a certain kind of financial journalism, the kind where people of like backgrounds spend all day staring at tickers and interviewing each other.

The segment couldn’t more clearly illustrate the disconnect between the financial-services sector, certain financial journalists, and, you know, “reality.”

This was CNBC’s worst performance in an entire week—since Michelle Caruso-Cabrera, Dennis Kneale, Roben Farzad & Co. made horses’ rear-ends of themselves trying to squeeze investment tips out of two of the leading thinkers on the global financial crisis, Nouriel Roubini and Nassim Nicholas Taleb.

What sent Santelli, CNBC’s hot-air, oops, “On-Air Editor,” over the edge? The homeowner bailout. Of course, he didn’t get himself into nearly this much of a lather over the trillions of dollars we’ve given to Wall Street welfare cases and the busted banks. Oh no. He’s mad that non-financial-service-professionals, otherwise known as homeowners, or, according to Santelli “losers,” are up now for help—to the tune of $275 billion, much of which would go to the banks anyway (emphasis mine):

Why don’t you put up a website to have people vote on the Internet as a referendum to see if we really want to subsidize the loser’s mortgages or would we like to at least buy cars and buy houses in foreclosure and give them to people that might have a chance to actually prosper down the road and reward people that can carry the water instead of drink the water?

Sign up for CJR's daily email

Which reminds me of the French Revolution scene from Mel Brooks’s History of the World: Part I:

Count de Monet: “The People Are Revolting!”
Louis XVI: “You said it—they stink on ice!”

Look, we have no problem with robust commentary. And the hothead thing is part of Santelli’s schtick. The man has to make a living, we suppose. He’s gone off on bailouts before (he actually walked out on a segment a few months ago after a heated discussion).

He’s also been wrong. The segment he walked out on was in the midst of the mid-September meltdown when he was calling for a delay in a bailout of the crippled financial system, which nearly everyone now agrees kept us from a catastrophic meltdown and depression. But even then, he didn’t question the need for something to be done to bail the financiers out.

And he’s not been afraid to take on the powerful, like his own network’s carnival barker, Jim Cramer (see this entertaining YouTube mash-up), over Cramer forgetting his own bullishness at the top of the market.

But watching CNBC lately is like stumbling onto Easter Island just after the natives chopped down their last tree. It’s like a lost world over there. Somebody send up a chopper.

But then, this may be a sympton of a wider disease.

We at The Audit have written repeatedly about the blame-the-homeowners meme that’s been so popular in misdirecting people away from the real culprits in the crisis: the financial-services boiler rooms that created all those junk mortgages and bundled them into crap securities for sale to all-too-trusting rubes (aka “clients”) around the world.

I understand there’s a powerful undercurrent of outrage from some people who are paying their mortgages (or renting) who disdain those who aren’t or can’t.

But let’s understand what’s going on here. This homeowner bailout isn’t really even aimed at easing people’s suffering. It’s aimed at the banks, whose downward spiral will not stop until the housing market stabilizes.

The question is do we step in and try to engineer the softest landing we can—or do we let it feed on itself until we all go down?

But what I’m really interested in isn’t the pros or cons about the homeowner bailout. Reasonable people can and do disagree about that. What’s really fascinating is the peek it offers into how CNBC—or at least part of it—thinks.

At this point, the financial network is channeling the culture it covers. The barrier between reporter and subject has nearly dissolved.

First, for a journalist to go off with “Tea Party” rhetoric while maligning millions of down-on-their-luck folks out there is just wrong.

The idea of calling some family in Lehigh Acres, Florida, “losers” because they happen to be caught in the maelstrom of a crippled local economy? Or the 90-year-old retired widow Addie Polk who, facing foreclosure on a probably predatory Countrywide second mortgage, shot herself when the sheriff showed up to evict her. Those people are not “losers.”

This crisis is far beyond the point where only the guilty, like speculators in Florida or condo developers in Vegas, are getting punished. I’ve written before that I have no sympathy for them. But regular, hard-working folks are getting swept up in a tide that keeps rising and has gone all tsunami on many places. Lots of cities around the country are already in depression, so we’re going to demonize the people who are unlucky enough to live there? Go back eighty years and Santelli would be calling the Okies and the men in the breadlines losers, as well.

Second, there’s this startling bit from his rant from the trading floor:

SANTELLI: These guys are pretty straightforward and my guess is a pretty good statistical cross-section of America—the silent majority.

If you think the makeup of the trading floor is representative of America, you’re just delusional. But a country of financial-services professionals does fit CNBC’s worldview.

Third, the CNBC anchors ate this rant up, as did their producers apparently, who kept egging Santelli on with his only-half-joking “Let’s start a revolution, we’re going commie like Cuba” rhetoric.

SANTELLI: They’re not like putty in our hands. This is America! How many of you people want to pay for your neighbor’s mortgage that has an extra bathroom and can’t pay their mortgage?

CROWD: Booo!

RANDOM TRADER: (leaning over to the mic) How ‘bout we all stop paying our mortgage? It’s a moral hazard!

ANCHOR: This is like mob rule. I’m getting scared.

SANTELLI: Don’t get scared. Cuba used to have mansions and a relatively decent economy. They moved from the individual to the collective. Now they’re driving ‘54 Chevys, Maybe one of the last good cars to come out of Detroit…

We’re thinking of having a Chicago Tea Party in July. All you capitalists that want to show up to Lake Michigan, I’m going to start organizing it.

ANCHOR: Mayor Daley is marshaling the police right now.

Hey, I’m sure it makes for good ratings. Lots of luck with that. But I’ve got an idea for some even better shtick:

Have Santelli report live from the South Side for a couple of weeks. Or better yet: Merced, California, or Fort Myers, Florida.

Interview someone who isn’t a trader.


Don’t miss Julia Ioffe’s take over at The Kicker on what Santelli had to say this morning on Today.

UPDATE Part Deux:

Check out my follow-up post on what this surge of outrage means for the press.

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.