Crisis is the stock-in-trade of the news-gathering business. Even in its present conglomerated state, American journalism lives or dies for scoops. In this competitive climate, you should be able to count on any news organization to report a world-shaking calamity in its broadest contours.
So it’s impossible to imagine a TV news outlet reporting in late November 1963 that President John Kennedy’s visit to Dallas had drawn some suspicious activity in the area surrounding the Texas School Book Depository but that, on the whole, the event had marked a significant first step along the path toward reelection for the Kennedy-Johnson ticket. Yet that imaginary report would be roughly equivalent to the work of the market savants who direct programming at the cable business network CNBC.
In 2008, the world they cover turned upside down. Toxic debt overwhelmed the paper prosperity of the early aughts. Several major investment banks went belly-up, and scores more took on the telltale pallor of the financial walking dead. National economies teetered on the brink of ruin. And there was CNBC’s best-known face of market prognostication, Mad Money host Jim Cramer, who reported the initial rumblings of the crisis in March 2008 as if he hadn’t noticed a thing amiss: “Should I be worried about Bear Stearns in terms of liquidity and get my money out of there?! NO, NO, NO! Bear Stearns is fine.”
Six days later, Bear Stearns was dead, its balance sheets a flood of red ink, its spare parts consigned to the grim-faced government accountants who were to oversee the bailout of Wall Street for months to come. Bear’s early flameout was an unmistakable, and by this time entirely foreseeable, sign that more gruesome reckonings were in the offing. Since then, Cramer’s bellowed moment of bullishness on Bear Stearns has become a symbol of the failings of the business press to register even the smallest hint of trouble in the markets ahead of the mortgage crisis. The Cramer follies have been broadcast, over and over, as a specimen of how the bubble-manias spiraled doggedly upward, until thudding ingloriously to Earth.
In many ways, though, the Cramer clip’s half-life is unfair: Cramer himself was just a cheerleader in the madness that caught most responsible observers of the financial system completely flatfooted. And more important, the focus on Cramer’s errant moment of stockpicking misses the bigger, truly bizarre tale of CNBC’s post-crash career. In the nearly half a decade since the Bear debacle, the leading cable source of business news has done its business in an alternate universe, behaving as though Wall Street were just another wronged party in the crisis, and not its principal author.
In CNBC’s through-the-looking-glass version of events, socialist regulators are about to seize control of the American economy. And the heroic defenders of prosperity are the bankers and brokers of the stock market, who must now be saved from the expropriating regulators. The only sane path forward is to unleash the mighty, market-hewing hands of the Wall Street titans of commerce from the bonds of public-sector restraint. Or to once again adopt the imagery of disasters past: to right the foundering ship of prosperity, it must be steered headlong into an iceberg.
Sinners Before an Angry Market
The perversity that garlands CNBC’s news operation has deep roots. The cable news network that CNBC would eventually become has its origins in an ancient cable channel called the Satellite Program Network (SPN), which operated throughout the United States in the 1980s. For most of its heady run, the programming on SPN was gleefully schizophrenic—a mix of odd game shows, niche programming, and hoary, low-budget movies. (Fun fact: one of the network’s offerings was a show called Moscow Meridian, hosted by French-born Soviet mouthpiece Vladimir Pozner.)
The channel ended up in the hands of NBC, which relaunched it as the Consumer News and Business Channel in April 1989. Two years later, CNBC cornered the stocks-and-shares cable audience when it absorbed its much larger rival, the Financial News Network.
The first thing a casual CNBC viewer notes today is neither the network’s ideological distortions nor its blown market prognostications. Rather, it’s the network’s trademark riot of visual stimuli—the frenetic sort of data presentation that might make sense in an aphasic’s ward. Crawling tickers and swooshing graphics depicting real-time market analysis frame an array of hosts who provide an unnervingly overcaffeinated profusion of jabber. It’s quite hard to describe to someone who’s never taken it in—I reckon that it’s the aural-visual equivalent of receiving a frenzy of information live from the jock strap of one of the light-cyclists from the “Tron” movies while tweaking on Adderall. Also, for good measure, you are a werewolf.
This stimulus overload makes CNBC more visually arresting than the drier incantations of its chief competitor, Bloomberg Television. And when you go beyond the visual packaging into the daily content, you realize that the network faces no serious threat from its latest upstart competitor, Fox Business Network. It’s just too hard to get to the right of CNBC.
It would be limiting, however, to describe CNBC as primarily, or even reliably, right-leaning—at least in the flat and binary scheme of political choreography that places the Obama White House on the “left” end of the political spectrum. At key moments, when the Obama administration acted in ways that pleased the market, CNBC swung foursquare behind the White House’s efforts. In March 2009, for instance, Obama’s economic team released details of its bank bailout plan—which offered the financial crisis’s Wall Street no-accounts a sweetheart stake in a “public-private partnership” that was set up to buy up toxic assets with the promise that taxpayers would be on the hook if anything got too hairy. After this market-stabilizing arrangement, CNBC’s Erin Burnett and Jim Cramer made their way to the set of the Today show to enthuse. Cramer declared Obama to be, finally, “pro-shareholder.” Burnett, meanwhile, beseeched everyone to give the administration’s stimulus plan—which had by that time launched a thousand Tea Party rallies—more time to work!
Such provisional embraces of Obamanomics point to an important wrinkle in CNBC’s broad animus toward the administration: the members of CNBC’s commentariat weren’t very worked up over Obama’s party affiliation. They were, rather, pitching fits over what amounted to perceived violations of market etiquette—those policy proposals and rhetorical asides suggesting that the Obama White House didn’t honor the stock market’s guiding mores. “CNBC looks at everything, particularly politics, in terms of how it will affect ‘the Market,’” noted Time’s TV critic James Poniewozik. “The commentators on CNBC murmur about the Market as if it were the island on Lost: a mystic force that must be placated, lest it become angry and punish us.”
Naturally, the only way to appease such an angry God is to ensure that its needs are perpetually met, at whatever cost such outlays may visit upon productive enterprise—or however much they may accelerate the many moneyed corruptions of our political system. CNBC’s Church of the Market has a set of easily identifiable tenets. It’s taken as a self-evident article of faith, for instance, that the private sector is right-minded and honorable in all of its dealings. Government regulation of the private sector is always something to mistrust—regulation, at best, threatens to distort the Market’s performance. And at worst, it’s tyranny. It therefore stands to reason that advocates of government intervention are candidates for a witch-dunking. “Regulatory capture” is a concept promoted by heretics; in CNBC’s perfect world, the Wise Men of Wall Street work hand in hand with regulators as partners in self-policing. That a revolving door spins inexorably between the two is not seen as a vice.
And here’s the truly deranged part of the CNBC saga: the network’s market devotions have only accelerated in the wake of the 2008 calamity—the interval, in other words, when the idolatry of the Market has proven not only false, but toxic. Institutionally speaking, CNBC refuses to acknowledge many of the basic, underlying causes of the economic collapse. The network’s talking heads oppose any regulatory intervention into Wall Street’s business and insist that Wall Street can trim its own sails, even though precisely nothing about the post-meltdown conduct of the big banks indicates that they want to correct any feature of their past conduct. If the Lords of Finance fail in their appointed rounds of self-regulation, that contretemps is but a temporary setback born of some technical glitch, and definitely not a sign of some galactic moral degeneracy.
Of course, the central problem for CNBC’s Apostles of the Market is that the Market, in fact, failed—and did so on such a stupendously disastrous scale that to insist on its unsullied virtue is a study in journalistic malpractice. Going into the collapse, the Market was humming along with as much laissez-faire as it had ever been accorded. And yet somehow, it melted down. The verdict, rendered by the maestro himself, Alan Greenspan: “Yes, I’ve found a flaw. I don’t know how significant or permanent it is. But I’ve been very distressed by that fact.”
CNBC has evinced neither any recognition of any such flaw nor any distress over Greenspan’s belated discovery. Instead, the network has surveyed the blighted landscape of America’s post-crash economy and decided that the culprit behind it all is the unproductive poor—together with the feckless, corrupt government that taxes and spends indefatigably in the misguided belief that it’s actually helping these no-account class warriors in their mission to drag the nation’s heroic financial elite down to their sordid level of being.
Osculating the Overclass
The obvious solution, in this cruelest of alternate realities, is to shore up the self-image of the country’s investor class. Even as the financial crisis and its miseries slowly prodded ordinary Americans into a growing awareness of the inequalities that govern their lives, CNBC kept stolidly scripting its programming to the same Randian playbook. Any time over the past five years, you could dial up the network at random and hear the same pundit’s lament: the lenders weren’t the culprits here—no, that dishonor clearly fell to the debt-ravaged borrowing class. The saps, miraculously, were made out to be predators—the near-death experience of American capitalism was the handiwork of the American mortgage-holders who had traded substantial amounts of their own public and personal equity in a $4.8 trillion bailout of Wall Street’s most desperate failures, without any accountability or foreseeable payback in return. And to make this dumbfoundingly counter-empirical case, the network had recruited an impressive roster of shock troops to represent the 1 percent.
Prior to the 2008 cataclysm, the two most visible personalities at CNBC were Maria Bartiromo and Erin Burnett, both creatures of Wall Street. Bartiromo had fielded flak for getting chummy with her banker sources; in 2007, she faced embarrassing conflict-of-interest reports that she had accepted a flight on a Citigroup executive’s corporate jet. Burnett, meanwhile, started out as an analyst at Goldman Sachs, and later did time as a vice president of Citigroup’s media division.
Both of these “Money Honeys” (as they were dubbed by the ever gender-enlightened financial press) spent much of their respective tours at CNBC being staggeringly misinformed on camera. Bartiromo, arguing against one of those terrible Great Society programs that had helped to end poverty among seniors, was widely mocked for demanding that then– New York Representative Anthony Weiner should sign up for Medicare himself, if he was such an ardent supporter of the program. It fell to Weiner to explain to Bartiromo that he was, in fact, forty-four years old.
As for Burnett, she went on Meet the Press to declare that the public concern over bank executives using bailout money as bonus-plunder wasn’t a “real issue,” adding, “The taxpayer money isn’t being taken and paid out in the form of bonuses.” There was no way for her—or for anyone else, in the oversight-challenged TARP regime—to know that. (Burnett has since slid downward in the Dunce Parade to a perch at CNN, where she insisted to a Zuccotti Park protestor that the government had made money from TARP—a development that should obviously put a brisk end to public outrage at Wall Street. At the time she made this argument, taxpayers were $95 billion in the red from TARP.)
But the chief architect of CNBC’s high-baroque regime of crisis denial was, of course, Squawk Box correspondent Rick Santelli, who on a fateful February afternoon in 2009, took it upon himself to decry the Obama administration’s efforts to rescue underwater homeowners from the clutches of certain destitution. Standing on the floor of the Chicago Mercantile Exchange, he declared that the recipients of this particular bailout were the real malefactors in the economic collapse. Rallying the traders who were collected on the floor as if they were the True Sons of Soil and Toil, he declaimed that there should be a “Chicago Tea Party” in response. From that solitary outburst—which in a more just world would be little more than an outtake in the extended DVD of Elia Kazan’s prophetic media satire A Face in the Crowd—a million bedevilments were spawned.
With that great moment in financial-cum-political delusion firmly occupying the top spot in the network’s clip reel, CNBC has thrown over its Money Honeys in favor of an army of mini-Santellis, most of whom captain the network’s market-osculating dayside operations. There is the network’s chief international correspondent Michelle Caruso-Cabrera, author of the fittingly overconfidently titled book You Know I’m Right: More Prosperity, Less Government and full-throated devotee of Chicago School shock-doctrine purist Milton Friedman. (Her take on Iraq’s first post-invasion elections in 2005 was: “What I learned is when people say the Middle East isn’t ready for democracy, you should not believe it.”)
CNBC has also provided a regular perch for access-journalist extraordinaire Andrew Ross Sorkin, who edits the market prostrations featured in the New York Times’ financial supplement, DealBook. Sorkin is best known as the author of the bestselling Too Big To Fail, a narrative account of the 2008 financial meltdown that depicts Wall Street’s celebrity bankers in the precise way CNBC prefers—as hallowed titans who endured an unimaginable tragedy at the hands of wicked fortune. Sorkin’s account casts nary a critical glance at the men involved in the fiasco. And Sorkin’s protagonists—including Jamie Dimon and John Mack—showed their appreciation by turning out in force for his Graydon Carter–hosted book party at Monkey Bar in Manhattan.
Sorkin has garnered more recent attention for his role in a CNBC interview with Paul Krugman that was supposed to be an opportunity to learn more about Krugman’s latest book, End This Depression Now! Instead, Krugman was subjected to a session of glib belittlement (Sorkin asked if earning the Squawk Box Blue Chip Book Award was as good as winning a Nobel Prize; cohost Joe Kernen referred to Krugman as a unicorn) that steadily devolved into what Krugman termed a parade of “zombie ideas.”
Writing in his New York Times blog afterward, Krugman offered this tart summary of the value added by CNBC broadcasts: “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.” Krugman should have known that no one on CNBC was interested in a probing examination of his ideas. He was, to CNBC, nothing but a useful ideological foil. Sorkin is about as likely to take Krugman’s ideas seriously as the Pope is to crack the spine of The Da Vinci Code.
The network’s most practiced and versatile market apologist is doubtless Larry Kudlow, who, prior to coming to CNBC, had done time in both political parties, the New York Federal Reserve, Bear Stearns, A. B. Laffer and Associates, and Empower America, a conservative economics crank-tank that eventually became FreedomWorks. Here is one entirely representative Kudlowist pronouncement on the prospects for global prosperity, circa 2006, culled from the terminally sanguine and Bush-besotted pages of the National Review (from a piece about, of all things, Middle East conflict):
The U.S. stock market and world equity bourses are important measures of fear, hope, security, and the health of the world’s economy. And while you might not know it from today’s magnified headlines about war, terrorism, higher oil prices, and rising interest rates, the stock market message is one of reasonable hope, confidence, and optimism about the state of the world.
“Leaving aside the wisdom of the economic analysis,” wrote Columbia Journalism Review’s Gal Beckerman, “the claim that stock market investments are some kind of marker of how people feel about Israel’s campaign against Hezbollah is beyond weird.”
Kudlow has since stepped out as an apologist for the sixteen banks that are currently under investigation for their role in rigging the London interbank offered rate (Libor), maintaining that this staggering conspiracy was a victimless crime and that “homeowners” along with “state and local governments benefited” from the systematic concealment of hundreds of billions in market losses. But the Libor rate, as any one even vaguely acquainted with global investing well knows, is a benchmark to which virtually all financial transactions are tied, and even microscopic manipulations can result in massive distortions of wealth or harrowing losses.
If Kudlow doesn’t understand this (or if he does but is pretending otherwise), that, too, is “beyond weird.” But once again, Kudlow makes clear his allegiances—the rate fixers must be motivated by some greater wisdom.
Leaching the Victims
CNBC’s market-worship manifests itself in an abiding adoration of the Lords and Ladies (but, let’s face it, mostly Lords) of the Financial District. Their exertions, which help to perpetuate the harmonious gyroscopy of the financial world, are celebrated. It’s taken as an article of faith that their talents are vast, their decisions sage—and their compensation eternally just.
As CNBC craves unfettered, friendly access to the Lords of the Street, it’s understandable that its mouthpieces would decide to protect, on pain of death, the tradition of ostentatious executive compensation, wholeheartedly selling the line that outsized stock-and-bonus packages are absolutely critical because they attract and maintain talent, despite all the compelling evidence that suggests that the talent the financial sector has attracted and maintained is severely wanting.
CNBC’s position on the matter was exactingly detailed by the late Squawk on the Street anchor Mark Haines in an argument with California Democratic Representative Brad Sherman, who supported placing limits on the salaries and bonuses of AIG executives. It happened that Haines had, the day before, made his thoughts on Wall Street executive salaries quite clear: “You can’t really, it seems to me, expect that these Wall Street companies are going to be run well by a bunch of people who don’t make more than $250,000.”
Haines sought to drive the same point home with Sherman by lowering his hypothetical ceiling for Wall Street compensation yet still further below any existing proposal, apparently just for the sake of highlighting the rampaging Bolshevism of it all. “You and people who share your opinions seem to feel, you know, let’s hold salaries on Wall Street to $100,000. Do you have any idea what Wall Street would look like if you did that?” Sherman sensibly complained that he’d never said he’d set the compensatory limit that low, and that his position was still very generous—like President Obama, he thought “$500,000 plus unlimited restricted stock” was more than acceptable.
Sherman really stepped in it when he dared to suggest that the American taxpayer could benefit from putting the failed financial institutions in receivership and instituting caps on salaries and bonuses. Haines insisted that “most people agree” that any such course of action “would have caused some systemic problems.” Sherman responded that while “most people on Wall Street agree” on that, “most people on Main Street do not.”
“What do the people on Main Street know about running a financial system?” blurted Haines. Sherman provided the obvious response: “What do AIG executives know about running a financial system?”
For CNBC, extremism in the defense of ungodly CEO compensation packages clearly is no vice. But the magnanimity that CNBC extends to those atop the financial food chain does not extend in any way to those at the bottom. Network correspondents have consistently cast those who got ground up in the gears of the subprime mortgage Tilt-A-Whirl as the real moochers, distorting the financial system’s majestic yet delicate machinery. Thus, the in-house editorial position is that predatory lending is a holocaust that never happened.
On March 2, 2010, Larry Kudlow and Melissa Francis anchored a segment that for all intents and purposes was set up to pooh-pooh the Obama administration’s efforts to create the Consumer Financial Protection Bureau. On hand to opine were Santelli; former FDIC chair Bill Isaac; and Janet Tavakoli, president of Tavakoli Structured Finance.
Tavakoli asserted that consumer protection was desirable, but a “big bloated regulatory body that won’t get the job done” was not a solution she favored. She might have gotten through the segment free of ridicule had it not been for her insistence that predatory lending was a thing that actually happened. “I have to tell you, here in Illinois, people were preyed upon—”
She was immediately interrupted by Kudlow: “Oh wait a second, we’re all victims?” Francis followed hard upon, saying, “The phrase ‘predatory lending’ always kills me because how do you trick someone into—how do you force someone to borrow money? Don’t borrow it if you can’t afford it!” A few moments of excited disparagement ensued. Still, Tavakoli rallied, insisting that borrowers were defrauded and citing a number of examples in which predators were prosecuted. Santelli wasn’t having it: “It takes two to tango. You can’t cheat an honest man.” Tavakoli called his response “pablum.”
It was, of course, much worse than pablum—it was a denial of objective reality. My Huffington Post colleague Arthur Delaney, who’s reported on numerous instances of preyed-upon borrowers, immediately pointed me in the direction of the ne plus ultra example—a woman named Virginia Naill, from Mineral, Virginia, who had “unwittingly gotten herself into an adjustable-rate mortgage with a two-year teaser rate.” What she ended up with was a loan, deemed by Virginia Legal Aid Justice Center lawyer Tom Domonoske to be an “example of what went wrong in America.” As Delaney explained,
Naill, 50, thought she’d refinanced into a fixed-rate mortgage. Back in 2006, that’s what she’d told the broker she wanted. But she signed the documents that were put in front of her, and what she got was a case study in irresponsible lending—a debt trap that even the broker has admitted was based on a fraudulent application.
Naill works at a Wal-Mart distribution center. Her husband, Donald Naill, is a roofing contractor. “They knowed me and my husband were illiterate, that we had a hard time reading and understanding what we read,” Naill told the Huffington Post. “We told ’em straight up they’d have to read it to us, and they said that they would.”
In a September deposition for a lawsuit filed on behalf of Donald Naill, the Naills’ broker said she knew the loan application contained bogus information—an inflated income statement that qualified them for a loan virtually guaranteed to blow up in Virginia Naill’s face when the interest rate adjusted.
Naill is just one of thousands who’d been taken for a ride in this fashion. But Santelli would no doubt have the same answer for Naill as he had for Tavakoli: “We cannot look at our citizens as stupid. And if they are stupid and they sign things that they don’t understand, that’s an issue that should be dealt with. But to carte blanche make these rules and bureaucratize the entire system because of the shortcomings of those that are financially illiterate. Deal with the issue: financial literacy.”
Obviously, to Santelli’s mind, those who exploit the illiteracy of others for their own ill-gotten boodle don’t suffer from any shortcomings, moral or otherwise. They are simply true acolytes of the Market, acting as God intended.
Ready, Aim, About-Face
Given the stolid uniformity of the network’s market-worshiping mindset, it’s most instructive to note the few passing occasions when CNBC has tried to reckon with reality. In May 2009, for example, CNBC performed a ritual incantation live on the air in an effort to acknowledge, in a generic sort of way, that the Market had somehow faltered. The network dedicated one hour of its primetime broadcast schedule to a special symposium on the “Future of Capitalism.” In keeping with the show’s portentous title, CNBC took care to assure viewers that it would be a true “meeting of the minds,” and the network indicated its overall importance by running a countdown clock on the chyron-infested screen throughout the day.
And what a “meeting of the minds” it was! Gathered together on the dark, spartan stage were such luminaries as AQR Capital Management cofounder Clifford Asness, PIMCO CEO Mohamed El-Erian, Citigroup CEO Vikram Pandit, BlackRock CEO Larry Fink, and—perhaps most astoundingly, given that this was supposed to be a panel discussing the “future of capitalism”—former General Electric CEO and CNBC house mascot Jack Welch.
As it turns out, with the noteworthy exception of Fink, the panelists’ vision for the “future” of capitalism mainly involved relentlessly reinvoking their past assertions.
Asness—who famously referred to President Obama’s tax policies as a pogrom—stuck to his admonitions against the government-sponsored entities that had lately come asunder in the mortgage crisis, demanding that “someone in government” make a “mea culpa” about Freddie Mac and Fannie Mae in order to restore “trust.”
Pandit, meanwhile, was rather insistent that the “future of capitalism” required everyone to just take a chill pill and recognize that he and his fellow financial barons had suffered enough. “There’s been a lot of pain,” Pandit said, “and people have paid for it, and they are paying for it.” He assured everyone, “In a significant way, we have reset the world . . . and what we really have to look to right now, is not the retribution, but what can we do to drive growth going forward.”
Welch added his own ominous hallelujah, “We’re not done. We’ve been through this before. We will come back.” You know—like zombies.
Fink, to his credit, was willing to admit that descrying the “future of capitalism” sort of required advancing something like a coherent critique of capitalism’s recent past. “Capitalism went way too far, and there was no one governing the excesses of capitalism. And I’m blaming the investors, too . . . everybody here was guilty.”
In short order, the other copanelists banded together as one to limply object to these heresies. As well they should! After all, this session was, if nothing else, a public declaration that the Lords of Finance had rebuilt their temple and had made their bodies ready to once again accept the Holy Spirit of the Market. This was no time for blame-taking or apostate reasoning.
The pièce de résistance, though, came this July, when CNBC aired an extraordinary interview with Sandy Weill, who up until 2006 had served as the chief executive of Citigroup. Weill sat down with Andrew Ross Sorkin and Becky Quick, and uttered these amazing words: “I think what we should probably do is go and split up investment banking from banking. Have banks be deposit-takers. Have banks make commercial loans and real estate loans. Have banks do something that’s not going to risk the taxpayer dollars, that’s not going to be too big to fail. If they want to hedge what they’re doing in their investments, let them do it in a way where it can be mark-to-market, so that they’re never going to be hit.”
Quick’s initial reaction to Weill’s suggestion was to say, “That’s a pretty radical idea, though.”
But it didn’t used to be. Weill was essentially endorsing what was, until 1999, the law of the land—the 1933 Glass-Steagall Act, which established the Federal Deposit Insurance Corporation and, more importantly, built a firewall between commercial and investment banking. Glass-Steagall stood until the 1999 Gramm-Leach-Bliley Act did away with the firewall, on the grounds that it was hampering financial sector “innovation.” President Bill Clinton, who signed the Gramm-Leach-Bliley bill into law, did so with the proclamation that Glass-Steagall was “no longer relevant”—the colloquial name for the legislation was the “Financial Services Modernization Act,” after all. Famously inveighing against all this modernization was North Dakota’s Democratic Senator Byron Dorgan, who warned that the lawmakers bringing it to pass would “in ten years’ time look back and say we should not have done that.” His prescience was off by just a year, as it turned out.
What made Sandy Weill’s suggestion all the more extraordinary is that no one had worked harder to ensure the repeal of Glass-Steagall than Sandy Weill had—for the simple reason that nobody stood to benefit more fabulously from the passage of Gramm-Leach-Bliley. Weill, who often bragged that the bill should have been named “Weill-Gramm-Leach-Bliley,” is known to have had a plaque on the wall of his office that proclaimed him the “shatterer of Glass-Steagall.”
“You’re almost referring to bringing back Glass-Steagall,” noted the ever-astute Sorkin. On that apparently radical notion, Weill strategically demurred, suggesting that “the only part of Glass-Steagall that we really cared about was insurance underwriting, and that’s what went away with Glass-Steagall.” That is not, strictly speaking, true: the supermarket era of banking that Weill famously ushered in could not have happened had Glass-Steagall’s firewall remained upright. Nevertheless, Weill was of the opinion that the world had changed, “and the world that we live in now is different than the world that we lived in ten years ago.” (A fairly cheap and easy insight, it should be noted, for someone who had gotten out while the getting was good.)
Had Weill been facing two journalists who were at all interested in pursuing the obvious hypocrisy of his remarks, some very obvious questions would have been asked. For starters, they might have asked him why he spent a small fortune to lobby against a law that had long served as the means by which investment and commercial banking were separated. They might have also queried him as to why that sort of financial sector regulation had suddenly, to his estimation, become unimpeachable—and indeed, necessary. They might have pointed to the obvious fact that the cost of Citi’s myriad failures had been passed on to American taxpayers, by means of a piece of legislation that he had, for years, trumpeted his involvement in enacting.
Naturally, that’s not how CNBC played it. Instead, Weill’s remarks were accepted as an entirely new suggestion from just another member of CNBC’s lost tribe of Wall Street apostles, all equally victimized by the capricious twist of fate that the Market had thrown at them. There needn’t be any further examination of the role Weill played, or the law he enabled—both of which objectively militated against CNBC’s fatalist party line on the financial crisis.
So while Weill’s comments got played throughout the day as a “shocking about-face,” no one at the network gave any apparent consideration to what made the about-face so shocking. Instead, Weill’s comments were deployed as a useful tool in the furtherance of undermining the Obama administration’s limp attempts at financial sector regulation—the Dodd-Frank bill and the watered-down bid to reinstate parts of Glass-Steagall via the “Volcker Rule.” This stratagem was both cynical and brilliant: CNBC had to know that the Obama administration would not want to embrace Weill’s suggestion after expending so much effort to get Dodd-Frank signed into law. So the next day, Sorkin was back on set, asking Deputy Treasury Secretary Neal Wolin, straight up, “Is Sandy Weill wrong then?” Wolin’s reply? “I think what we should be doing is putting in place the kinds of size and scope restrictions that Dodd-Frank contains.”
And that was the life cycle of Sandy Weill’s extraordinary self-negating proposition, as far as CNBC was concerned. Its value as a prospective reform was confined entirely to its pedigree—’twas the pronouncement of a Lord of Finance, to be puzzled over briefly, perhaps, and then decorously tucked away.
In any other setting, where rational humans exist, Sandy Weill’s unexpected proclamation would have served as a shock to the system, an event that begged for further circumspection. But at CNBC, it was just another test of faith that needed to be overcome. And by that point—having steadfastly held the line against the diminishment of their liege lords’ compensation, having denied agency to the true victims of the financial calamity, having presented themselves as devoted servants of the old Gilded Age now ready to mark its renewal—the people of CNBC were veteran true believers. Surely, one day soon the Market shall bless them for their chaste intellectual devotions.