In light of their reporting on the failure of investment firm Bear Stearns Companies Inc. (NYSE: BSC) [1],, it seems CNBC reporters aren’t “tip-toeing around on eggshells” when reporting about problems at Lehman Brothers Holdings Inc. (NYSE: LEH) [2].
On CNBC’s “Squawk Box,” reporter Charlie Gasparino told co-host Joe Kernan, “I will say this about the Bear Sterns thing when you compare that [Lehman] with this. I think our reporting was incredibly responsible. It was so responsible … and you know we went out of our way with Bear Stearns … We just report on how feckless management is and I can’t help that Bear Stearns was feckless. [Lehman] was feckless too and that is the scary part.”
“They’re going to parse every ‘is’ that a journalist said,” said Kernan. “We don’t hammer the stock. We watch the stock get hammered and then we talk about it.”
Gasparino and Kernan were referring to the questioning of CNBC reporters’ journalistic ethics raised in an article by Bryan Burrough for Vanity Fair magazine’s August 2008 [3] issue. Burrough suggested that short-sellers may have spread rumors about the firm’s demise and story hungry CNBC reporters may have picked the rumors up as news – pushing Bear Stearns over the edge. Gasparino was mentioned in Burrough's story,
Burrough called Gasparino “an especially aggressive reporter” who was “the bane of Bear Stearns” because Gasparino suggested top employees should face possible criminal charges and “more than once he had predicted that the firm would go under.”
In the article, Burrough pointed to an instance during a roundtable discussion where Gasparino was pretty vocal.
“Bear has a problem with whether they should exist or not in the future in this sense,” said Gasparino on air. “What do they have left? A clearing business, a second-rate investment bank?”
Because of the credit crisis, Gasparino said he didn’t see “how they could survive independently. They don’t have enough horses out there.”
More criticism came after the Vanity Fair article – this time from a CEO.
JPMorgan Chase’s CEO Jamie Dimon concurred with the article and complained CNBC reporting could have been part of Bear’s downfall in an interview aired on PBS’s July 7 “The Charlie Rose Show.” [4]
On the July 8 broadcast of CNBC’s “Power Lunch,” Gasparino offered a rebuttal [5], slamming comments from Dimon saying, “Well, you know, he [Dimon] said one thing that I’m just – listen, I didn’t watch it … I’m just going by what appears to be a transcript here: ‘Where there’s smoke, there’s fire.’ Oh really? Sometimes where there’s smoke, there’s no fire, Jamie. I’ve got news for you.”
Gasparino was quoted in The New York Post [6], July 11, as saying, "CNBC didn't report rumors” and “If Bryan Burrough wrote something substantively and factually accurate about the way we covered the story there would be a problem, but he didn't. He was incredibly sloppy.”
"Maybe I touched a nerve,” Burrough told The Post. He lamented that “the idea that CNBC did in Bear is ridiculous” but added that there were a few places when CNBC reporters “stepped right up to the line.”
In 2002, Business & Media Institute advisory board member Don Luskin said that Gasparino had played a role in rumor mongering for then-former
Luskin said Gasparino was “formerly an uncritical and dutiful conduit for Eliot Spitzer's leaks at The Wall Street Journal [7].” The claim was an attempt to connect Salomon Smith Barney telecom analyst Jack Grubman’s upgrade of AT&T with alleged improper influence from Citigroup chairman Sandy Weill according to Luskin.
In related news, Lehman shopped itself to potential buyers like Bank of America Corp. September 12, a day after saying it had found a way to patch up its massive real-estate-related losses, according to The Wall Street Journal [8].