Maria Bartiromo: Debt Was the Poison
In this interview, CNBC anchor Maria Bartiromo talks about covering Wall Street during the critical days and the aftermath of the Lehman Brothers collapse -- the subject of her new book, "The Weekend That Changed Wall Street."
Your book is a play-by-play of the Lehman collapse that took place two years ago. Since then, many books have already been written about the subject. Why did you think it was important to write your own version?
Maria Bartiromo: I was able to take a step back before starting and I would like to believe I was able to give perspective because I did not write immediately after. I did not rush to write because there were many books out which did a great job of handling the weekend and the immediate collapse. I wanted to look at it a year later and include the Greek and European debt crisis, all the way to the financial regulatory reform because the crisis empowered a new administration to come up with heavier regulation. I felt that was a big part of the story.It's important to understand what went on that weekend, but I think it's equally critical to look at the immediate and longer term impact and lessons learned two years later. How debt was the poison for not just one company, one industry, one country but actually the globe. Did you observe any hero (or heroes) during that fateful weekend? Bartiromo: I think the players handled this very well. It was an extraordinary moment in time and I am happy we had that leadership at the wheel. At that point, most of the insiders on Wall Street handled themselves as well as could be expected. They did a good job of putting down their own competitive juices and instead worked together to get through this. I think they all understood that there was strong potential for a domino effect. Self preservation is an amazing instinct. Were you not concerned that writing this book -- divulging personal and unreported information on your sources -- would somehow affect your dealings with them going forward? Bartiromo: There is always a balance. Hardworking reporters find information that others can't find. CNBC for 20 years has played a critical role in democratizing the markets. It is important to be honest and transparent, but off the record information is always off the record. You write about how Wall Street has been forever changed by the collapse of Lehman Brothers. Has anything changed with the way you (and other members of the financial media) now cover Wall Street? Bartiromo: Twenty years of covering the markets -- and watching various booms and busts -- has made me a bit more skeptical. Jim Rogers, the international investor, once told me it's important to be a contrarian and to question things, especially when everything seems perfect. I agree. As a journalist, it is critical to question and kick the tires of a whole host of subjects and stories. Was there any reason home prices in Phoenix, for example, rose 40% year over year in 2006? Was the school system any better? Was the infrastructure any different? No. It was just a mania that caused people to have urgency about getting in "now." It is important to remember the simple basics. If it looks too good to be true, it probably is. I am proud of the way CNBC handled this financial crisis. We are built for balance. We do more than 120 interviews a day here in the United States and more than 850 globally. The goal is always to get the best and brightest minds to debate each critical issue. Many of the biggest bears like Peter Schiff, Nouriel Roubini and David Einhorn appeared on our air repeatedly throughout the crisis and oftentimes they were matched against investors who thought the market was going to continue to grow. When combined with multiple interviews with George Soros and Warren Buffett, it should not have been a surprise that the housing market was overpriced and it could have an impact on the economy as a whole. We talk a lot about how Wall Street has changed. In your opinion, have things really changed? Bartiromo: Many things have changed. First, we have a much tighter regulatory environment. The crisis empowered a new sheriff in town to push through bigger government regulation and higher expenses for business. This will continue to evolve with new requirements coming from the Basel accord, on top of FinReg. Second, individuals and institutions are much more aware of the implications of debt. Individuals are saving more money and institutions are hoarding more cash. Everyone is talking about debt and deficits. Also, the landscape looks different. Fewer banks, no more traditional investment banks, no bank holding companies, boutiques, etc. Asset sales like proprietary desks continue. Another change has been the impact all of this has had on the economy, as businesses are reluctant to add heads to the payroll because of uncertainty over FinReg and higher expenses all around (health care and taxes). Also, scrutiny on compensation, pay for performance. Is there a sequel to The Weekend That Changed Wall Street? A book perhaps on what has NOT changed after all the lessons learned? Bartiromo: Probably. I'll take notes and come back to you.
>To contact the writer of this article, click here: Marilen Cawad. >To follow the writer on Twitter, go to http://twitter.com/marilencawad. >To submit a news tip, send an email to: firstname.lastname@example.org.
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