Bryan Burrough, one of the co-authors of the seminal business book “Barbarians at the Gate,” writes in the latest issue of Vanity Fair about the demise of Bear Stearns and suggests that CNBC‘s reporting had something to do with the downfall.
Burrough writes about CNBC’s reporting of rumors that the firm was having a liquidity crisis.
He wrote, Â “For the next hour the Bear Stearns rumor became a topic of conversation between CNBC correspondents and various market traders and analysts. At 1:50, Matthew Cheslock remarked, ‘The sentiment [on Bear] is pretty negative. The general consensus is â€˜Where thereâ€™s smoke, thereâ€™s fire.'”
“A few minutes later, Griffeth, perhaps sensing the network might have gone a bit too far, asked Dennis Kneale, ‘What about the jittery nature of this market right now? Are we starting to believe some rumors that may or may not be true?’ Kneale agreed. ‘Someone,’ he observed, ‘is always making money on the other side of that bad news or that rumor.’
“Yet CNBCâ€™s coverage remained anything but skeptical of the rumor. At two the networkâ€™s new ‘money honey,’ Erin Burnett, headlined the hour by announcing ‘credit issues at Bear,’ never mind that there was no such thing. She turned to correspondent David Faber, who observed, ‘Of course, no firmâ€™s ever going to say that they are having trouble with liquidity, and, in fact, youâ€™ve either got liquidity or you donâ€™t. So if you donâ€™t have it, youâ€™re done. Those are the kinds of concerns in this market, concerns of confidence You can have crises of confidence, causing meltdowns.’
Read more here. There’s also an interesting section about Bear Stearns deciding what CNBC correspondent would get to interview its CEO, with the Bear PR people noting that those who would be turned down would be upset.