Although the collapse of Bear Stearns happened back in March, the debate still rages as to what led to the failure of the 85-year old investment bank that had survived years of previous turmoil, including the Great Depression.
After JPMorgan Chase (NYSE:JPM) CEO Jamie Dimon appeared on PBS's "The Charlie Rose Show" July 7 and commented on an August 2008 Vanity Fair article alleging that CNBC reporting could have been part of Bear Stearns' downfall, the cable channel's on-air editor Charlie Gasparino criticized what was claimed in the article and Dimon's reaction on CNBC's July 8 "Power Lunch."
"Well, you know, he [Dimon] said one thing that I'm just - listen, I didn't watch it," CNBC's Charlie Gasparino said, "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."
In March, Dimon's firm, JPMorgan, purchased the beleaguered Bear Stearns at a discount price, with the Federal Reserve and the Treasury Department brokering the deal.
But according to Gasparino, assertions that rumors were responsible for Bear Stearns' collapse are the product of "ill-informed writers and reporters" and that the company had several fundamental flaws - including its leadership - which caused the investment bank's failure.
"I mean, what he [Dimon] was essentially saying is that he believes that rumors brought down Bear Stearns," Gasparino said. "I know that's become popular among some ill-informed writers and reporters lately - that rumors took out a firm that had bad management, which earlier in the summer, the CFO got on a conference call and said this was the worst financial debacle he's ever seen and the stock went down like 10 bucks in three minutes, a same firm where, you know - the CEO was playing golf while Rome was burning."
"You could name a million problems with Bear Stearns that kind of gave the impression that there was a problem there - a real desperate problem," said Gasparino. "And it ain't rumors; I got news for you."
In 2002, Business & Media Institute advisory board member Don Luskin said that Gasparino had played a role in rumor mongering for then-former New York state Attorney General Eliot Spitzer.
Luskin said Gasparino was "formerly an uncritical and dutiful conduit for Eliot Spitzer's leaks at The Wall Street Journal." The claim was an attempt to connect Salomon Smith Barney telecom analyst Jack Grubman's upgrade of AT&T with improper influencing from Citigroup chairman Sandy Weill according to Luskin.
