When the inimitable CNBC reporter Charlie Gasparino announced the title of his new crisis epic, The Sellout: How Three Decades of Wall Street Greed and Government Mismanagement Destroyed the Global Financial System, to his friend Teddy Forstmann, the financier was skeptical. "So what you're saying," Ted said, "is that somewhere along the line, Wall Street as an institution had some principles to sell out?" He had a point. Crisis-book connoisseur Moe Tkacik caught up with Gasparino as he obsessively checked his Amazon rankings today to find out more.
So, Charlie, I learned many things from your book, The Sellout, besides the thing about [former Bear Stearns CEO] Jimmy Cayne telling his friend his antacid bottle was actually filled with cocaine.
Jimmy Cayne actually just called me. He said he thought I was a fair reporter, and — this was somewhat of a shock — he said, "I just wanted to wish you the best of luck with your new book, I can't make your book party because I'm out of town." And I'm not kidding you, but then he said this: "I just wanted you to know I think you are the best reporter in the history of reporting." I'm seriously not kidding. Maybe he was stoned.
Well, as you state on page two, you "never found Jimmy Cayne's pot-smoking particularly newsworthy because he never seemed stoned at work" — even though he once tried to hand you "what looked like a joint" in the Bear Stearns elevator.
What I've always liked about Jimmy Cayne is that he was interesting in a refreshing way. John Thain is pretty boring. Stan O'Neal is just ruthless. Dick Fuld is just kind of nasty, Chuck Prince is a doofus, Bob Rubin is kind of out to lunch but the culture of [Bear Stearns] has always been kind of interesting to cover.
Well, ironically, it seems like Bear Stearns produced more of the guys who "saw it coming," so to speak, than Goldman. John Paulson was a Bear guy, Kyle Bass was a Bear guy. No one really listened to any of those guys, though. Has anything changed? Are you at all optimistic about the future?
I'm not really optimistic about the future of Wall Street. I mean, I've always thought Wall Street was a necessary evil. You could never really trust them. My first book was about how they screwed over all these average American people during the internet bubble. But at least that scandal was somewhat related to Wall Street's real mission, which is to help companies raise capital so companies could keep the economy in working order. Think about how far Wall Street grew away from that mission. What the hell does the carry trade do for society? And what kind of struck me was that over and over again, these guys have not had to face the consequences of their actions, and then they get amnesia. I'm not in that camp that thinks Goldman Sachs is the root of all evil, but they do crystallize the problem that's wrong with the bailout. At this point last year right now they were [seriously fearing for their own survival], and now they are allowed to say they never needed the government assistance, and yet inexplicably they are still a commercial bank and able to borrow at the same rates of a bank with depositors and ATM machines and small business clients and branches that employ bank tellers. How is that possible?
That Goldman's future was hanging in the balance was nothing but hot air promulgated on CNBC? Make no mistake: they were toast. Their business model was the same as everyone else, they were leveraged 30 to 1 like everyone else, so the idea "that they were perfectly hedged."
Oh yeah, I love that "perfectly hedged" line. Like, if taxpayers hadn't coughed up that 13 billion dollars last fall they totally had a backup plan in the private sector.
Right, that is the absurdity of it. That they will say they were perfectly hedged, and yet have never had to elaborate on those hedges, like who they were with. By the way, everybody that blew up said they had hedges. And I'm sure they thought they did, but guess what, they blew up anyway, and if you blow up you didn't have hedges.
In other words, more banks need to blow up, is what you're saying.
Right. You know, most of us walk around every day constantly reminded of our own infallibility, because life is like that. But these guys are too cloistered, and no one holds them accountable. And so when you see these guys in New York City, and they walk into the restaurant and they think they own the restaurant, it's because they sort of do.
Right, like in your book, when [former Citigroup fixed income chief] Tom Maheras barks at the Vegas blackjack dealer, "Do you know who I am?," and you think to yourself, Who does he think he is, Rihanna or something? you are the sucker, because he actually does run the whole casino.
All these guys come back again. Here's a scoop: I hear Tom Maheras is starting a hedge fund, he's got investors, he's lined up $75 million.
It couldn't happen to a more loathsome guy! Or maybe it could
of all the guys you wrote about, who's the worst?
Stan O'Neal was the most sort of loathsome in a way. I know him, and he's better than what he turned out to be, the megalomaniac, dogmatic destroyer of the company. He purged all the bad guys, and some of them were bad, but then he replaced them with guys who turned out to be worse.
I found that fascinating, the way a grandson of a slave would try to change the provincial racist culture at Merrill Lynch by installing this crew of jet-setting international douchebags like that deadbeat dad with the $10 million bonus.
Well, Stan didn't think they were douchebags. He thought they were brilliant. A lot of these guys did get very good SAT scores. But the thing about Stan is that he thought he was different, but just like [Long Term Capital Management founder] John Meriwether, he got caught up in the risk-mentality groupthink and the Goldman envy and just replaced the old jerks with a new team of jerks.
The tone of your book is more reflective than most of the crisis books I've read, and I've read them all.
People think because I go on TV and scream a lot I don't have half a brain in my head, but I've been in this business a long time. And there's the fact that I rewrote it eight times.
Did you find it tough, starting out in business journalism, to get people to talk to you without being deferential?
I think the last guy who really intimidated me in a reporting situation was the president of the Cortland County school board [for Newsday]. Most of these guys are cowards. Sometimes people will get mad about something I reported, mostly Lehman guys, and they'll confront me outside a restaurant, but it's always in packs; there will be five of them or six of them and it's me. At first you're nice, because these people are unemployed and that's terrible, but if they don't let up, that's when you just have to tell them to point blank go fuck themselves.
In any case, some of [my sources] are good friends, but I'm not one of them, you'll see at my party. [Blackrock CEO] Larry Fink will be there, and maybe [Morgan Stanley CEO] John Mack will show up, but I'm not gonna be holding hands with fuckin' [JPMorgan CEO] Jamie Dimon or anything like that.