Dylan Ratigan of CNBC – He Doth Protest Too Much

Dylan Ratigan, the anchor of Fast Money and more CNBC shows than we can keep track of, has been a temperate, thoughtful reporter who takes pains to show a genial, good-natured side to his viewers.

But, this week, Dylan Ratigan underwent a radical transformation of personality and recast himself as a  financial reincarnation of CNN’s Lou-Dobbs. It was sudden, hard and jarring on the senses.

Like an avenging Lou Dobbs, Dylan Ratigan ranted all week against the bad guys on Wall Street, the Wall Street CEOs who leveraged their firms to an unheard of ratio of 40:1 and caused indescribable harm to America and the American people.

On Friday, October 17, Dylan repeated this performance during the Fast Money show. In his opening segment*,  Dylan waxed eloquent like a class-action lawyer would in before a jury. After this performance, CNBC should get Dylan the $400 haircut made famous by John Edwards, ex-senator and successful lawyer. Mr. Ratigan deserves it.

Dylan blamed a “few individuals” on Wall Street for assuming risks that were so huge that they had to be passed on ultimately to the “rest of us”. While Dylan spoke, CNBC put a banner under his picture that read “Was The SEC Asleep While Wall St. Leveraged Itself To The Hilt?”.

Dylan’s main exhibit was a portion of Treasury Secretary Hank Paulson’s testimony to the US Congress on February 29, 2000 (yes 2000) when he was the CEO of Goldman Sachs. Mr. Paulson told the Congress (in that testimony) that, to compete with their foreign-based competitors, Wall Street needed to use higher leverage. Dylan waved this testimony on camera with the flair of a flamboyant lawyer in front of a jury.

Dylan ended his argument with “Here is a question for you?” It was not a question but an exhortation to the “few individuals” to return the huge bonuses. Then he passed his moral judgment calling it “utterly unconscionable”. His loyal and obedient cohorts, Joe Terranova and Karen Finerman dutifully joined the chorus by repeating the “unconscionable” phrase. (As an aside, we ask ourselves, would honest Jeff Macke have joined this chorus or would he have pointed out what we are about to point out ourselves.)

This was a performance that Lou Dobbs would have been proud of. But there is a huge difference between Lou Dobbs and Dylan Ratigan. Lou Dobbs, like his views or not, has been honest and totally consistent in his views. In contrast, Dylan Ratigan reinvented himself to fit today’s mood.

Those of you who watch Fast Money, think back to 2007 and before. You will recall that Dylan Ratigan  and his trader team have been the loudest and most loyal cheerleaders of Wall Street Firms; recall how many times these people exhorted you to buy Goldman Sachs. That was their champion stock; they celebrated the earnings and stock performance of Goldman Sachs so often that you could have renamed the show “Dylan loves Goldman Sachs”. Fast Money also promoted stocks of other brokerage firms like Merrill Lynch, Morgan Stanley, Lehman. 

Dylan and his trader team knew fully well that all these firms used heavy leverage. They also knew that high leverage was the steroid that pumped up profits on Wall Street. They knew that issuance of highly leveraged loans (the type that have gone bad, very bad) was the engine behind the Private Equity boom of 2007. Yet, they kept exhorting their viewers to follow what the ultimate smart money (Private Equity Firms) was doing.

This cheerleading was critical to the ratings of Mr. Ratigan’s show. You know these networks, ratings are everything and they hype whatever the audience wants to hear.

If Dylan Ratigan and CNBC want to restore trust in financial journalism, they need to come clean and apologize to their viewers for their cheerleading role during boom times. These guys hyped the product and sold it to their viewers. Remember, Wall Street Firms used leverage for their own proprietary profits and these firms are very secretive about their techniques. It is CNBC and the financial media that took this toxic potion and injected it in the consciousness of their viewers.

The compensation of Dylan Ratigan, his Fast Money team and that of his colleagues at CNBC are not disclosed to the public. We suspect it runs into many, many millions of dollars. CNBC itself earned multiples of this amount from advertising revenues while Dylan and his colleagues were cheerleading Wall Street leverage.

To use Mr. Ratigan’s words, we find this “utterly unconscionable”.

So let us ask Dylan Ratigan and his colleagues in Dylan’s own words, ” Is it appropriate for you to assume these huge salaries with the knowledge now that your promotion and cheerleading of these practices have come back to hurt every tax payer in America?”

We await Mr. Ratigan’s response.

Editor’s Note: Besides the theatrics and the brimstone, Mr. Ratigan did an injustice to Secretary Paulson and Wall Street. He knows (or he should ask his colleague David Faber) that British Banks and European Banks use leverage ratios that are much higher (40:1 to 70:1) than the leverage ratios used by Wall Street Firms.
So Mr. Paulson was right in 2000 that Wall Street firms needed higher limits to compete with European banks. Mr. Ratigan never mentioned this fact perhaps because it would have lessened the effect of his fire and brimstone. The higher leverage is why European Banks are in far worse trouble than US Banks.  The real difference is that UK and Europe protect their Banks while Mr. Paulson refused to protect Lehman. The bankruptcy of Lehman was the explosion that precipitated the global financial avalanche.

* You can view Mr. Ratigan’s comments at www.cnbc.com/id/15840232?video=894113288&play=1 – the comments begin at 16:12 minute of the 21 minute clip.

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