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The Case Against John Carney, Revisited

Horrors!

Luring investors into a stock market trap, taking money from hedge funds, pumping stocks, helping investment banks fund a liquidity crisis, being a team player for Wall Street — quite a lot of nefarious things for me to have foisted upon CNBC in just six months! No wonder it's felt so hectic.

John Carney
Photo: Oliver Quillia
John Carney

Gary Anderson has written a 2000-word attack on CNBC titled Why Is CNBC Trying So Hard To Defend Insider Trading? But, for the most part, it is about me.

Oh sure, Erin Burnett, Jim Cramer, Larry Kudlow and Trish Regan come in for some abuse. Rick Santelli and the Najarians get some mud thrown at them, too.

But the piece begins with the words: "John Carney of CNBC Is On A Personal Crusade to Legalize Insider Trading." And it ends with a call for me to quit CNBC to become a muckraker, presumably because Anderson believes I cannot rake the muck at CNBC.

Let me say straight out that I am not on a personal crusade to legalize insider trading. I do believe that the mandatory federal ban on insider trading is bad policy and investors and the markets would be better off without it.

But there's nothing personal about this belief (except, I guess, that I happen to hold it) and there's nothing crusading about it. Crusading just is not in my psychological make-up. I do not believe that my writing is likely to improve the world or change public policy. I certainly do not write with a goal to improve the human condition or public policy.

In fact, I’m pretty skeptical that the human condition or the public policies of our government are likely to be improved very much at all. I do hope to demonstrate, every now and again, that most of the schemes hatched by improvers will likely make things worse, and that much of what many mistake for the accumulation of knowledge is simply the piling up of myths on top of biases on top of self-dealing ideologies. But I don’t hold up much hope that this demonstration will do much to rescue us from goose-stepping to auditory hallucinations we take for the marching song of progress.

And, also, I want to tell stories about what is happening on Wall Street and what those stories mean for the rest of us.

To paraphrase a great journalist, I'm convinced that the world is down with at least a score of painful diseases, all of them chronic and incurable; nevertheless, I cling to the notion that human existence remains predominantly charming.

Incidentally, although I do take a position against a ban on insider trading, this has nothing at all to do with my employment at CNBC. In the first place, as far as I can tell, I'm the only person at CNBC to take this view. (If there are others, I invite you to speak up!) For all I know, the brass at CNBC is slightly embarrassed by my radicalism on this issue.

More importantly, this reflects a view I've held since long before I joined CNBC. In October of 2009, I shot down every single argument I'd ever heard supporting the insider trading ban. My official Business Insider biography, which I believe I wrote back in October of 2008, explained that I believe insider trading should be legal. Way back in April of 2007, I was arguing at DealBreakerthat the primary reason insider trading is illegal is too boost investor confidence because "the government, corporate America and the large brokerages want ordinary investors to feel confident they are playing on something of a level playing field with those with potentially better access to information."

It's fine if Anderson wants to disagree with me on this. But it's just weird for him to argue that my position is part of a stock pumping scheme meant to benefit Wall Street firms. In fact, part of my argument for legalizing insider trading is that it would likely have the beneficial effect of discouraging retail investors from trying to pick stocks, and instead encourage broad diversification and index fund investing.

I hardly know what to make of Anderson's nonsensical claim that I've been pumping up Wall Street for years. At various times my websites have been blocked by Bear Stearns and Merrill Lynch — hardly a sign of love. I described Citi as a broken bank at DealBreaker. (Read the archives for a taste of how DealBreaker treats Citi.) I called Citi's payment of bonuses a scam in the summer of 2009 and CNBC invited me on as a guest to debate a Yale professor about my views.I opposed the bailouts, for goodness sakes!

The very first thing I ever wrote for DealBreaker in April of 2006 was a piece mocking Donald Trump for starting a Trump-branded mortgage company.

"I don't need a mortgage any time soon," I concluded. "Who buys in this kind of market anyway?"

By August of that year, just a couple of months after I had started to write about finance full time, I was pointing to websites demonstrating a housing bubble. By October I was writing that the housing bubble was deflating. After the bubble burst, I wrote two articles warning that housing prices might never, everrecover.

One point can be dismissed outright: Anderson is just completely wrong when he says that I am paid for speaking at hedge funds. He has no basis for this claim, provides no links to substantiate it, and never asked me about it. Nonetheless he makes this defamatory remark three times:

I have appreciated Carney's astute observation about Basel 3 in the past, and John even quoted me once, but I noticed recently that he is speaking at hedge funds. We saw how ineffective that sort of behavior made Larry Summers, who did nothing for mainstreet as Obama's financial guru.

Perhaps Wall Street is a different planet. Or maybe Carney is betting that mainstreet is asleep and won't notice; which was once likely true, but may not be anymore. If you have article after article defending hedge funds, while deriving speaking fees from hedge funds it just looks bad, though I am sure it is perfectly legal.

How can a guy who is paid for speaking at hedge funds be a news editor and objectively report? I don't get it. At least stop taking hedge fund gigs John! CNBC appears to mainstreet as being dirty, John. These gigs don't help the perception! I know it is all perfectly legal, but come on!

For the record: I am not now and have never been paid for speaking at hedge funds. It just has never happened. What's more, it won't happen as long as I'm at CNBC, as my contract prohibits me from accepting any such payments.

I did recently moderate a panel being put on by the Markets Media Group as part of a conference on the future of trading. It wasn't organized by a hedge fund, however, and I wasn't paid anything to moderate the panel. Anderson is either misinformed or making stuff up.

Finally, it strikes me as odd that Anderson thinks I cannot be a muckraker at CNBC. If anything, I'm encouraged by the brass around here to rake even more muck than I do. And I do quite a bit. Check out, for instance, all the writing my colleague Ash Bennington and I have done on the put-back issue at Citigroup and other large banks.

There is room always room for criticism of media organizations, especially one as important as CNBC. And Anderson has written some praiseworthy essays for sites such as Seeking Alpha. But instead of critiquing me or CNBC, Anderson just took aim at demons that do not exist outside his excitable mind. It's like Don Quixote tilting at windmills, minus the nobility or comedy.

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