GO
Loading...

CNBC TRANSCRIPT: FORMER NEW YORK STOCK EXCHANGE CEO RICHARD GRASSO SPEAKS WITH MARIA BARTIROMO ON CNBC’S “CLOSING BELL” TODAY

WHEN: Today, Tuesday, July 3, 2012

WHERE: CNBC’s “Closing Bell

Following is the unofficial transcript of a CNBC interview with Former New York Stock Exchange CEO Richard Grasso. All references must be sourced to CNBC. Following is the link to video of the interview on CNBC.com: http://video.cnbc.com/gallery/?video=3000100658

MARIA BARTIROMO: AND OF COURSE, THIS SCANDAL ANOTHER BLACK EYE FOR WALL STREET AND THE BANKS. IT IS CERTAINLY NOT INSPIRING TRUST OR CONFIDENCE FOR THE RETAIL INVESTOR. AS SOME PEOPLE ARE PREDICTING, MORE BANKS WILL BE IMPLICATED HERE. LET’S GET REACTION RIGHT NOW TO THAT WITH RICHARD GRASSO. HE IS THE FORMER CEO OF THE NEW YORK STOCK EXCHANGE. DICK, IT IS GREAT TO SEE YOU. THANKS FOR SPENDING THE TIME WITH US.

GRASSO: MARIA, IT IS GREAT TO BE WITH YOU AND AN EARLY HAPPY BIRTHDAY TO THE GREATEST COUNTRY CIVILIZATION HAS EVER KNOWN.

BARTIROMO: CHEERS TO THAT. WELL YOU KNOW DICK, IT SEEMS LIKE IT IS ONE THING AFTER ANOTHER FOR THE FINANCIALS. WHAT'S YOUR TAKE ON ALL OF THIS? YOU’VE GOT JPMORGAN ON THE HOT SEAT, YOU’VE GOT BARCLAYS WITH THIS INTEREST RATE FIXING SCANDAL. HOW ARE THE BANKS AND WALL STREET GOING TO EARN BACK TRUST AND WHAT'S YOUR TAKE ON THIS WHOLE DEVELOPING STORY OUT OF BARCLAYS?

GRASSO: I THINK FIRST AND MOST IMPORTANTLY, THE WAY THE FINANCIAL INSTITUTIONS MUST EARN THE TRUST AND CONFIDENCE OF THE CONSUMER BACK IS BY DOING WHAT THEY DO FOR CONSUMERS, DELIVERING A PRODUCT THAT'S CONSISTENT, THAT’S GOT -- IF YOU WILL, AS ITS COMMON INGREDIENT, INTEGRITY. PUTTING THE CUSTOMER FIRST IS GOOD FOR BUSINESS. I THINK THE FINANCIAL INSTITUTIONS UNDERSTAND THAT, MARIA. BUT THERE'S BEEN SOME VERY HEAVY BODY BLOWS EXPERIENCED BY THE PUBLIC, WHEN YOU LOOK WHAT HAPPENED IN THE MORTGAGE MARKET, WHEN YOU LOOK AT THE CRASH IN '08. WHEN YOU LOOK AT THE FLASH CRASH, WHEN YOU LOOK AT WHAT'S HAPPENING HERE NOW. AND CERTAINLY, NOT TO MINIMIZE ITS CONTRIBUTION, JUST WHEN THE PUBLIC WAS READY TO JUMP BACK IN, WE HAVE THE MOST VISIBLE IPO IN THE LAST TWO DECADES ABSOLUTELY FALL ON ITS FACE IN THE FORM OF FACEBOOK. IT'S BEEN A REAL TOUGH TIME FOR CONSUMERS WHO WANT TO GET BACK INTO THE MARKET AND YET THERE ARE COMPELLING REASONS TO BE IN THE RISK TRADE NOW, BECAUSE THE ALTERNATIVE IS A RETURN OF ZERO.

BARTIROMO: LET ME ASK YOU ABOUT MARKET STRUCTURE AND REALLY ABOUT OVERSIGHT HERE. BECAUSE, BOB DIAMOND SAYS THAT THE MOVES THAT HIS BANK MADE WITH REGARD TO LIBOR WERE DONE WITH REGULATORS' KNOWLEDGE. SO IS THIS EVIDENCE THAT THE SYSTEM IS BROKEN? WILL IT BE MORE FUEL FOR MORE REGULATION? WE KEEP POINTING THE FINGER AT THE EXECUTIVES AND THE BANKS. I'M NOT SAYING THAT'S NOT APPROPRIATE. BUT ALSO, WE’VE GOT REGULATORS ASLEEP AT THE WHEEL HERE.

GRASSO: WELL I THINK YOU LEARN THE LESSON THAT YOU CAN NEVER BLAME IT ON THE REGULATORS, BUT YOU CAN NEVER LOOK AWAY FROM THE REALITY THAT THE REGULATORS ARE INTIMATELY INVOLVED IN THESE FINANCIAL INSTITUTIONS. I WOULD NOT BE SURPRISED IF WE LEARN, AS THIS INVESTIGATION GOES FORWARD, THAT REGULATORS WERE ON SITE, AS THEY WERE HERE IN AMERICA DURING THE '08 MELTDOWN AND DURING SOME OF THE PERIODS WE'RE TALKING ABOUT, IN TERMS OF EXAMINING JPMORGAN. BUT YOU DON'T BLAME IT ON THE REGULATORS. I THINK WHAT IS MORE IMPORTANT FROM A PUBLIC CONFIDENCE POINT OF VIEW, IS FOR THE REGULATORS NOT TO EXERCISE THE STRATEGY OF READY-FIRE-AIM. YOU KNOW, PEOPLE ARE TALKING ABOUT BOB DIAMOND'S RESIGNATION. IF BOB DIAMOND RESIGNED TODAY, I HAVE A BRIDGE HERE THAT CONNECTS MANHATTAN WITH BROOKLYN THAT I'M PREPARED TO SELL TO YOU. HE WAS MADE TO WALK THE PLANK, BEFORE ANYONE EVER CONCLUDED THAT BOB DIAMOND DID ANYTHING INAPPROPRIATE. YOU LOOK AT WHAT'S HAPPENING IN TERMS OF THE EXAMINATION OF THE DERIVATIVES TRADING UNDER JPMORGAN. PEOPLE TOOK JAMIE DIMON, WHO IS CLEARLY THE BEST CEO IN FINANCIAL SERVICES, AND TOOK HIM FROM HERO TO GOAT IN ABOUT TWO WEEKS. WE HAVE TO STOP DOING THIS. PEOPLE SHOULD PAY THE PRICE. THEY SHOULD WALK THE PLANK, IF THEY'VE DONE SOMETHING WRONG. NO ONE HAS YET SAID BOB DIAMOND DID ANYTHING WRONG. CERTAINLY, WHEN YOU LOOK AT JPMORGAN AND THE INCREDIBLE RECORD THAT JAMIE HAS ASSEMBLED, YOU CANNOT LOOK AT THIS ONE SERIES OF DERIVATIVE TRADES AND SAY AN ENTIRE CAREER IS UP IN SMOKE. IT'S NONSENSE. I THINK WE HAVE TO STOP DOING IT.

BARTIROMO: BY THE WAY, WE HAVEN'T REALLY SEEN THE KIND OF SCRUTINY ON JON CORZINE AT MF GLOBAL. BUT THAT'S FOR ANOTHER CONVERSATION.

GRASSO: THAT'S FOR A POLITICAL CONVERSATION.

BARTIROMO: LET ME GET ONE FINAL QUESTION HERE, AND IT’S A DIFFERENT TOPIC. YOU MENTIONED FACEBOOK. OF COURSE, THERE'S BEEN CONFLICTING REPORTS THIS WEEK THAT FACEBOOK IS STILL CONSIDERING SWITCHING EXCHANGES FROM THE NASDAQ TO THE NEW YORK STOCK EXCHANGE. AS FORMER CEO OF THE BIG BOARD, WOULD SUCH A SWITCH BENEFIT FACEBOOK? WHAT’S YOUR TAKE? IF YOU'RE NASDAQ, WHAT DO YOU DO TO PREVENT THIS FROM HAPPENING? I MEAN, WHAT A FOUL-UP THAT IPO WAS RIGHT FROM THE OPEN.

GRASSO: IT WAS NOT JUST A FOUL-UP, BUT IT WAS A TERRIBLE DISAPPOINTMENT TO CONSUMERS ACROSS ALL MARKETS AND IN ALL PRODUCTS. YOU KNOW MARIA, WE HAD THE GM IPO, WHICH WENT FLAWLESSLY AT THE NEW YORK STOCK EXCHANGE. YOU WOULD HAVE THOUGHT THAT NASDAQ WOULD HAVE TAKEN THAT AS A CASE STUDY AND USED THE METHODOLOGY THAT PRODUCED AN ABSOLUTELY SEAMLESS GM INTRODUCTION BACK TO THE PUBLIC MARKET IN THE FACEBOOK SITUATION. THEY DIDN'T. THEY WANTED TO DO IT THEIR OWN WAY. THEY FAILED. AND IN FAILING, THEY NOT ONLY HURT FACEBOOK, BUT THEY HURT THE ENTIRE MARKET STRUCTURE IN THIS COUNTRY. I COULD NEVER UNDERSTAND WHY FACEBOOK WANTED TO GO TO NASDAQ IN THE FIRST PLACE, BUT YOU WOULD EXPECT THAT FROM ME. I'M A HOME TEAM ROOTER. THE REALITY IS AT THIS JUNCTURE, FACEBOOK SHOULD REEXAMINE WHETHER THEY WANT GO TO THE NEW YORK STOCK EXCHANGE, THE SAME WAY GENERAL MOTORS ANNOUNCED TODAY IT'S REEXAMINING GOING BACK TO ADVERTISING ON FACEBOOK. LOOK, IF YOU MADE A BAD MISTAKE, YOU CURE THE PROBLEM BY DOING SOMETHING DIFFERENT. THAT'S WHAT THEY CAN DO NOW.

BARTIROMO: WE'LL SEE ABOUT THAT. REALLY, AN INTERESTING DEVELOPMENT. A REAL QUESTION AS TO WHETHER THEY WILL CONSIDER NYSE – DICK, ALWAYS A PLEASURE TO HAVE YOU ON THE PROGRAM.

GRASSO: JUST ONE FOOTNOTE MARIA. YOU KNOW, THIS $40 MILLION THAT NASDAQ IS TALKING ABOUT COMPENSATING BROKERS, I THINK THAT ADDS INSULT TO INJURY. THE FINANCIAL LOSSES ARE ENORMOUS, BUT THE LOSS OF PUBLIC CONFIDENCE ENGENDERED BY THIS, I THINK THE MOST ROYAL OF SCREW-UPS WE'VE EVER SEEN IN THE OPENING OF AN IPO, DESERVES A HELL OF A LOT MORE THAN WHAT THEY'RE SUGGESTING.

BARTIROMO: YEAH, WELL CERTAINLY THE NUMBERS SEEM PALTRY WHEN YOU LOOK AT SOME OF THE LOSSES RELATED TO FACEBOOK. DICK, HAVE A GREAT FOURTH OF JULY. LOVE TALKING WITH YOU AND WE WILL SEE YOU SOON.

GRASSO: I LOOK FORWARD TO IT, MARIA. HAPPY BIRTHDAY, AMERICA.

BARTIROMO: GREAT. DICK GRASSO JOINING US IN NEW YORK TONIGHT.

About CNBC:

With CNBC in the U.S., CNBC in Asia Pacific, CNBC in Europe, Middle East and Africa, CNBC World and CNBC HD+, CNBC is the recognized world leader in business news providing real-time data, analysis and information to more than 390 million homes worldwide. The network's 16 live hours a day of business programming in North America (weekdays from 4:00 a.m.- 8:00 p.m.) is produced at CNBC's global headquarters in Englewood Cliffs, N.J., and includes reports from CNBC News bureaus worldwide. CNBC.com and CNBC Mobile Web (mobile.cnbc.com) offer real-time stock quotes, charts, analysis and on-demand video.

Members of the media can receive more information about CNBC and its programming on the NBC Universal Media Village Web site at http://www.nbcumv.com/mediavillage/networks/cnbc/