At a Vanity Fair and Bloomberg event in Manhattan on Wednesday night, audience members were delighted by an impromptu ( and slightly coerced) appearance by Morgan Stanley CEO, John Mack, who called for far more stringent policing of Wall Street.
Mack, sitting inconspicuously amongst a crowd of business journos and financiers, was cheekily ambushed by Bloomberg's Margaret Brennan during the 'additional questions' portion of the evening, after a stellar panel of business reporters (and one historian) speculated on the causes of the financial crisis and analyzed how governmental and news institutions have handled the event.
After a quasi-joke that he was hiding from the camera, Mack grudgingly stood up and answered questions from Brennan and the panel. Mack, who will step down as CEO of Morgan Stanley next January, thought press coverage of the crisis had been, "overall, fair," and honed in on the urgent need for greater regulation of the finance industry.
"Regulators have to be much more involved," Mack said. "We cannot control ourselves -- [regulators] have to step in and control the Street." He added that some positive changes have been made, pointing to the fact that in the halls of Morgan Stanley, ten or fifteen federal regulators now roam daily.
"I love it," Mack said. "It forces firms to invest in risk management."
The 'Covering the Crisis' panel consisted of Vanity Fair's Bryan Burrough (formerly an investigative reporter for the Wall Street Journal), Niall Ferguson (a professor of history and business at Harvard and contributing editor for the Financial Times), Bethany McLean (a contributing editor at Vanity Fair and the reporter often credited with having brought down Enron) and Andrew Ross Sorkin (the NYT's chief mergers and acquisitions reporter and columnist). The discussion was moderated by a pithy and tongue-in-cheek Michael Lewis, who left Portfolio in February to join the ranks of Graydon Carter's mag (the man at the helm of Vanity Fair was in attendance, as was the Bloomberg group's multimedia CEO, Andrew Lack).
Some highlights from the conversation...
- Lewis: Should Lehman have been allowed to fall? Sorkin ummed and ahhed and then said yes; Ferguson said no; so did Burrough: "Lehman was losable. They were isolatable. You could put them on an island. If you had lost AIG, I'm not sure it was isolatable."
- Lewis: What caused the crisis? Sorkin said deregulation, monetary policy and leverage; McLean blamed the political emphasis and encouragement of universal homeownership; Ferguson listed all the above and then proclaimed that we have all missed one important factor: China.
- Brennan to Mack on media coverage of Morgan Stanley and the crisis in general: Mack described the coverage as generally fair, but then declared that coverage of the Stanley/Mitsubishi deal was "bullshit."
- Brennan (host of cable TV news show, InBusiness): Did cable news coverage affect the crisis? Sorkin said it may have upped the panic ante, because even neutral, realistic reflection of the panic reverberates and thus intensifies alarm; Burrough was more condemnatory: " TV journos have too much time to fill. Your job is not to reflect passions, it's to report facts"; Ferguson argued that major financial meltdowns happened long before cable news.
- Lewis to Sorkin: Is there anything you didn't uncover in your book? (Sorkin's new book, Too Big to Fail, looks at the collapse and bailout of Wall Street. Lewis had implied earlier in the evening that Sorkin's source list and the information he extrapolated during the reportage, was quite impressive): Sorkin said he wished he had access to the confidential notes taken during that 5 hour meeting on what to do about AIG, on that fateful Tuesday last September...