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U.S. Treasury Secretary Timothy Geithner announced yesterday a new one trillion dollar plan to purchase toxic assets from failing banks. According to Geithner, the newest bailout is designed to generate investment; however, Nobel Prize winning economist and New York Times columnist Paul Krugman sharply criticized the plan saying that it will be ineffectual. President Obama’s key economic adviser Christina Romero responded publicly in the media disagreeing with Krugman about the joint public-private sector plan while expressing confidence that the U.S. economy will shows discernable signs of recovery in twelve months. With the economy constantly in the news, from AIG’s controversial bonuses to the latest Department of the Treasury bailout plan, Media Matters has launched a new project to keep financial news accountable. The longtime watchdog center recently introduced the “Financial Media Matters” website that will monitor economic misinformation disseminated in major outlets such as The Wall Street Journal, CNBC and Fox Business Network.

GUEST: Karl Frisch, Senior Fellow at Media Matters for America, a progressive media watchdog, research, and information center in Washington, D.C..

For more information, visit www.financialmediamatters.org.

Rough Transcript:

Sonali Kolhatkar: Now it’s interesting because the recent John Stewart interview on the Daily Show with CNBC is Jim Kramer, I think has helped bring into public consciousness the role that financial media has played in the recession. Let’s talk a little bit about who are the financial media, first. I mean, supposedly they are people with a background in economics, right?

Karl Frisch: Supposedly. Although Media Matters did a study a couple of weeks ago that showed in something like six hundred news segments about the economic crisis only, I believe 6% of those broadcast contained comments from an economist.

SK: But what about those doing the interviewing?

KF: Well, very few of those doing the interviewing. More likely that you’ll find on Fox Business News or Fox Business Network or CNBC is the person doing the interviewing is more likely to have ties to the industry than they are to be an actual economist.

SK: And therein lies the problem?

KF: It’s a big problem. I don’t think that it’s necessarily a problem. If you look at political journalism, for instance, many political journalists have some kind of political experience. I think it has the ability to make one a better reporter. Now the problem comes in and I think people remember the John Stewart interview when John Stewart basically started talking about the journalistic abilities of CNBC. Kramer shot back, Look we interviewed these people and they lied to us! Well, any reporter worth their weight is going to go after more than just the word of a CEO who stands to benefit from their report. They’re going to dig deeper. They’re going to check and see if what this CEO is saying is actual truth or if it’s just spin.

SK: And unlike Pacifica these financial news outlets have armies of staff to do that kind of background checking and have enough money to do it.

KF: It’s like watching Entertainment Tonight, but for the financial industry.

SK: Specifically what role did outlets like CNBC and Wall Street Journal play, I mean this is the obvious question, but specifically was it just their cheer-leading of the time when the housing bubble was just getting bigger and bigger, was it their cheer-leading and lack of reporting on the reality that lead to this problem?

KF: Well, I think we have a very short memory when it comes to these types of events. CNBC, in particular, faced enormous scrutiny—not just right now. When the tech bubble was bursting, they faced scrutiny for hyping stocks that were going belly up. During Enron, they faced the same scrutiny. So now here we are again. And, it’s this type of reporting, you hear things like this, on CNBC, “Too much is being made about the subprime credit record and the housing down turn.” Or, “The recession debate is over, it’s not going to happen. Time to move one.” Or, “There’s no recession coming, the pessimists were wrong, it’s not going to happen.” Or, “We are in a slow patch, that’s all. It’s nothing to get us up in arms about.” Or, “The reality is, a possible upturn in the housing trend and at the very least we are getting a bottom.” It was cheer-leading and that’s not the role of a journalist. That’s the role of the people in the company. It’s the job of the journalist to look and see, is their leveraging their finances thirty five to one a good idea? No, it’s not a good idea, especially when many economists were seeing the housing bubble coming to an end or bursting. Years ago, as Dean Banker pointed out, in 2002, once the subprime mortgage crisis hit, it was only a matter of time before other people started losing their homes which was going to lead to economic catastrophe.

SK: On that issue itself, certainly there was a cheer-leading, but also as the Jim Kramer interview with Jon Stewart points out, these interviewers, these reporters in the financial media very much legitimized if you will the betting on the hedge funds, the mortgage backed securities.

KF: Absolutely. As if it was just a game.

SK: So just basically, encouraging Wall Street executives to continually bet on what was essentially going to harm ordinary people. Making money off of the backs of ordinary people.

KF: Profit at any cost, sure that’s what America wants. But that’s not the job of the media.

SK: But again that’s the heart of this whole media infrastructure that has a massive, pro-business slant because the people who are in it… I mean Jim Kramer himself has his own hedge funds.

KF: Right.

SK: I mean it’s like Wall Street reporting on Wall Street.

KF: Which is why we launched FinancialMediaMatters.org. The scapegoat here is that the folks at CNBC and NBC claim that progressives and people concerned are trying to use CNBC as an excuse. That’s not the case. They are not the only problem here. They are one big problem and they fail to realize that. And that’s why we’ve launched financialmediamatters. We need people looking much more closely at what is happening on CNBC, what is happening on Fox Business Network, and on Bloomberg and the Walstreet Journal and the monthly financial publications. Because they are not going to police themselves. And if we’ve learned anything in this crisis it’s that only by average American citizens who consume the news holding their media accountable is anything better going to come out of this.

SK: And certainly these and these outlets did an interview, you know, people like Dean Baker and Doug Hanwood, Noami Prince, so many of these trained economists who were sounding the alarm. So now I understand, Financial Media Matters wrote an open letter about CNBC host, Larry Kudlow, tell us about that letter.

KF: Well, Larry Kudlow had his own show on CNBC for quite some time and, as of late, he’s taken to criticizing senator from Connecticut as well as other Democratic leaders. He’s scheduled to raise money for the National Republican Congressional Campaign Committee. And, to make matters worse, it’s one thing to report on things. It’s another thing to be weighing a possible senate campaign against that very senator he’s been criticizing. So he’s been using his airwaves to possibly enhance his prospects as a candidate for senate and that’s just unethical by any standard. It’s similar to what we saw when Chris Mathews was looking at running for senate as a democrat in Pennsylvania, when he would have on Ed Rendall and other prominent Democrats from Pennsylvania and just completely inflate their egos. So what we’ve done is, we’ve written an open letter that people can see at financialmediamatters.org to CNBC asking that they force Kudlow’s hand. Make him make a decision. If he chooses to run for the senate, he should be forced to take a leave of absence from the network.

SK: Now Karl, it’s not just CNBC, and the Wall Street Journal, etc, it’s also the rightwing media, it’s also the shock jocks. Now tell us a little about the role of Rush Limbaugh who, I’m not sure how much he knows about economics, but what role has he been playing, cheerleading? Before the recession and now, in the wake of it, cheer leading the Wall Street execs?

KF: It’s quite funny. Rush Limbaugh, just last week—and we monitor him everyday on his show RushLimbaughwire.com, he was likening the public’s criticism of AIG to an angry lynch mob that was being gymed up by the Obama Administration. And then after he said that, all the little Limbaughs in the media started following suit, including Glen Back from Fox who also called it a lynch mob, which I found very funny. This is the same guy who has taken to broadcasting on Fridays from a doom room where he hosts survivalists prophesizing the impending doom of our country. It’s also the same guy who claims that the Whitehouse is using FEMA to set up concentration camps for conservatives in an effort to establish totalitarian rule. In fairness to him, he’s not saying he’s sure about this, he’s just saying his “research” hasn’t disproven it yet. I guess if anyone knows how to insight an angry irrational conspiracy pro-mob, it would be Glen Beck.

SK: Now Karl, the Wall Street execs have their media and certainly the Right Wing has its media, but what about the reporting on the silent majority. The masses of Americans who are up in arms about what they’re seeing happening, not only on Wall Street but in the American handouts. There was a lot of reporting on the public outrage and the public outcry over the AIG bonuses. Do you think that the media in general, not just the financial media, but the media in general did a decent job in expressing that public outrage?

KF: No, absolutely not. One reason we’re not limiting financial media matters.org to only financial publications, is because many Americans do get their financial news, their economic news, their labor news from traditional papers, like their local papers, or the Washington Post, or the New York Times. So Financial Media Matters will also focus on those issues from those publications and other networks.

It’s important to realize that the corporate media does not only report dribble. They don’t always mess it up. Unfortunately, you have to really have a good eye for finding a good story.

SK: And you have to be an expert in economics yourself. You can’t rely on them to emphasize what’s important.

KF: What a lot of people just don’t have time for which is why Media Matters exists. What you need to do, if you’re reading something, you need to read it in another outlet as well, go on the blogs, don’t trust everything you read, whether it’s in the blobs or in a traditional news outlet. But read enough to where you’re getting a well rounded view of what’s going on out there. And then, take what you’ve learned, and go to Media Matters.org, you’re likely to find, every day we are posting research on what’s been happening in the news. Correcting common misinformation, correcting misstatements of fact, and then you can take that knowledge that you’ve gleamed from traditional media and a blogosphere, and you can read our items and you’ll have a pretty good idea of what’s happening there. Failing that, if you don’t have time to do that, you could just read Media Matters dot org and we do a pretty good job of summarizing what’s happening out there and correcting what’s not accurate.

SK: Karl, how has the mainstream media in general created a sympathy if you will for, for example, AIG executives who have received millions of dollars in bonuses, and in general, you’ve heard about some of AIG top people talking about the death threats that they have received. How sympathetic has the media been to somehow humanize these extremely wealthy people?

KF: Well, let’s be clear. Death threats in any circumstance are not appropriate. I understand the anger.

SK: People have committed suicide who have lost their homes and their jobs.

KF: Or they’re working multiple jobs just to keep their heads above water and they have been doing that for more than a decade. Times are awful out there. They’re not just tough, they’re terrible. So I understand the anger. Aside from the talk about the death threats, I don’t think you’ve done much to humanize the executives in the traditional press. In the conservative press, you obviously have. And it’s not so much an effort on their part to humanize them, but to dehumanize those who have left them. And that’s something that’s ongoing in the conservative media at all times.

SK: And that’s part of that, “well, we shouldn’t be rewarding people who made bad decisions over their subprime mortgages.”

KF: Just as an example, Neo Borst in a host of a conservative talk show radio, one of the top talkers of this country, said yesterday that anybody who makes under $75,000 a year, is just lazy.

SK: Okay, well, I guess I join those ranks certainly.

KF: I guess he doesn’t know what the medium income is in this country is, we can’t all be paid like a talk show host.

Special Thanks to Celina for transcribing this interview.