Maria Bartiromo on the Biggest Change in Wall Street

For this weekend's upcoming Motley Fool Money radio show, I interviewed Maria Bartiromo, the host of CNBC's Closing Bell and author of The Weekend That Changed Wall Street: An Eyewitness Account. In the book, she details the weekend of Sept. 12-14, 2008, when Goldman Sachs (NYSE: GS  ) , Bank of America (NYSE: BAC  ) , JPMorgan Chase (NYSE: JPM  ) , AIG (NYSE: AIG  ) , and other major financial institutions were changed forever. What follows is part of our conversation, edited for clarity.

Chris Hill: Looking back now at the events of that weekend, is there one domino in particular that you look at and think, if that didn't happen this would have turned out much better? Or is it a case that everything was just far too connected and this was almost inevitable?

Maria Bartiromo: No, I think there were a couple of things that could have been done differently. For starters, why is it that the government did not open the window to cheaper lending to Lehman Brothers -- and the other investment banks -- before the firm was facing such disaster? Because two weeks after the firm declared bankruptcy, the Fed opened the window to investment banks and allowed them to borrow money at the same rates as the commercial banks. So there were steps I think the government could have taken, but I also think that Treasury Secretary Hank Paulson and New York Fed head Tim Geithner needed to make Congress understand the severity of this. And I think they actually used Lehman as part of that by saying, "Look, this is the first domino to fall. Lehman is first; who knows who is next? We need money for TARP." Congress, I don't think, would have readily put out the money, approved the money, if in fact they didn't understand the severity, and I think that is part of what happened.

Hill: Earlier in the year, I interviewed Michael Lewis and asked him what surprised him the most as he was writing his latest book about Wall Street. He said he was taken aback by the degree of conformity in the financial world, how like-minded people had become, and that it was a very different Wall Street from the one he worked on back in the 1980s. You have covered Wall Street for more than 20 years. What has been the biggest change that you have observed?

Bartiromo: Oh, so much has changed. For starters, when I first got down to Wall Street, there was an individual investor revolution going on where people were accessing information, empowering themselves with information, with the thought that they could invest and save for the long term wisely, which they could. Then that followed quickly by a global revolution, where one thing happens in one corner of the world and it immediately impacts the rest of the world. So on a fundamental level, those were sort of huge, big changes that affected so much of what we do and so much of the way investors have access to information and the way that they invest.

Then there are other sort of clear changes that you can see and feel and touch and look at the floor of the New York Stock Exchange. The technology revolution was another huge change. Today there are about 1,200 people on the floor of the exchange, maybe a thousand. At the peak, it was more than 3,000. Technology has taken over, and investors today are going through the machines, for better or for worse, by the way. We saw the flash crash send the market down a thousand points, so this whole "man versus machine" phenomenon has downside risks as well. So you have an individual investor revolution, a global revolution, a technology revolution, all of which happened pretty much overlapping one another in a 15-year period, and so I think it is night and day from when I started. ...

Hill: One of the jobs you had before working in business journalism, you worked as a teller at an off-track betting location.

Bartiromo: That's right.

Hill: Did that experience help prepare you for working on Wall Street?

Bartiromo: (Laughs.) Well, it was a weekend job when I was in college. It was on a Saturday. I said to someone who asked me this once that maybe the urgency and the horse racing and the fast pace and dealing with money sort of planted the seed for me. I don't know. It was a city job, and it was a nice salary and I did it on Saturdays when I would come home from college. Look, it was a great job, and I enjoyed it tremendously.

I do not relate investing to gambling. I don't think it is the same, but at the end of the day, you are making a bet, right? You are betting on something. I hope that when you make that bet in the investment world you have got some facts, some fundamentals to back up your bet rather than just a guess.

Hill: So do you still bet on the horses? I am looking for any tip I can get here.

Bartiromo: (Laughing.) I never was a gambler. I never actually bet on the horses, I just carried out the bets, but no, look, you know what I do like? I like blackjack.

Hill: Really?

Bartiromo: Yeah, when I go to the Bahamas or on a vacation, I will always check out the blackjack table because it is fun.

Hill: Any chance we're going to see you in a celebrity blackjack tournament?

Bartiromo: No, I am not that good. In fact, I always come up with a number; usually it is about a hundred dollars, that if I lose a hundred, I am gone. I write it off to entertainment and that is it, so if I lose a hundred, I don't think that kind of number is going to allow me to sit at the table with some of those big shots.

Click here to read more from Maria Bartiromo on the weekend that changed Wall Street.

The interview with Maria Bartiromo airs this weekend on Motley Fool Money on radio stations across America and on iTunes. Chris Hill does not own shares of any of the companies mentioned. The Motley Fool has a disclosure policy.


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