When, in August of 2007, I went on CNBC's "Street Signs" and screamed "they know nothing," my now famous rant about how the Fed was way behind the curve on the coming housing crisis, I had one goal in mind: to get the Fed to cut interest rates and to cut them fast.
I didn't know at the time, but I sure succeeded in getting the Fed's attention as we know from the release of the 2007 transcripts on Friday. Except it wasn't the kind of attention I sought. I became a laugh line at the subsequent meeting, as someone who was strident and wrong about the shape of the markets to come.
I certainly didn't intend to go ballistic when I started. If you watch the whole "Stop Trading" episode I was actually fairly subdued, explaining why the market didn't act so well. I only got going with how Ben Bernanke "knew nothing" and how Fed voting member William Poole was a disgrace because he had been the leader of the let-the-market-handle-it contingent, because my friend Erin Burnett inadvertently pushed the wrong button by asking what they should do and why they weren't doing it.
We all know now that if the Fed had cut rates dramatically at the time, as I suggested, we might not have had so many financial institutions go under or as many as $7 trillion in mortgages that went bad or needed to be modified.
But I don't write this to show how right I was or how wrong they were, although the cruel irony of their laughing at my performance is pretty galling given subsequent events.
I write because I am confused to this day about how my contacts could have been so much better than theirs. How could the Fed, with all of its resources and nationwide staffers and fabulous data, not get it better than this one commentator? Doesn't it say that something is very wrong about this institution if that can happen? How could I, with my small band of colleagues, long-time contacts and long-standing relationships, get it so much more right than they did?
I have some theories. First, it is possible that people are reluctant to tell important Federal Reserve people the truth for fear that it could haunt them in the form of regulatory action. Second, there is a natural tendency among key people in the financial industry to not raise any red flags for fear that they can shake confidence, which even in the best of times can be a real issue. Finally, I think they speak to the wrong people. It's the people in the trenches who know the most and the people I talk to are very much the higher-level people who man those trenches. Maybe the big shots, like Jeremy Irons in "Margin Call," -- still the best movie ever about Wall Street -- simply didn't know the score.
After I went out on the limb as I did, even as I wanted it to be a one-and-done affair -- you don't rant every day or you are just a cartoon character -- I was amazed that my comments were met with such derision rather than an attempt to deal with them head on. The Fed certainly never reached out to me, even the lowest levels. You would think they would be more curious, if only to find more belly laughs to live up their meetings. In fact, before these minutes, it was only after Treasury Secretary Tim Geithner, at CNBC's Delivering Alpha conference, acknowledged that I got it right and the Fed got it wrong, that I learned anyone official had even heard what I had to say.
But the bottom line's pretty clear. All I really did was manage to bring a little levity to a clueless set of people who should have known a lot better than some blogging TV personality. Just like nobody high level in the corrupt portion of the mortgage industry was ever pursued by the authorities, no one in that room ever had to pay any price for getting it so wrong.
Alas, after the release of these transcripts, my legacy and my recompense will have to be simple: he who laughs last, laughs best.