Michael Lewis

  • Aired:  02/01/11
  •  | Views: 14,914

Michael Lewis explains how Wall Street got so good at disguising bad loans that they bought some for themselves. (5:53)

( CHEERS AND APPLAUSE )

>> Stephen: WELCOME BACK.

MY GUEST TONIGHT HAS WRITTEN A

BEST-SELLING BOOK ABOUT

MORTGAGE BUNDLING.

I SAY WHAT IS A BOOK BUT PAPER

BUNDLING.

PLEASE WELCOME MICHAEL LEWIS.

I'D LIKE TO APOLOGIZE.

TO ANYTHING THAT HAPPENED TO

YOU BEFORE THE INTERVIEW.

SIR, YOU'RE THE AUTHOR OF MANY

THINGS.

THE BLIND SIDE AND NOW THE BIG

SHORT WHICH IS BEING RELEASED

IN PAPERBACK.

GREAT BOOK.

HAVEN'T READ IT.

I DON'T THINK I NEED TO.

BECAUSE THE DOW AROUND 12,000.

AND SOMEONE GOT HIS SALARY

TRIPLED AT GOLDMAN SACHS AND

WE HAVE FORGIVEN AND

FORGOTTEN.

WE HAVE AT LEAST FORGOTTEN.

WHAT WAS THERE TO BE UPSET

ABOUT, SIR.

>> IT IS IMPRESSIVE HOW GOOD

WALL STREET IS AT WHAT IT

DOES.

>> Stephen: THEY DO THAT THING

THEY DO WITH THE DOW.

THEY MAKE THE DOW THING MOVE.

THEY TAKE THE DOW AND THEY

CASH THEM FROM FOR DOW CASH.

THAT'S HOW IT WORKS, RIGHT?

>> WALL STREET, WHAT IT'S

SUPPOSED TO DO IS PUT TOGETHER

PEOPLE WHO NEED TO BORROW

MONEY WITH PEOPLE WHO CAN LEND

THE MONEY.

THEY SPENT A NUMBER OF YEARS

FIGURING OUT HOW TO LEND MONEY

TO PEOPLE WHO WOULD NEVER

REPAY THE MONEY.

>> Stephen: WHY WOULD YOU DO

THAT?

>> BECAUSE IT PAID THEM TO DO

THAT.

>> Stephen: HOW DOES IT PAY

YOU TO GIVE MONEY TO PEOPLE

WHO WILL NOT GIVE IT BACK.

>> YOU PRETEND THAT THEY'RE

GOING TO GIVE IT BACK.

>> Stephen: THEY PRETEND.

DON'T YOU GET BACK PRETEND

MONEY THEN?

>> THE PEOPLE IN THE END WHO

LENT THE MONEY GOT BACK

PRETEND MONEY BUT FOR A WHILE

EVERYTHING WAS OKAY.

>> Stephen: PEOPLE WHO LENT

THEM THE MONEY GOT THE PRETEND

MONEY.

>> WALL STREET JUST SITS IN

THE MIDDLE.

>> Stephen: GIVE ME SOME MONEY-

WILL GIVE IT TO THIS PERSON.

YOU GO LIKE THIS.

>> THAT'S RIGHT.

>> Stephen: YOU DON'T ACTUALLY

DO ANYTHING.

>> THEY TAKE A LITTLE BIT OUT

IN THE MIDDLE.

YOU DON'T REALLY KNOW IT'S A

BIG PILE OF MONEY.

THEY TAKE A LITTLE SLICE OF

IT.

IT DOESN'T SEEM LIKE MUCH BUT

IT'S QUITE A BIT.

THEY'RE VERY GOOD AT TURNING

YOUR MONEY INTO THEIR MONEY.

>> Stephen: BUT THEY'RE ALSO

AN ENGINE OF THE ECONOMY.

>> THEY'RE SUPPOSED TO BE.

WELL, THEY'RE SUPPOSED TO BE.

>> Stephen: THEY'RE THE JOB

CREATORS.

THE TOP 2% AND THEY ARE THE 2%

OF WAGE EARNERS.

>> ABSOLUTELY.

>> Stephen: THEY CREATE THE

JOBS.

THEY'RE THE SMALL BUSINESSMEN.

I MEAN, THERE IS A VERY SMALL

AMOUNT TO BE BUSINESSMEN.

WHATEVER.

THE WORD SMALL IS IN THERE.

>> THEY DID THIS THING AND

CREATED TRILLIONS OF DOLLARS

OF LOANS THAT WOULD NEVER BE

REPAID.

THOSE LOANS STILL HAVEN'T BEEN

REPAID.

THEY DISGUISED THE FACT THAT

THE LOANS WOULDN'T BE REPAID.

THAT'S HOW THEY GOT PEOPLE TO

LEND THEM MONEY.

IT CAN GET VERY, VERY

COMPLICATED.

>> Stephen: REALLY.

>> YOU KNOW ABOUT THIS.

>> Stephen: I LIVE IT.

IT'S MY LIFE, MY FRIEND.

BUT HOW DO YOU MAKE SOMETHING

WORTHLESS....

>> LET ME FINISH.

>> Stephen: A LONG COMPOUND

SENTENCE HERE.

>> THEY'RE SO GOOD AT

DISGUISING THE LOANS.

THEY BOUGHT SOME FOR

THEMSELVES.

>> Stephen: WAITE.

THEY DISGUISED IT SO BADLY

THAT IT CAME BACK AND SAID, HI,

CAN WE COME IN?

THEY SAID, SURE, COME IN, MGS

FELLOW.

YOU LOOK LONELY.

THEY CAME IN AND THEY WENT...

ALL RIGHT.

>> ALL BECAUSE OF THIS THEY

WERE ALL BANKRUPT.

THE ONLY REASON THEY'RE NOT

ALL OUT OF BUSINESS IS THE TAX

PAYOR CAME IN AND SAVED THEM.

>> Stephen: OBAMA'S FAULT.

>> ACTUALLY BUSH WAS THE ONE

WHO DID IT IN THE FIRST PLACE.

>> Stephen: A LONG TIME AGO.

CAN'T REMEMBER WHO WAS

PRESIDENT THEN.

YOU KNOW WHAT?

WHO CARES.

TWO YEARS AGO.

STOP LIVING IN THE PAST.

>> THEY STARTED... THE

GOVERNMENT GAVE THEM MONEY.

LOTS OF MONEY.

THE ORGANIZATIONS COMMITTED

SUICIDE ONCE.

NOTHING HAS CHANGED ABOUT THE

ORGANIZATION.

>> Stephen: WE SENT IN THE

STOMACH PUMP.

>> THAT'S RIGHT.

>> Stephen: THIS STORY IS

GETTING HAPPIER.

>> AND SO.

>> Stephen: WHAT HAPPENS NEXT?

>> NICKEL S IS WHAT YOU WANT

TO BUY.

>> Stephen: NICKELS?

LIKE THE NICKEL.

>> ONE OF THESE CHARACTERS WHO

MADE HIS FORTUNE BETTING

AGAINST THE COLLAPSE OF THE

SYSTEM HAS STARTED TO BUY

NICKELS BECAUSE THE NICKEL....

>> Stephen: A PHYSICAL NICKEL?

LIKE THE JEFFERSON NICKEL.

>> BECAUSE IT'S GOT THE METAL

CONTENT.

HE'S WORKED OUT THAT THE METAL

CONTENT OF THE NICKEL IS NOW

WORTH 7 CENTS.

IF YOU MELTED IT DOWN YOU

WOULD GET 7 CENTS.

SO IT'S A HUGE RETURN.

>> Stephen: HOW DO YOU GET

NICKELS?

>> HE CALLED HIS BANK AND SAID

I WOULD LIKE TO BUY 20 MILLION

NICKELS.

AND THEY SAID WE'VE GOT TO

CALL YOU BACK.

>> Stephen: I'VE GOT A GUM

BALL PROBLEM.

>> HE GOT A CALL FROM THE

FEDERAL RESERVE SAYING WHY DO

YOU WANT THESE NICKELS?

HE SAID I REALLY LIKE NICKELS.

>> Stephen: DID YOU GET THEM?

>> HE'S GOT THEM IN A

BRINGS....

>> Stephen: HOW DO YOU GET 20

MILLION NICKELS?

WHAT DO THEY COME ON?

>> A PLANK LIKE IT'S A BIG

PLANK.

I'VE SEEN PICTURES OF THEM.

BIG PILES OF NICKELS.

>> Stephen: IT HAS TO WEIGH A

TON.

>> YEAH BUT IT'S WORTH A LOT.

>> Stephen: IT'S ILLEGAL TO

DESTROY U.S. CURRENCY.

YOU CANNOT MELT U.S. CURRENCY

DOWN.

THAT IS AGAINST THE LAW.

HE WILL DO BIG TIME.

>> DO YOU THINK THAT WILL STOP

HIM.

>> Stephen: YOU THINK NONE OF

THESE GUYS ARE EVER GOING TO

SEE ANY JAIL TIME?

>> NO.

>> Stephen: LET ME PUT THAT

ANOTHER WAY.

ARE YOU BULLISH ON SNOWBALL

FUTURES IN HELL?

>> YES.

>> Stephen: THANK YOU.

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