Best selling author and Wall Street legend Michael Lewis was on CNBCs Squawk Box this morning for a segment the show has been doing this week on books you need to read.
If anyone should be able to answer that question, it’s Lewis. He wrote Wall Street’s modern classics — Liar’s Poker, The Big Short, and Boomerang.
But he was also once a Wall Streeter, having worked at legendary (gone but not forgotten) firm Salomon Brothers, so his insight on what has happened to the industry over the last few decades is invavluable — and he says there’s one main question on everyone’s mind:
“When you look at the players at the centre of the crisis, the enablers that packaged products and made them ever more complicated… Were they crooks or were they fools?”
That doesn’t mean he thought that the ‘crooks’ would go to jail though. In fact he said, “At no point did I think (while he was writing his books)… ahh this is going to send someone to jail… I’m not an expert on securities law so I don’t know how you get someone in jail.”
It doesn’t mean that Lewis thinks the ‘fools’ were incredibly that foolish either. Figuring out what was going to happen in the mortgage market took a special person and special circumstances:
“It helped to be an outsider…one way to be an outsider was to be a misfit…that’s the connection between the unusual personality and the ability to see what was going on. It was very hard to figure it out,” he explained. “In addition there was still an element of serendipity in their lives. You could’ve figured it out too soon and had to sit on these positions for too long.”
But it shouldn’t have just been misfits.
“Smart people inside the industry should have figured it out. It was in the air in 2007 2008…that it was unforseeable(?)…the stories in the the Big Short show you that’s not true.”
So Lewis is nice, but he’s not letting Wall Street off the hook.
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