Michael Lewis Talks To 60 Minutes About His New Book, 'Wall Street: Inside The Collapse'

Watch CBS News Videos Online Props to CBS for this "60 Minutes" interview with "Liars Poker" author Michael Lewis about the Wall Street crash. Belie

Watch CBS News Videos Online

Props to CBS for this "60 Minutes" interview with "Liars Poker" author Michael Lewis about the Wall Street crash. Believe me when I say it's well worth reading the whole thing:

But none of that has changed the Wall Street bonus culture. Lewis says there is a sense of entitlement to outrageous compensation that he thinks is way out of proportion to its contribution to the U.S. economy.

"How did that happen that somebody thinks they're automatically worth millions of dollars a year?" Kroft asked.

"Well, when you're surrounded by a lot of other people who are being paid millions of dollars of year, you're not thinking, 'Oh, it's outrageous for someone to pay me millions of dollars a year.' You're thinking, 'It's outrageous that Jim got $500,000 more than me.' That they're looking to each other as reference points rather than to the larger society," Lewis explained.

Asked if he thinks people are worth that kind of money, Lewis asked, "What do you mean are they worth that kind of money?"

"Do they deserve all that money?" Kroft asked.

"Again, what do you mean do they deserve it? They worked really hard. They spent a lot of hours in the office," Lewis said. "So you can't begrudge someone who starts a company and employs lots of people and so on and so forth for making a lot of money. I don't mind people making a lot of money. On Wall Street the business has become very obviously divorced from productivity, from productive enterprise."

"So in that sense, no. They don't deserve it. They didn't earn it," he added. "What they did was finagle it. They were very good at putting themselves in the middle of large financial transactions that probably shouldn't have happened in the first place and taking out little pieces of it. They generated trillions of dollars of subprime mortgage loans that should never have been made. But the world would be better off if that whole industry had never existed. So that's crazy."

Lewis says the more people learn about what happened, the angrier they become.

Asked if he sees anything happening to reform the system, Lewis said, "There are several things that obviously should be done that have not been done. And you can't explain to my mother why they haven't been done. Only a really smart person on Wall Street could explain why they haven't been done. But for example, all right, one of the things at the bottom of this crisis, we had these ratings agencies that called a lot of things AAA, gold-plated securities that were worthless."

"And the ratings agencies are paid, of course, by the Wall Street firms for their ratings. Why is that allowed? Why can you buy a rating? That seems like a very obvious thing to change. And people talk about it, but it hadn't happened. Credit default swaps, insurance contracts that we trade freely, but it's not classified as insurance. This market is the closest thing to, sort of, ground zero of the recent calamity. And yet, nothing has been done to change the market. Nothing's been done to make it more transparent, nothing's been done to make it more like what it is, an insurance market. That's an obvious reform," Lewis said.

"From the time I was at Salomon Brothers, it was incredible to me that the firm could advise customers what to buy and sell," he added. "At the same time, they are betting on the things that they're trying to sell their customers. So I might call you up and say, 'Wow, these subprime mortgage loans, they look really, really good. This pile over here, you oughta invest in that pile. ' And meanwhile, the traders behind me are betting against it.'"

Lewis believes the financial industry is living in a world so disconnected from American life that it cannot be sustained. He thinks it may take a while, but he believes Wall Street as we know it, has done itself in.

"The leaders on Wall Street completely lost any sense of their responsibility to the society," Lewis said. "And if you know you're gonna blow up AIG by putting $20 billion of bad subprime mortgage risk into it even though it's gonna be very profitable for you, you should stop and say this shouldn't be done."

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