Brad Wieners interviews Michael Lewis — Michael Lewis on the Next Crisis

What surprised you most while reporting on the crisis?

The realization that it had actually paid for everyone to behave the way they behaved. Working on The Big Short, I first thought of it as this bet, and there were winners and losers on both sides of the bet. In one sense there was—but on Wall Street, even the losers got rich. So that was the thing I couldn’t get out of my head: that failure was so well-rewarded. It wasn’t that they’d been foolish and idiotic. They’d been incentivized to do disastrous things.

Henry Paulson, the man behind the bank bailouts, recently said, “The root cause of every financial crisis is flawed government policies.” Is that fair?

Some of the government’s policies have been idiotic. But the idea that the story begins and ends with government policy is insane. Wall Street, all by itself, orchestrated the crisis by a web of deceit that was breathtaking. If Wall Street continues to operate in that spirit, I would argue that there’s almost nothing the government can do to prevent them from doing bad things. Incentives are at the bottom of it all. At the gambling end of Wall Street, the people who are making decisions are making decisions not with their money, but with other people’s money, [so] they themselves are not personally responsible.

Bloomberg Businessweek
Michael Lewis on the Next Crisis
Brad Wieners