Michael Lewis, the former Salomon Brothers trader who wrote "Liar's Poker" about the excesses of Wall Street during the 1980s, delivered a devastating critique of the financial industry and of the government bailout today on CNN"s "Fareed Zakaria GPS."
Lewis thinks that the government's rescue efforts have only served to postpone a "day of reckoning" for Wall Street:
I think that we are in for another day of reckoning down the road. I just don't know when it is.
Part of the problem, Lewis argues, is that the architects of the bailout are too cozy with the banks which created the financial crisis in the first place, even speculating that Treasury Secretary Tim Geithner is already looking ahead to a cushy job in the private sector.
"...one of the things that's odd about the current situation is that the people who created the problem are so powerful in deciding what the solution to the problem is going to be. There is a great tradition on Wall Street of making a fortune, creating a mess, and then making a fortune cleaning it up. But to do it on this scale is breathtaking to me. \
And it is amazing to me the degree to which, say, Goldman Sachs is intertwined with the Treasury, and how they're -- there don't seem to be any independent voices in the thick of the decision-making. The decision-making is all being done by people who one way or another might expect to make a lot of money from Goldman Sachs in the future...
So, on a grander scale, if I'm Tim Geithner and I'm the secretary of the treasury, what do you think he's going to do when he stops being secretary of the treasury? His natural next step is go work in the financial sector. I don't think he's actually thinking, "I've got to be nice to the people on Wall Street, because they're going to make me rich on the back end of it."
Further, he believes that regulation has been ineffective because the regulators are conflicted, expressing shock that this cozy connection is considered routine in Washington: But the directors of the last three -- let's see, three of the last four or four of the last five directors of enforcement of the SEC work for big Wall Street banks now...
And you can just assume, I think, that if you're a prominent person at the SEC, your exit strategy is to get a lot of money from a Wall Street firm. And nobody says anything about it. That's the amazing thing.
It's not even thought scandalous. It's just thought normal. It's like a natural career -- a step in a financial career.
Video
http://www.huffingtonpost.com/2009/06/07/michael-lewis-wall-street_n_212340.html