60 Minutes This Sunday - Wall Street: Inside The Collapse

Discussion in 'Wall St. News' started by brownsfan019, Mar 13, 2010.

  1. Wall Street: Inside The Collapse

    March 12, 2010
    Wall Street: Inside The Collapse
    Author Tells "60 Minutes" What Led to Wall Street Collapse and Who Predicted It

    Wall Street bonuses in the current climate are a "very elegant form of theft" former bond trader Michael Lewis tells Steve Kroft. "60 Minutes," Sunday, March 14 at 7 p.m. ET/PT.

    (CBS) The big banks that received billions of dollars from the U.S. government and continue to pay their executives large bonuses are engaged in a "very elegant form of theft" says former bond-trader-turned-author Michael Lewis.

    He spoke to "60 Minutes" correspondent Steve Kroft in an interview to be broadcast Sunday, March 14, at 7 p.m. ET/PT.

    Wall Street banks, many on the verge of collapse just over a year ago, paid employees about $20 billion in bonuses for 2009 profits. Lewis tells Kroft that bonuses paid out by big banks that were propped up by the Federal Reserve in the economic crisis were essentially a scam on taxpayers. When you are a big bank on Wall Street, says Lewis, "You have access to a zero percent loan in virtually unlimited quantities from the Federal Reserve. You can take that money and reinvest it in treasury bonds or government agency securities and you will get the spread and you could do it over and over," says Lewis. "You're essentially borrowing from the government and lending the government and taking a cut."

    Add to that the vicious cycle of greed within the industry and the bonuses flowed, says Lewis. "Really what's going on is the people on the top of the firm want to make a lot of money and if they're going to make a lot of money, they have got to pay the people under them a lot of money," he says. "So it's a very elegant form of theft right now," Lewis says.

    Lewis believes the political connections of Goldman Sachs played at least some role in the Federal Reserve's decision to subsidize it and other banks deemed "too big to fail." "There’s no proof but… it certainly didn't hurt that [Treasury Secretary Henry Paulson] was a former Goldman CEO…that a lot of the people at the table were former Goldman employees…that the air..everybody breathed contained the assumption that we can never do anything to harm Goldman Sachs," Lewis tells Kroft. "I can't really see how their political influence didn’t have anything to do with it."

    In his newest book, The Big Short: Inside the Doomsday Machine, Lewis explores how a handful of Wall Street outsiders who realized the subprime mortgage business was a house of cards, found a way to bet against it and made millions doing it. He tells Kroft the people who decided to create and trade these flawed financial instruments were blinded to the danger by greed for the most part, but should have known better because that was their job.

    Lewis says despite the fact that their dealings managed to destroy $1.7 trillion - and counting - of wealth, these people still left their companies with big payouts. "I didn't run across a single character who didn't get rich." Even richer: "And they're being paid all over again to sort through the mess…that is an age-old trick on Wall Street…people who create the disasters make a lot of money cleaning up the disaster because they're the ones who know about the disaster," Lewis tells Kroft.

    Link to video
  2. One bump as the show is tonight.
  3. Thanks for posting. I like Lewis, Liars Poker is a great read.
  4. Looking forward to it.
  5. Too late. Goldman is so entrenched, they will lead us to another 2008. Everyone in DC is aware of it; there just isn't enough testicle fortitude to stand up to them. And I think we all agree they won't quit on their own.

    I fear for capitalism. Next time, as we are at ground zero, the backlash will be even more vicious.

    As I write this, Lewis is saying, "Wall St. has done itself in." I have to agree, and people much more connected than me have said they agree with me. Pretty frightening.

    I asked a fellow, rich, well - connected, "You tell me what would possess a man in a perfectly good airplane to lean on the stick and crash into an IRS building? " You see, they can not explain this behavior, and cannot visualize it on a large scale. But it's happening.

    I see civil unrest not seen since the 60's.
  6. PatternRec

    PatternRec Guest

    The solution is simple.

    Due diligence.

    That is the only thing that will reform Wall Street. Due diligence is in real time. Legislation is a lagging indicator that is based on hindsight to prevent what already happened. Not what will or can happen.

    It's very difficult to dupe or take advantage of someone who does their due diligence.
  7. the1


    You have to remember that this financial crisis didn't happen by accident or by ignorance. You don't think Goldman knew what they were doing when they went to AIG and asked them to insure garbage? The numbers are something a junior analyst out of a Tier III school could have recognized as being crap. Goldman still pays the rating agencies for AAA ratings. It's all one big game -- a game that Goldman played to perfection. Bye-bye Bear, Lehman, and MER. Now Goldman sits atop of the Investment Banking Industry on their golden thrones doing "God's work."


  8. I am ready with my "shack in the mountains". Seriously, there is a cold north wind starting to blow.
  9. Well, that doctor certainly did his. What did he make? 200 and some million?

    Definitely a lesson there.
  10. #10     Mar 14, 2010