Michael Lewis on the Legacy of ‘Liar’s Poker’

Question: In 2008, did you see the rise of the bad-banker aesthetic that you wrote about in Liar’s Poker?

Lewis:    You know, I think it’s very clear what happened.  I watched it since I left Salomon Brothers.  People who worked for large institutions were sanitized.  They were forced to become sanitized because they are public corporations now.  And the Salomon Brothers I walked into in 1985, although it has just become a public corporation, still behaved a lot like a partnership.  It didn’t completely recognize its obligation to become socialized.  But it got forced to become socialized partly because of my book, in fact.  You know, just people will, “Oh, that’s so cold, rude, and socially unacceptable”.  In particular, its treatment of women had to change dramatically.  And Wall Street learned that if it wanted to deflect public inspection, it had to be much more polite.  It had to behave better on the surface.  So the bad language went away.  Sexism went away.  The overt sexism went away; the sexism didn’t go away.  These institutions look more and more like ordinary American institutions.  All of these changed was in the service of camouflaging the financial profanity that was going on beneath it.  The profanity got worse and worse and worse and worse.  So the people who were cursing and who were on the surface offensive in 1985 were much saner financially, much less likely to do horrible things with other people’s money, much more responsible, much more likely to say, “I wouldn’t do that because that’s wrong.”  And it was because they still had the legacy of the partnership in the head.  When the firms were partnerships, if you did something really dumb, like buy $50 billion of subprime mortgage bonds, you destroyed yourself and your partners.  You would live with that.  You know, you were responsible for the losses.  Once you’re a corporation, your shareholders are responsible for the losses, and so you don’t care as much.  So I’ve learned to have a very healthy respect for people who still curse on Wall Street because I take it as a signal of fundamental honesty.  They don’t care for you to see them anything for what they are, and so an awful lot of what financial people say that I find worthy of reprinting, you can’t reprint in the New York Times.

Michael Lewis on a Liar's Poker for the twenty-first century.

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