'Liar's Poker' Author Sees Upside To Market Crash

When Michael Lewis looks back on the Wall Street he wrote about in his 1989 best-seller, Liar's Poker, the street looks positively quaint. At the time, it was shocking that an investment bank CEO made $3 million a year.

The current crash is different — very different. Michael Lewis says he didn't appreciate its distinctions until he began doing research four or five months ago. "The size of the problem is massive," Lewis notes. "Not only did trillions — trillions — of dollars get lent to people who won't be able to repay them, but Wall Street at the same time created a market in side bets about whether these people would be able to repay their loans. And that market in side bets is tens of trillions of dollars."

I don't think, going forward, you will see people working at a place called Goldman Sachs taking home $70 million or $80 million at the end of each year, which they have done in the past." Such earnings are unwarranted, Lewis says. "One of the madnesses of the last 25 years … has been the rewards we've bestowed on financiers," he says. "The people who have actually been allocating the capital on Wall Street have done a rather bad job of it. … The idea that these are essentially the highest-paying corporate jobs in America, by far, seems to me insane."

Those rewards have had "a really distorting effect" on society, Lewis says, creating a new norm for personal financial rewards for CEOs of all stripes. "That's going to be gone."

Excerpts from today's NPR story and interview