Michael Lewis's "The Big Short" Is Long on Juicy Info

Michael Lewis’s latest book The Big Short is not the biography of Warner Wolf, Lou Rufino, and Mike Lupica. Rather, it is a true story about the people who saw the 2008 financial crisis coming, and made a fortunate betting on the entire system’s collapse.

Lewis is best known for his book The Blind Side, which was made into a wildly successful movie last year, and for which Sandra Bullock recently won the Academy Award for Best Actress. Naturally, Imus has neither read the book nor seen the film.

“I live a very sheltered life,” he told Lewis. “I’m not afraid of living, I’m not afraid of dying. I’m just afraid I’m going to have to do something for five minutes that doesn’t involve me.”

After explaining that The Blind Side is about why the left tackle in football is the second-highest paid position on the field after the quarterback, Lewis allowed that a bit of fate helped his book garner so much attention.

“Michael Oher was in high school when I started to follow his journey,” said Lewis, referring to The Blind Side’s main character, whose physique (big) and skill (agility) made him uniquely suited play left tackle. Oher’s personal story is also compelling: he was adopted as a teenager by an affluent white family in Tennessee after being all but abandoned by his troubled mother.

So to segue from an uplifting story like The Blind Side to the utterly depressing concept of The Big Short is testament not only to Lewis’s talent as a journalist, but to his capacity to make people cry for all sorts of reasons.

The meltdown on Wall Street began in the mid-2000s, said Lewis, when the entire financial system found itself on the wrong side of a bet. “They were generating these bad loans to people, packaging them into bonds and selling them off,” he said. They were also “betting” these packages of bad loans would fail, which they ultimately did.

More commonly known as credit default swaps, these bets are an element of a huge and unregulated portion of Wall Street, whose actual purpose is to put together borrowers with lenders, to allocate capital, and to help clarify risk. 

“There is a very legitimate function,” Lewis said of Wall Street firms. “But it sort of only works if they’re paid to do just the productive activity, because there’s this whole other side business on Wall Street which is essentially casino activity.”

Yet Lewis insisted, much to Imus’s dismay, that not everybody at Goldman Sachs or Merrill Lynch or AIG is a crook. “What’s scandalous is how much that was done that was kind of legal,” he said. “The problem is the rules of the game.”

The system was so screwed up, Lewis said, ‘that Wall Street traders were doing really stupid things without completely understanding how stupid they were.”

He believes the country is still in Act One of its financial drama. “The symptoms had to be dealt with,” he said of the government’s rush to bailout all these people who caused the problems in the first place. “And now it’s time to deal with the cause.”

Imus commented, “You can’t make it up!”

True. And as Lewis pointed out, he’s not allowed to.

-Julie Kanfer