The 1989 book “Liar’s Poker” was not only the start of a major journalistic career -- author Michael Lewis has gone on to numerous other triumphs -- but it’s one of the key documents of how our world of casino capitalism was made. Subtitled “Rising Through the Wreckage on Wall Street,” the book gives a close-up look at what happens when finance is radically deregulated. His scenes in Salomon Brothers’ offices in New York and the City of London are also populated by oversize characters, some of whom you can’t help liking. “Liar’s Poker” has been reissued on its 25th anniversary, with a new reflection by the author.
“Michael Lewis has a talent for placing himself at the center of a revolution,” Robert Boynton writes at the introduction to a conversation with the author in the book “The New New Journalism.”
Lewis -- also the author of “The New New Thing,” “Moneyball,” “Flash Boys” and others -- is a New Orleans native who now lives in Berkeley, California. We spoke to him during a recent visit to New York.
Let’s talk a little about "Liar’s Poker." This was your first book, but since then you’ve written about all kinds of little worlds and subcultures -- baseball, Silicon Valley and high finance. What makes the guys you write about in "Liar’s Poker" stand out of all the people you’ve chronicled? Or are testosterone-stoked men all the same in the end?
One of the things that makes them stand out as characters is that they didn’t know they were characters when I was writing about them. That really, really helps, because I just saw the behavior in the raw. I was there working alongside them and I didn’t ask their permission if I could interview them. That was a huge advantage. It was also, on Wall Street, a far less self-conscious time. People weren’t really worried about how they seemed to the outside world. They would order up strippers and gamble on the trading floor and do all sorts of outrageous things, and they were just out there.
The other thing that’s distinctive -- this doesn’t distinguish them from most of my characters, actually -- is that that firm, at the time, was transforming the financial industry. I think Salomon Brothers in 1985 was more like Google or like Facebook than it is like a Wall Street firm today because it attracted all these people who were attracted to world-changing stuff. People went to work for Salomon Brothers so that they could join Lewis Ranieri in transforming the mortgage market. It was really an unusual collection of people. The characters were pungent. If you put little tracker devices on them like animals in the wild, what’s happened to a lot of those people since is extremely interesting. They’re just really interesting people.
Right, so even with all of the people you’ve written about through the years, they still stand out, it sounds like.
The only other groups of people I’ve been with that had such a concentration of characters was the New Republic in 1990, when I went to write there, and the club I belonged to in college. Those three groups of people stand out as extraordinary groups of people, and I didn't write about the New Republic or my club. This is the one I wrote about.
I imagine especially to a young man in the '80s, it would have seemed like an anomaly. Wall Street was booming, the City of London, which had been sleepy for a long time, was booming as well. It seems like, looking back, it wasn’t as much of an anomaly as it was the beginning of the world we’re in now. The scenes you’ve sketched almost feel like a photographic negative of the financial crash of 2008. I wonder the extent to which you felt like you were witnessing the birth of something.
That’s exactly how I feel. I misread it at the time. In fact, if I had read it right I might have had less energy about the book. I thought what I was doing was capturing this very bizarre moment that could not be sustained. I really thought it was freakish; this isn’t humility, this is true: I thought, “these people are paying me hundreds of thousands of dollars to give financial advice, that’s fucking insane,” and nobody else around me was any more qualified than me. I just felt like people were going to look back and say, “Can you believe they did this?” but it turned out to be the start of a new world where this became normal.
The big trends that originated, actually, at Salomon Brothers swept over Wall Street. The proprietary trading business, and the idea of turning your partnership into a corporation, and the idea that what you’re supposed to be doing if you’re a salesman is dreaming up really, really complicated products that the customer doesn’t understand -- all that starts there and then, and it just kept going. So yes, I do feel like the reason the book has continued to sell is that it speaks to people still going to Wall Street, which is bizarre.
Well, some of these people are kind of charming, and they’re all colorful. Besides the financial collapse, how did these people and the world they made possible change our world? What are the long-term impacts of this fervor?
I think the mortgage bond example is the best. At the time, even though the mortgage department was raping the clients and making reams of money, I really thought -- and I do think -- that this was a really, really useful innovation. It would be really great to get capital from all over the world to the American home buyer, just to lower the cost of owning a home, as long as it was done on the up-and-up, where people knew what they were lending to. It was a really good idea at the origins, but it metastasized into something that was a horrible idea. You don’t find the actual characters who dreamed up the good idea ... they didn’t help metastasize it. They were there for one part of it and then it kind of got away from them.
Proprietary trading, too. There was a moment where it weirdly made some sense for the proprietary trading that was going on at Salomon Brothers to be as dominant in the firm as it was. It was really smart, and if you were a shareholder you would say keep doing it. It metastasized into an opportunity for the people who were on the sharp end of things to make huge bets, and if they worked out they got rich, and if they didn’t work out the firm suffered.
It’s a little hard to blame the people who have the idea for the consequences of the idea. There’s no way anybody in this "Liar’s Poker" foresaw what was going to happen. I can remember sitting down with one of the guys from the mortgage department, who happened to be a very senior person at Merrill Lynch when they were loading up on subprime bonds, and he got fired because he said, “We don’t do this.” He said, “This is insane” … I would say the dynamic is something like the revolution consuming the revolutionary. These particular people would have been very ill-suited to perpetrate what’s been perpetrated, basically, in the name of their ideas.
Having said that, they were obviously not sane. It was vulgar and it was rapacious, up to a point.
You’ve mentioned the huge amount of money that you were making at the time, and you were low on the totem pole and quite young there. What did money do to these people? Did it change them? Did it make them happy? Did it make you happy?
No. One of the reasons it was so easy to leave is that I looked up and I said, “How am I going to feel 10 years from now?” I didn’t see any examples of people who seemed happy. It was more like the money owned them, rather than that they owned the money, and they came to need it. Having said that, the sums of money now seem trivial. John Gutfreund, the head of the firm, was paid $3 million a year and that was considered scandalous. Now that’s the ante for --
I think Larry Ellison makes that on his lunch break.
Yes. But at the time, the money seemed outrageous. There’s all this great research that’s being done about how money changes people’s brains and makes people happier … it makes them numb to other people. I think I saw that and I sensed that. I didn’t ever develop a real need for the money, but if I had been a different kind of kid, I might have been different about that.
I was really lucky -- I was raised in an affluent environment so I didn't have any kind of chip on my shoulder about money. I had been inoculated, and a lot of people had not. If you have not been inoculated, the first time you’re making more money than anybody your age that you know, you think this proves how important you are. It becomes wrapped up in your identity. I always thought the money was kind of absurd; I didn't ever see it as my identity. I did see there was something cool about someone throwing money at me, but I didn't think of myself differently because of it.
What did you make of "The Wolf of Wall Street"?
It was much more about Martin Scorsese’s inner life than it was about Wall Street.
It didn’t remind you of the world you knew then?
No. Because it was outright fraud, it was outright criminality. All the extracurricular stuff was so much over-the-top. Apparently, he tried to get that scene of sniffing cocaine out of the hooker’s butt into three other movies of his, so he just found a place that it was plausible.
It didn’t speak to you, then, about what you had lived through?
No. I thought it was a very funny movie in its own right, but I didn’t think, “Oh yeah, that describes the world I came from.” It was like a very, very, very distant cousin to that world.
The book is very loose and casual in style, it’s like a friend telling you tall tales over beers or something. A casual style is not always easy to achieve. What were you going for with the book, and to what extent was Tom Wolfe’s writing an impact on you at that point?
I couldn’t shake Tom Wolfe. I loved his stuff. He was unignorable to me as an influence. I can remember what I was reading over and over when I was writing the book -- it’s going to sound pretentious -- but I wanted the reader to feel that this was the truth unvarnished, and it was Henry Adams’ "Education" and Rousseau’s "Confessions." Those were the two books that I had that were just kind of there and were models for the sort of spirit in which I wanted to operate.
I had never written a book. The first thing I tried to do when I saw the publisher was basically a history of Wall Street with a thing at the end where I was going to bring us up-to-date with what happened with me at Salomon Brothers. And then I started writing and I thought, “I want to write about what happened to me,” and I handed in something and my editor said, ”Forget the history of Wall Street, just write this.”
It’s funny, there’s a similar story with one of Tom Wolfe’s first pieces. I think when he wrote a piece on the car customizers he just sent a long letter to his editor and the editor just ran the damn thing.
Yes, that’s more or less what happened with me. It wasn’t as dramatic because I wasn’t on a deadline, but it wasn’t until I sat down to write that I realized what a story I had.
You have a great line in the afterword of the book, which I want to read back to you and have you unpack: “Wall Street has gone from being the loud guy who organizes bus tours of strip clubs but still loves his wife and kids to the quiet guy who fakes a pious devotion to his family while secretly cheating on his wife every chance he gets.” Tell us what you mean by that.
It’s the spirit of the place that’s changed. I was just trying to get at, you know, Wall Street actually was a place filled with loud guys who ran bus tours of strip clubs. My point is that now I think all the Wall Street guys are cheating on their wives implies the sneakiness of it, the hypocrisy. There was no hypocrisy then; it wasn’t that way. It was what it seemed, and I liked that about it. I’m not a strip club kind of guy, but I didn’t mind that some guys were. It didn’t bother me as long as they said that’s what they were. That’s the difference.
Wall Street presents a face now, very self-consciously, and the phoniness of it I find repellent, much more repellent than bad behavior. Hell’s hottest fires burn for hypocrites, there’s a line in the book -- Edwin Edwards, that’s what he said during a campaign, and amazingly, Edwin Edwards is back running for Congress again -- but that’s what I mean. I have much more time for the vulgarity than I do for the hypocrisy.
I’ll put that on a T-shirt. You wrote a review I liked a lot of John Lanchester’s novel, "Capital," last year, and you talk about the jolt of energy that deregulation brought to London at the time. The culture changed in a huge way, and I wonder if there would have been any other way for Anglo-American culture to go. Would there have been a way to wake up from the ‘70s without leading to this?
It’s a really good question, that I have absolutely no answer to. But you’re really right, that period felt like an antidote to what came before it, but somehow the antidote was more virulent than the problem. It’s hard to imagine another path; the path at the time seems so clear. The signals coming out of Reagan and Thatcher were so clear. The reason it was so unbridled and unself-conscious in Salomon Brothers is that it was an environment where there was no reason to doubt that what you were doing was the greatest thing in the whole world. There was no skepticism in the marketplace, and that’s what we have now, which we didn’t have then. People now understand that the market can do really bad things -- at least some people do.
I know you’re not an economist, but there are writers on economics like Paul Krugman and so on who describe this stuff from a slightly different angle. Do you follow those people? Do you think they bring anything useful to the world that you describe here and in some of your other books?
I read Krugman, I read Stiglitz, I haven’t read Piketty’s books but I think I’m not alone in that … I read Brad DeLong’s blog, I read all kinds of economic stuff. What do I think it brings to this? It’s different, because I feel like what I’m interested in, I’m more of a reporter. I tried to figure out how it worked and bring characters to life and all that, and it’s just different. I don’t feel like there’s any conflict between my take on that world and especially the take of the left-leaning economists. There would probably be some right-wing economists who I don’t really pay that much attention to who would explain why collateralized debt obligations and subprime mortgage bonds are actually really good for the world, but I’m so beyond wanting to hear it.
I guess there are people who think the Glass-Steagall repeal was a good thing. There are certainly economists who do, but it’s hard to take them seriously at this point.
It’s because you just see this wanton damage inflicted on the world by the financial sector. It’s a cultural issue: Does the financial sector serve the economy or does the economy serve the financial sector? There aren’t any great, grand theoretical descriptions of Wall Street that I find compelling. The guys you describe aren’t really doing that.
Krugman is more knee-jerk hostile to anything Wall Street does than I am. The last time I was disturbed by something he wrote about Wall Street was when he bitch-slapped the people who were the heroes of "Flash Boys" out of the assumption that anybody doing anything on Wall Street has got to be a crook. My point was that these guys were actually trying to create a business that would be great for everybody, so I’m less ideological about it than he is, anyway.
I read them for other reasons, but I haven’t been terribly informed by academic economists in writing about Wall Street.
What draws you to write about a subculture or a cast of characters?
I don’t really know. I guess I’m obviously drawn to people who think they’re challenging existing arrangements -- partly because it enables you to describe the existing arrangements in a different and interesting way, and partly because I myself have always been a bit of a bomb thrower, just in my life. Which kinds of characters -- I can’t tell you how many entreaties I’ve had from people saying, “I’m like one of your characters, come write a book about me!” -- so it isn’t like I’m universally interested in people who are challenging the status quo.
Sometimes it really is a matter of when I sit down with a person -- it being Brad Katsuyama or Jim Clark, or whoever it is -- I feel like there’s an electricity in their personality. I can make it swing on the page, I can make this work. Partly it’s if I sit down with a person and think it’d be fun to spend a year with them, they’re someone I would like to know better. It’s hard to explain why you feel that way about some people and why you don’t feel that way about others.
It’s a question of chemistry … So what made you want to be a journalist in the first place, and how does the field seem to have changed in the 30 or whatever years it’s been?
I had no vendable skills when I came out of school; I didn’t have anything I particularly wanted to do, but I had a lot of things I didn’t want to do. I found the general business world tedious and I really, really enjoyed writing. I felt transported when I was doing it, I just liked it. Although I’d never written for school magazines or newspapers, I just thought maybe this is something I could figure out how to make it pay. There were lots of sources of inspiration along the way. In the very beginning, Tom Wolfe was really important to me, Michael Kinsley was really important to me at the New Republic …
I guess the answer was that I liked doing it and when I started doing it I received almost instant encouragement from the marketplace, so I thought maybe I should keep doing it.
You’re writing books more than daily or weekly dispatches, but does the field seem to have changed radically since you started out in the '80s?
Yes. When I started out, there were some clear shop windows. You wanted to get your piece in the New Republic, get your piece in the Spectator in London, where you felt like you were advertising your wares to the entire industry. There was a structure to it that was pretty obvious to anybody who’d spent a year or so trying to figure out how to get in. There were other channels in, obviously; you could come out of journalism school and get a job at a local paper, but that didn’t interest me. I was interested in magazine writing.
Now, there’s no structure. It seems better because it seems like you can write anything and put it on the Web and people will read it, but in fact there’s less context for new writers. I think it’s harder to be introduced, there’s no character who can pick up and create people the way Michael Kinsley did or as quickly as he did.
True, context is an important word … You studied art history in college. I presume you studied it probably out of an interest in art, but the art world has been taken over by some of the same big-money market worship that you describe in your financial books. Is there any way to explain or make sense of that? It’s inevitable, in a way, that once capitalism reached the way it was in the '80s that everything kind of falls to it. What do you make of that change?
I went from being a student to being a stock boy at the Wildenstein Art Gallery, so I watched it up close for six months. That was, and is still, the largest privately held collection of Old Master paintings and sculptures. At the time they had on their books $3 billion of art, which is probably $20 billion in today’s dollars.
I watched the intersection of money with art right when I came out of college, and it didn’t particularly disturb me in any way, but I didn’t find it interesting. I liked the art, I was very interested in the art, but I didn’t find the relationship between the money and the art interesting. I don’t know why, I think it was sort of like rich people’s vanities. There are people who actually suffered for anything and they were able to acquire this stuff, and it feels inert. I don’t think it’s bad for art, particularly -- in fact it’s probably good for art to have lots of money thrown at artists -- but the whole collecting and acquiring impulse has never interested me.
I don’t pay that much attention to the art world right now because it doesn't interest me as much as the art itself.
You’re not cooking up a biography of Jeff Koons or something like that?
I’m definitely not cooking up a biography of Jeff Koons. I don’t want to say it’s never going to happen because you never know, but … I’d have privileged access to that space, still, because I know a lot of people in that world, but it’s never occurred to me to use that access to go write something about it.
Right. So what is the next thing you’re working on?
The next thing I’m working on, and I’m immediately going home to do it, is I’m writing a pilot script for Showtime for a drama. The drama is set on Wall Street in the 1920s, and it’ll be done by the end of the year, I hope, and I hope they can make a decision really quickly, and if they decide to make it that’s what I’m going to do -- I’m going to go run a show. And if they don’t decide to make it I have a book idea but I can’t really talk about it.