Wall Street Engaged in 'Elegant Form of Theft'

Subject: Wall Street Engaged in 'Elegant Form of Theft' Wed Mar 24, 2010 2:04 am

'Liar's Poker' author sees more sleight-of-hand going on

Wall Street trader-turned-critic Michael Lewis says the big banks are using an "elegant form of theft" to rip off taxpayers. How else to explain the notion of getting a government bailout and then handing out huge bonuses, he tells 60 Minutes in an interview airing tomorrow. Lewis, author of the acclaimed Liar's Poker, is pushing a new book on the industry.

"You have access to a zero percent loan in virtually unlimited quantities from the Federal Reserve," he says. "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. You're essentially borrowing from the government and lending the government and taking a cut." What's "really going on," he adds, is that the firm's head honchos "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. So it's a very elegant form of theft."

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"I mean, there's a wonderful little vignette in the 'Big Short' about the leading bond trade, subprime mortgage bond trader at Morgan Stanley, a fellow named Howie Hubler, who manages to lose somewhere between, it's hard to know, but seven and $12 billion in a matter of six or eight months, more than any single trader has ever lost in the history of Wall Street, and no one knows his name," Lewis said.

http://www.cbsnews.com/stories/2010/03/12/60minutes/main6292458.shtml

Wall Street Engaged in 'Elegant Form of Theft'

Wall Street Engaged in 'Elegant Form of Theft'

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