A Q&A with Michael Lewis
Michael Lewis, author of “Liar’s Poker,” “Moneyball,” “The Big Short” and, most recently, “Flash Boys,” will speak Thursday evening at Winter Words.
Lewis will be on stage in conversation with Aspen author Tom Bernard, a retired bond salesman who was featured in Lewis’s breakout book, “Liar’s Poker,” in which Lewis dubbed him “The Human Piranha.”
The sold-out event is scheduled to begin at 6 p.m. at Paepcke Auditorium. Wait-list tickets will be available on a first-come, first-served basis.
Lewis spoke with Aspen Times arts editor Andrew Travers in advance of his Winter Words event. This is an edited transcript of that interview.
Andrew Travers: Tell me about your relationship with Tom Bernard. You met him back at Salomon Brothers when he was “The Human Piranha?”
Michael Lewis: Yes, and I was a “geek.” He would have been senior enough when I rolled into the place that he was speaking to us in the training program. He was someone everybody was afraid of. You got the sense that if you said something stupid he would let you know it (laughs). But from the minute I met him I adored him.
We reconnected after Salomon Brothers, some time down the road. I used to come out to Aspen in summers. My parents rented a house there for 20 years. And we would do an annual bike ride. We went over to the Maroon Bells, we rode to Crested butte, and realized when we got there that he didn’t have the keys to the car he parked (laughs).
Given that the last few books of mine have been Wall Street-related – the next few won’t be, I’m moving on – but nevertheless, the last few have been, so he seemed like a really good person to sit down and talk to.
AT: Have you held on to many friendships from those days? Or did “Liar’s Poker” piss some people off?
ML: “Liar’s Poker” didn’t cost me any friendships. When it came out, all of my friends thought it was funny. It did cause a lot of people at Salomon Brothers to get in touch with me. It ticked off some people at the top of the company, but even they have come around. [Former Salomon CEO] John Gutfreund calls me every so often, and I’ve bumped into him and it’s been really friendly. So time has mellowed whatever hostilities there were when the book came out.
People from the book, the ones that are alive, I’m in touch with all the main characters of the book – most of them are on the East Coast and London, so I see them more often than I get to see Tom.
There is an informal Salomon alumni association. I think that because everyone who was there thinks about it as a place that had a real effect on them. It was a really distinctive place, love it or hate it, it was pungent, and there was nothing like it. So all of us, I think at least in retrospect, think of it fondly.
AT: When “Flash Boys” came out last year there was a sense that you exposing the high-frequency trading system might change the system. Have you seen an impact in the way you expected over the last year?
ML: I didn’t have expectations. Just having witnessed the financial crisis, I thought, “Well, if this can happen and not a lot changes on Wall Street then I’m not sure anything can change Wall Street.” But, having said, that, I’ve been pleasantly surprised by how aggressive the New York attorney general has been. He’s filed lawsuits against Barclays for the dark pool but also has several others in the works. And that’s a big deal. To see what changed, you have to look pretty closely, but you can see IEX growing very quickly for a new exchange. And you can see several bank dark pools have collapsed or folded up shop. You’ve seen lots of fines and sanctions and things, but it is hard to know what it adds up to. So there’s been movement and there apparently are investigations going on in the Justice Department. The SEC never said very much. So the SEC was never going to be a source of change, but the Justice Department and the FBI both apparently have stuff going on. I honestly don’t know what. And these things often do take years, so it’s hard to know what will emerge.
The thing to watch is that in the fall, IEX will become a full-fledged stock exchange, like the New York Stock Exchange. They can then wage full war with the system, in a way they cant now. Right now they’re still fighting with a hand tied behind their back and I think I would not be shocked to see a lot of movement once that happens. And I see it happening from two groups of people: one is CEOs of publicly listed companies who are outraged by how their shares are traded on the exchanges, and second is big mutual funds and pension funds – investors who have the trust of small investors. There are a lot of large ones who are calculating what they’re saving by trading on IEX as opposed to letting their orders go to the open market. If those numbers are big enough, I think that’s going to force change.
So yeah, maybe these lawsuits and complaints and fines and all of that add up to something. But it’s really a situation where the market could drive the change. Because it’s the investors who are the customers, after all.
I’m hopeful. Nothing that’s happened has disappointed me. I’ve been a little surprised by how much outrage and propaganda the high-frequency trading community has generated. But even then, not so much, because they have a lot of money and a lot of money at stake.
Having said all that, I’ve got to say, the subject is tedious. I found the story that was in the subject really interesting – that these guys who are in the heart of the system wanted to change the system. But having written my story, I dread having to follow the picayune details of stock market structure. It’s boring and it’s complicated and that makes it less likely to be a subject of political activity and regular activity, because people can’t wrap their heads around it and they’re bored by it. So I hope, like the rest of the public, I can just ignore it and the market will take care of it.
AT: Did you seek to find some moral, good guys in the industry like Brad Katsuyama and the IEX crew to base the book around?
ML: I didn’t start by finding a problem in the stock market and finding someone to illustrate the problem. I started by stumbling onto Brad Katsyuama while he and his team were busy trying to find out how the stock market worked. I found that riveting. If you just told me the stock market had this rigged component to it, I would have said, “You know what, a lot of these markets look like that. It is shocking, I guess, but the financial system is dysfunctional.” But I thought the characters were a big story. Without them I would not have written about it, I probably wouldn’t even have written a magazine article about it. I would have just said, “Well, the financial industry is doing something else screwy.”
AT: What are you moving on to next?
ML: I can’t say. I’ve got two projects I’m not allowed to talk about. One of them is a TV show and one of them is a book. If the TV show happens, the book will take awhile longer. The TV show is a drama for Showtime. With TV shows you never know if its going to happen, they might have you write a script and then just walk away from it. And if they do, there’s a book I’m going to write. It’s new terrain for me. It’s not finance and it’s not sports.
AT: You spoke to one of my classes at Tulane University, about 10 years ago, and told a story about your first piece of journalism, how you went into Ochsner Medical Center and just asked what the newest thing they had in there was, and then wrote about that.
ML: That was to enter The Economist’s competition for an internship. They said, “Write about something new that’s happening in technology or medicine.” I got home [from London] to New Orleans and said, “Well, Ochsner is pretty cutting edge. Whatever they have is going to seem like the 22nd Century to the Brits. So I went over there and asked what’s new and they showed me a breast cancer detection device. I wrote the piece and they published the pieces. That might have been my first published piece of journalism. It was.
AT: Is that a tactic you’ve used since? What’s your criteria for a book-length subject?
ML: It’s such a pain to write one of these things. The criteria really is that it’s something I have to be really excited about. It’s some combination of ideas and characters. So, do I feel like these ideas are important? And do I feel like the characters are compelling? And does it feel like a challenge to get it down on the page? And then at some point when I feel like I have the ingredients, I have to ask, if I didn’t write it, do I feel like I’d be doing the world a disservice? If the answer is “Yes,” then I write it. But I pick up and discard stuff all the time.
AT: Coming out here over the years, are there Colorado stories that have caught your eye?
ML: Why, you want to steal them? I’ve long wanted to come visit the Unabomber, who is in jail there. There’s a trip I’ve always wanted to take, and do as a travel piece, which is to cross-country ski from Vail to Aspen and stay in those World War Two army huts. Those two are on my list.
The last time I was there as a reporter was when I was writing a piece about Obama and there was a character there I had to get to, Tyler Stark, an Air Force pilot who had to parachute out of his plane in the Libya bombings and had been rescued by a Libyan. His parents live there, near Aurora. That’s the last time I was there.
AT: What’s the latest on “The Big Short” movie adaptation?
ML: They start filming next month in New Orleans. They have an incredible cast: Brad Pitt, Christian Bale, Ryan Gosling and Steve Carell. They plan to be done by May, so I think it comes out in the fall.
AT: What have you learned about Hollywood from seeing “The Blind Side” and “Moneyball” made into movies?
ML: I’ve had a lucky experience. I like the people who’ve done it. It’s interesting seeing what happens when they try to take a book and turn it into a movie. Because eventually they figure out that a movie is not a book. A movie is a short story, and the amount of compression that has to go in is immense. So it’s really hard. That’s the biggest thing. Just how shorthand and different it has to be. They’ve worked because the filmmakers have said, “I’m going to get rid of the book and do what I want to do.” So the book becomes more of a touchstone than a template. And as far as giving advice to someone trying to turn a book into a movie, I’d say that, “Don’t let it be a crutch. You have to invent your own thing.” And they have. And I stay out of it. It’s nice to see other people go to work on it, because I have nothing to contribute.
Read the Aspen Times story on Lewis’s Winter Words event here.
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