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With one of those firms, you were sure to lose. they were the smart money. somehow they became the dumb money. the somehow is they got structured in a way that caused collective intelligence to decline. it caused a kind of stupidity inside. >> risk-seeking, so that, you know, there was money to be made in the short-term because the bubble kept inflating. and nobody wanted to miss that opportunity. >> that's right. the short-term is at the center of the problem. if you want to -- in the very abstract way to back away from -- from the massive losses in these wall street firms and say, okay, what...

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Banks couldn't take a hit. very different policy than they adopted with the auto industry. very different policy than the british government adopted with banks. once you adopt that policy, you paint yourself in a corner. the only way out is to give money to the banks until they're healthy again. that's what they've been doing in dramatic fashion. lots of little subtle gifts to the banks. the bank's response, you might have thought, might have been, wow, we're grateful. we are really sorry we behaved the way we did clearly there's something wrong here. there must be a way to regulate us. instea...

We know that wall street screwed up. we know why. i think the things he has proposed, the basic -- the basic idea of, one, forcing transparency in places. by transparency, meaning if you buy or sell a credit default swap or any other thing, you will not do it between yourselves and create risk that nobody knows what they are or how big they are. creating this uncertainty in the system. you will do it on a change, and we will know at any given moment what your exposure is and what the world's exposure to you is. two, consumer protection agency. for whatever reason people -- i've learned this fr...

So, you know, when i wrote -- the only reason i came back to it, i was wrong. "liar's poker" was the story not about the end of an era but the beginning of an era. there remained this question. it was assumed that the rest of the american economy may be going to hell. but those americans do know what they're doing with money. >> yeah. >> that, has changed. that has changed now. it now -- i don't think there's anybody who thinks people on wall street know what they're doing. >> but those banks are still making lots of money. >> yes. it's because they created a crisis of such proportions that th...