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Michael Lewis, whose latest book chronicles the rise and fall of the subprime mortgage debt market, would have ended up in a hedge fund if he'd stuck to a career on Wall Street.
"I would have ended up ... in John Meriwether's Long Term Capital [Management] because that's who I worked for at Salomon [Brothers] and I got along well with John," Lewis said in a recent telephone interview with IDD Magazine. "I would have gone to Long Term Capital Management and I would have built up a lot of money and I'd be poor again."
Lewis' latest book, "The Big Short: Inside The Doomsday Machine" (W.W. Norton & Co.), looks at the birth of subprime mortgage debt, how it helped stoke demand for U.S. housing, and the development of credit default swaps, which allowed investors to bet against subprime mortgage securities.
Lewis's new book introduces readers to investors like hedge fund managers Steve Eisman and Mike Burry, who questioned the quality of mortgage underwriting before the credit crisis took hold and began betting against housing through various methods, including shorting mortgage company stocks and subprime residential mortgage-backed securities. In many ways, the best seller is a bookend to "Liar's Poker," Lewis' 1989 chronicle of the mortgage bond desk run by Lewis Ranieri at Salomon Brothers.
In his nonfiction, Lewis subsequently examined the dot-com revolution in...