WALL STREET BONUSES IN THE CURRENT CLIMATE ARE A "VERY ELEGANT FORM OF THEFT" SAYS FORMER BOND TRADER MICHAEL LEWIS -- "60 MINUTES" SUNDAY

Author Speaks About His Upcoming Book on the Subprime Mortgage Mess

The big banks that received billions of dollars from the U.S. government and continue to pay their executives large bonuses are engaged in a "very elegant form of theft" says former bond-trader-turned-author Michael Lewis. He spoke to Steve Kroft in an interview to be broadcast on 60 MINUTES Sunday, March 14 (7:00-8:00 PM, ET/PT) on the CBS Television Network.

Wall Street banks, many on the verge of collapse just over a year ago, paid employees about $20 billion in bonuses for 2009 profits. Lewis tells Kroft that bonuses paid out by big banks that were propped up by the Federal Reserve in the economic crisis were essentially a scam on taxpayers. When you are a big bank on Wall Street, says Lewis, "You have access to a zero percent loan in virtually unlimited quantities from the Federal Reserve. 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," says Lewis. "You're essentially borrowing from the government and lending the government and taking a cut."

Add to that the vicious cycle of greed within the industry and the bonuses flowed, says Lewis. "Really what's going on is the people on the top of the firm 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," he says. "So it's a very elegant form of theft right now," Lewis says.

Lewis believes the political connections of Goldman Sachs played at least some role in the Federal Reserve's decision to subsidize it and other banks deemed "too big to fail." "There's no proof but... it certainly didn't hurt that [Treasury Secretary Henry Paulson] was a former Goldman CEO...that a lot of the people at the table were former Goldman employees...that the air..everybody breathed contained the assumption that we can never do anything to harm Goldman Sachs," Lewis tells Kroft. "I can't really see how their political influence didn't have anything to do with it."

In his newest book, The Big Short: Inside the Doomsday Machine, Lewis explores how a handful of Wall Street outsiders who realized the subprime mortgage business was a house of cards, found a way to bet against it and made millions doing it. He tells Kroft the people who decided to create and trade these flawed financial instruments were blinded to the danger by greed for the most part, but should have known better because that was their job.

Lewis says despite the fact that their dealings managed to destroy $1.7 trillion - and counting - of wealth, these people still left their companies with big payouts. "I didn't run across a single character who didn't get rich." Even richer: "And they're being paid all over again to sort through the mess...that is an age-old trick on Wall Street...people who create the disasters make a lot of money cleaning up the disaster because they're the ones who know about the disaster," Lewis tells Kroft.