Michael Lewis explains to Stephen Colbert why the 2008 bank bailout was a big mistake

Author Michael Lewis was on Thursday's Late Show to talk about the new movie based on his book The Big Short. He briefly explained the story behind the book, comparing the shorting of mortgage-backed securities to betting someone that their house will burn down. "Don't you have incentive to become an arsonist then?" Colbert asked, and Lewis agreed. People lost their homes in the 2008 crash, but the banks survived because the U.S. bailed them out and didn't break them up, Colbert said, asking: "Was that a bad idea?" Lewis said yes.

Colbert noted that when he interviewed Ben Bernanke, the former Fed chairman said it was the right thing to do, and Hillary Clinton told him the banks shouldn't be bailed out. Lewis sided with Clinton. "I think what they failed to appreciate is that when they resuscitated these places, like let them stay in business, that they would proceed then to not only get bigger, even bigger — that's the amazing thing — but also to start to meddle in the process to reform them, and to sort of like throw their political clout into preventing any kind of change," he said. "It would have been much easier to reform the system if the banks weren't there paying lobbyists, paying politicians to stop it from happening." Watch below to see Lewis ask forgiveness for his own sins, and receive it. Peter Weber

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