Fareed Zakaria talked to author of Liars Poker, Michael Lewis, about what the future is for Wall Street and the economy, and Lewis is not optomistic due to the revolving door between our government and the financial sector.

ZAKARIA: And we are back with Michael Lewis.

Michael, there are sort of two views on the future of Wall Street. One is, this whole game is over. And sort of, to a certain extent, you've been expressing it a little bit, that, you know, this is a 30-year boom. We're going to look back it the way we did the 1920s, maybe the 1890s.

But there's another view that says there are so many smart people out there, and they are so hungry, and they desperately want to find ways to make money, that you're going to actually see new and interesting ways that these firms will either produce money, or there'll be a whole series of smaller firms -- you know, risk-taking firms like hedge funds on the one side, much more staid banks on the other.

What do you think? What does your gut tell you the future of Wall Street is going to look like?

LEWIS: I think that we are in for another day of reckoning down the road. I just don't know when it is.

I think that they haven't even properly evaluated the institutions. They haven't been honest about what these institutions have on their books. They've had phony stress tests.

So, we're in a kind of, I think, right now, in a period where there's a false sense that it's over, that the crisis is passed. I don't think the crisis is passed.

Now, they haven't all deleveraged. Morgan Stanley did, to its chagrin. But everybody else is still running these huge -- a huge amount of leverage. But that's going to change. I think the general sense that this sort of risk-taking should not take place in a public corporation, especially one that's too big to fail, will express itself in regulation that will prevent it from happening.

But you're right. There are all these smart people. And they're used to making huge sums of money. And it's kind of hard to believe that that will just end.

I don't think it will just end. I think it will find a different expression. I think that what you'll see is hedge funds will become more and more interesting.

ZAKARIA: But what happens to these storied...

LEWIS: These big institutions.

ZAKARIA: ... these massive, massive banks? I mean, they used to define American power in a way, these massive, multinational banks that were all headquartered in New York.

LEWIS: I think they steadily become much more boring. I think they steadily attract a less a caliber people to work for them, and they pay less. They pay less.

I think that -- it's hard to see now, because what's odd -- one of the things that's odd about the current situation is that the people who created the problem are so powerful in deciding what the solution to the problem is going to be. There is a great tradition on Wall Street of making a fortune, creating a mess, and then making a fortune cleaning it up. But to do it on this scale is breathtaking to me.

And it is amazing to me the degree to which, say, Goldman Sachs is intertwined with the Treasury, and how they're -- there don't seem to be any independent voices in the thick of the decision-making. The decision-making is all being done by people who one way or another might expect to make a lot of money from Goldman Sachs in the future.

ZAKARIA: You talked about that in an op-ed in the "New York Times." Describe that amazing revolving door between the SEC and the investment banks.

LEWIS: Well, that's the -- that's sort of the down market version. But the directors of the last three -- let's see, three of the last four or four of the last five directors of enforcement of the SEC work for big Wall Street banks now.

ZAKARIA: And expected -- right. And...

LEWIS: And you can just assume, I think, that if you're a prominent person at the SEC, your exit strategy is to get a lot of money from a Wall Street firm. And nobody says anything about it. That's the amazing thing.

It's not even thought scandalous. It's just thought normal. It's like a natural career -- a step in a financial career. Regulate...

ZAKARIA: And regulators, of course -- you are highly unlikely to enforce in a very punitive manner any of the SEC's mandates, if your hope is the next day, you know, to leave and get a job.

LEWIS: You're not going to want to not get along with the head of Goldman Sachs. That's absolutely right. You're not going to -- there's a limit to how much trouble you're going to be willing to cause.

I think that only partly explains the SEC's impotence. I mean, the truth is also that an awful lot of what happened to create this crisis wasn't even illegal.

ZAKARIA: Right.

LEWIS: So, there wasn't anything the SEC could have done about it.

So, on a grander scale, if I'm Tim Geithner and I'm the secretary of the treasury, what do you think he's going to do when he stops being secretary of the treasury? His natural next step is go work in the financial sector. I don't think he's actually thinking, "I've got to be nice to the people on Wall Street, because they're going to make me rich on the back end of it."

But I think it can't help but influence his behavior, that that option even is there.