JON ERLICHMAN, HOST: We want to start with this idea of the lessons from the crisis, what we'velearned. I know you know lawmakers have spent a lot of hours trying to get to the bottom of what led tothe financial crisis in the first place.Do you think it has been a productive effort on -- on their part so far?MICHAEL BURRY: Well, I think it's difficult for -- for Congress to really get a handle on this. I think it'ssuch a partisan environment and they need to -- and I think they need to be so aware of -- of -- of what their positions ought to be that it's a little bit difficult. I've seen what could -- the most significant developmentis really the -- the empowerment of the Fed in the wake of all this, which is a little surprising.The Federal Reserve, in my view, hadn't seen this coming and -- and in some ways, possibly contributed tothe crisis as a -- and -- and what we're seeing coming out of this is, is Congress saying we don't know howto -- to regulate this. We don't know how to prevent this from happening. Let's empower the Fed. The Fedcan -- they can -- now they can look over thrifts. They can do this and that and the other. I'd have to have aspecial pneumonic to -- to remember all the different powers the Fed got.But they've thrown it to the Fed and now Bernanke is the most powerful Fed chairman in history. I'm notsure that's the -- the right response. That -- the result tends to tell me they're not -- they're not getting itright.ERLICHMAN: What's the danger of having more power for the Federal Reserve?BURRY: Well, I don't feel that the economic theories and policies that got us into this mess are the same policies and theories that will get us out of this mess. And more to the point, I don't -- I'm 100 percent surethat the policies and theories that got us into this mess won't prevent the next mess from happening.And that's probably my biggest frustration with the whole process. I don't think that -- I think with all the blame on Wall Street and all the focus on Wall Street -- the increase -- the perp walks for Wall Street --these things, in a lot of ways, are non -- are not very productive. I think it's not very productive to blame anarrow set of individuals or a narrow set of institutions. Nobody is taking time to blame anything that anybody in Congress did or the Fed did or the other businesses, you know, how the banks acted, how the mortgage brokers acted, how people acted, how borrowers acted. There's -- there's a lot of blame to go around. And I think this blame game being orientedentirely toward Wall Street is -- is not overall helpful.ERLICHMAN: Alan Greenspan is aware of at least some of your views on Fed policies. As you know,Bloomberg's Al Hunt asked Alan Greenspan earlier this year -- and Greenspan called your insight, looking back, the insights you had heading into the housing crisis, as a, quote, "statistical illusion."How did you feel about those comments?BURRY: Well, I have to say, I understand. He was crowned the maestro about a decade ago by BobWoodward. And, you know, in -- in those -- in 2003, he said that national bubbles in real estate don'thappen. In 2004, he counseled Americans to in -- to that -- that they're overlooking adjustable ratemortgages, that they should favor adjustable rate mortgages in their financial plan. In 2005, he touted thetechnology advancements that are making credit available to people who otherwise would not receivecredit. And these technology advancements are the same -- that same sort of language is used by IndyMac, New Century, Ameriquest, these subprime loans that ended up failing spectacularly. And, you know, thosenames and a little bit -- they're a little bit dwarfed or eclipsed by the other big names.But the -- what I've seen -- what I saw was a Fed that crashed rates from 2000 -- the beginning of 2001 to2003, it took rates from 6 percent or so down to 1 percent. In that time frame is when we fir -- we saw the-- the divergence where income diverged from home prices. So when you look -- if you chart income --national income or the -- home prices started to diverge in 2001.