Yahoo! Finance | February 03, 2011
By Henry Blodget

Remember a couple of years ago when everyone from Ben Bernanke to the heads of Wall Street banks defended their role in the financial crisis by saying "no one could have seen this coming?"

Well, that was bunk: Plenty of people saw it coming.

And the denial went way beyond mere after-the-fact excuses, says Michael Lewis, bestselling author of Liar's Poker, The Big Short, and many other books.

In a new article in Vanity Fair, Lewis tells the story of an analyst at Merrill Lynch who, months before the crisis, said the lending practices of several big Irish banks were the riskiest and most reckless in Europe.

The Irish banks freaked out when they saw the report and demanded that Merrill retract it. Merrill DID retract it, and then rewrote and re-issued a version that was far more flattering to the Irish banks. And at the end of the year, the analyst was canned.

Of course, several months after the report appeared, the financial crisis hit and the Irish banks collapsed.

Lewis's story suggests that it's still far riskier for a Wall Street analyst to be bearish and right than bullish and wrong.

More importantly, Lewis says, the Irish banking disaster still has not been adequately addressed. The banks have been temporarily bailed out by German taxpayers, but eventually the bad debts will come due.