captioning funded by cbs and ford-- built for the road ahead. >> kroft: so you made a ton of money. >> made a ton of money. much more than i ever imagined, you know, i'd ever had. >> kroft: incredibly, he made that ton of money during the worst financial disaster since the great depression. he's part of the inside story of the wall street collapse as told by michael lewis, one of the country's preeminent non-fiction writers, with a knack for turning complicated, mind- numbing material into fascinating yarns. >> i'm afraid that our culture

will come to the conclusion that everybody was just a bunch of criminals. i think the story is much more interesting than that. i think it's a story of mass delusion. ♪ >> stahl: when derek paravicini is playing the piano, it's hard to believe there's anything he can't do. ♪ and yet, when you meet him away from the keyboard, the contrast is shocking. can you hold up three fingers for me? >> i can do that. >> stahl: can you hold up three? >> i don't know how to do it. >> stahl: derek is a musical savant, blessed with an island of extreme talent in a sea of profound disability. ♪ ( cheers and applause ) >> i'm steve kroft. >> i'm lesley stahl. >> i'm bob simon. >> i'm morley safer. >> i'm anderson cooper. >> i'm scott pelley. those stories and andy rooney

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one stands alone. the secret is swanson 100% natural chicken broth. >> kroft: if you had to pick someone to write the autopsy report on the wall street financial collapse 18 months ago, you couldn't do any better than michael lewis. he is one of the country's preeminent non-fiction writers, with a knack for turning complicated, mind-numbing material into fascinating yarns. he wrote his first best-seller, "liar's poker," about his experiences as a young wall street bond trader, when he was still in his 20s.

and he has since followed up with seven more best-sellers on subjects ranging from silicon valley in "the new new thing" to big time sports in "money ball" and "the blind side." his new book, called "the big short: inside the doomsday machine", comes out later this week, and it explains how some of wall street's finest minds managed to destroy $1.75 trillion of wealth in the sub- prime mortgage market. we spent two days debriefing him at his home in california. >> michael lewis: this was an episode where capitalism was almost destroyed, just by the capitalists. and, in the most sensational way, they... they were sort of destroyed by their own folly. >> kroft: what happened? >> lewis: the incentives for people on wall street got so screwed up that the people who worked there became blinded to their own long-term interests, and because this... the short-

term interests were so overpowering. and so, they behaved in ways that were antithetical to their own long-term interests. >> kroft: michael lewis, a onetime wonder boy on wall street, is about to turn 50 now, ensconced in this hillside compound in berkeley, california, which has a main house and three cottages. and he is much happier writing about business than actually conducting it. what was the book that bought this place? >> lewis: this would've been "the new new thing" that bought this place. >> kroft: how many books have you sold now? >> lewis: some millions. i don't know how many millions; not... not john grisham millions, but millions. >> kroft: he lives here with his wife, former mtv news correspondent tabitha soren, and their three children-- a three- year-old son and two young daughters, who he takes to all of cal berkeley's women's basketball games. it's one of the few breaks that lewis allowed himself over the past 18 months as he dug into the idiocy and negligence that produced the worst financial

crisis since the great depression. >> lewis: i'm afraid that our culture will come to the conclusion, because it's always the easy conclusion, that everybody was just a bunch of criminals. i think the story is much more interesting than that. i think it's a story of mass delusion. >> kroft: lewis's forte has always been discovering little- known facts and characters that change people's perception about a story. so when he finally sat down at his computer with sacks full of research to write about this calamity, he had no interest in treasury secretary hank paulson or ben bernanke or the c.e.o.s of wall street's big investment banks, who he believes had no clue what was going on while it was going on. he wanted to tell the story through the eyes of people who were paying attention and who knew that a financial disaster was inevitable. >> lewis: but there are a handful of characters who actually had seen it coming and made a fortune off of it. and there were so few of them, and there were so many people

who had been on the other side, that i thought they... that i kind of wondered who they were and why they got themselves into that position. >> kroft: what they saw. >> lewis: what they saw, almost more, how they saw. >> kroft: how many people were there, do you think, in the world that understood what was going on? >> lewis: between ten and 20 investors at most, and this is from the universe of tens of thousands of people who could have conceivably made that bet. >> kroft: the first one to see that something was seriously amiss in the burgeoning sub- prime mortgage market was dr. michael burry, a california physician with only one good eye. he lost the other one to cancer as a child, and also suffers from asperger's syndrome, a condition related to autism that often produces an aversion to social contact. uncomfortable dealing with patients, burry quit medicine and started a hedge fund in cupertino, spending most of his time in a darkened office glued to his computer screen. beginning in 2003, he turned to something that no one else in

america was doing, reading and analyzing the pools of risky sub-prime mortgage loans that wall street had been buying up and bundling into highly profitable mortgage-backed securities, which they were selling to investors around the world. >> dr. michael burry: i called up the prospectuses and i read the prospectuses, and i looked at these pools. i could see the credit standards within these pools deteriorating just quarter to quarter. >> kroft: how could you tell that? >> burry: there was, essentially, crappier mortgages being put into these pools. and it didn't seem investors seemed to care and it didn't seem the ratings agencies seemed to care. >> kroft: do you think many people read these...read these prospectuses? >> burry: i think the lawyers that put them together, to an extent, maybe. >> kroft: do you think that the executives at the big wall street firms who were issuing these bonds had read them, or understood them? >> burry: i don't think they read them, no. i think that there were probably junior analysts that were given the tasks of reviewing the...

these documents. however, i think that this was a profit center. it was a profit center, it was something the organization wanted to do. >> kroft: in effect, lewis writes, michael burry was doing the first real analysis of the creditworthiness of the sub- prime borrowers and the structure of the complicated wall street mortgage securities; the kind of work that was supposed to have been done by bond-rating agencies like standard & poors and moody's, so that investors could accurately judge their risk. what you were doing sounds to me like the job that the rating agency should have been doing? >> burry: there's no way the rating agencies had anywhere near the manpower to look through all that was being issued. >> kroft: yeah, but you're one guy. and you found it. >> burry: you... you would think that even if they just looked at a sample, maybe they would have come to a realization. >> kroft: by 2005, michael burry had come to the realization that

the wall street bond market had lost its mind. it was buying up hundreds of millions of dollars in dicey loans to unqualified buyers who were, in michael lewis's words, "one broken refrigerator away from default." burry concluded that the sub- prime market would collapse in 2007. >> lewis: he notices for the first time that there are pools... there are mortgage bonds supported by pools of loans, and most of the loans are, what do you... are called "negative-amortizing interest- only loans," which means that, you, the homeowner and buyer, you borrow the money, and you not only don't have to repay your principal, you have to... you don't even have to repay the interest. and if you just don't pay anything, they just... they just add to your loan. >> kroft: so you can't lose your house. >> lewis: you can't lose your house, in theory, right? and so he figures, we've reached the end of the road in the insanity of lending. they... they're scraping the bottom of the barrel. now is the time to lay a bet. and it's before anybody does. >> kroft: burry figured out that these mortgage-backed securities

would become worthless if just a small percentage of the dicey loans went bad, and he wanted to bet against the worst of them. he decided that the best way to do it would be to get wall street to sell him inexpensive insurance contracts on the securities that would pay off big time if they failed. the contracts were called credit default swaps. >> lewis: he conceives that they are going to invent, on wall street, credit default swaps on sub-prime mortgages, essentially, insurance contracts on the bonds before they even do. and he helps... he participates in the creation of this instrument. and michael burry is the first one in. >> kroft: burry assumed a lot of people would figure out what he was up to, but very few did. it took two years for the drama to play out, but the sub-prime mortgage market finally collapsed in 2007, just as he had predicted. so you made a ton of money. >> burry: made a ton of money, much more than i ever imagined, you know, i'd ever have. we made $725 million, i think,

on the funds in 2007. >> lewis: michael burry's advantage was he wasn't part of the collective. he was just this guy in a t- shirt and shorts with a glass eyeball and asperger's syndrome, looking at the numbers and... when nobody else really was. >> kroft: how can they not look at the numbers? i mean, how can wall street be selling all of these... buying all of these mortgages and repackaging them, and... and not realizing that they're not very good mortgages? >> lewis: wall street is able to delude itself because it's paid to delude itself. that's the... i mean, one of the lessons of this story is that people see what they're incentivized to see. if you pay someone not to see the truth, they will not see the truth. and wall street organized itself so people were paid to see something other than the truth. and that's one of the central messages of this story. you have to be very careful what... how you incentivize people, because they will respond to the incentives.

>> kroft: and all of the incentives in wall street's largely unregulated bond market were geared toward keeping the sub-prime money machine humming. shortly after michael burry decided the people there had lost their minds, wall street's most influential investment bank convinced the financial products division of insurance giant a.i.g. to join the party, a decision that would destroy the company. >> lewis: they insured tens of billions of dollars of sub-prime mortgage loans without even knowing they were doing it. goldman sachs persuaded them to insure these piles of loans without them ever investigating what was in the pile. so there's an additional level of incompetence; they didn't even know the mistake they were making. >> kroft: over a period of just a few months in 2005, goldman sachs got a.i.g. to insure $20 billion worth of sub-prime mortgage securities that the ratings agencies had graded triple-a.

but in fact, lewis says, the pools contained some of the worst drek on the market. do you think the big banks like goldman sachs played a.i.g. for a patsy? >> lewis: that's exactly what they did. i mean, i don't... i think even goldman sachs would admit that to themselves, which is saying something. yes, absolutely. using the cover of "we're all big boys in this market," they... the big investment banks have long sought to exploit their customers. >> kroft: what role did the rating agencies play in this? >> lewis: they were handmaidens to wall street. the ratings agencies get paid by wall street-- by merrill lynch, by citigroup, by morgan stanley, by goldman sachs-- to rate the bonds that wall street creates. this creates a certain moral hazard. ( laughs ) >> kroft: you write in the book that goldman essentially took the worst stuff that they couldn't sell, they repackaged it and took it to moody's, and got moody's to rate it triple-a? >> lewis: correct. >> kroft: how? how did they know that moody's was going to rate it triple-a?

>> lewis: yes. they had helped design the models, i'm sure, that moody's used to rate the bonds. and i've spoken with people at morgan stanley and goldman sachs who said, "we helped the ratings agencies understand these things." >> kroft: they were the educators? >> lewis: yeah, they were the educators. >> kroft: lewis calls the goldman sachs-a.i.g. deal one of the original sins of the looming financial crisis. other wall street firms were so jealous of the goldman deal, they got a.i.g. to insure another $30 billion of what turned out to be worthless securities. but lewis thinks the fiasco had more to do with wall street stupidity than corruption. they didn't understand these things? >> lewis: not well enough. they... i mean, there's a wonderful little vignette in... in "the big short" about the leading bond trade... sub-prime mortgage bond trader at morgan stanley, a fellow named howie hubler, who manages to lose somewhere between... it's hard to know, but $7 billion and $12

billion in a matter of... of six or eight months-- more than any single trader has ever lost in the history of wall street, and no one knows his name. >> kroft: according to lewis, at the end of 2006 and the beginning of 2007, when the commercial bank j.p. morgan became the first to recognize the danger and fled the sub- prime market, hubler was gobbling up $16 billion worth of sub-prime mortgage bonds that would be worthless in nine months. >> lewis: he did not understand the forces that work in his own market. and he was supposed to be the smart guy. i mean, what... what were the dumb guys doing? so, i... i think that it's really clear that... that the firms themselves did not understand the machine they created. what happened to howie hubler? >> lewis: he's allowed to resign from morgan stanley, and he takes with him millions of dollars in back pay, tens of millions of dollars in back pay that... it was all hushed up, basically. >> kroft: did most of the people who made these terrible decisions leave with a lot of money?

>> lewis: yes, they all did. i... i did not... i haven't run across a single character who didn't get rich. anybody above a certain level in all these firms made huge sums of money, by any standard. and the people who were... i mean, this is where it gets a little creepy-- the people who were most instrumental in building the sub-prime mortgage machine also happened to be the ones who had the most detailed understanding now of the securities in the rubble. and they're being paid all over again to sort through the mess, because they're the experts. that is an age-old trick on wall street because, generally speaking, people who create disasters make a lot of money cleaning up the disaster because they're the ones who know about the disaster. >> kroft: what about the c.e.o.s? >> lewis: stan o'neal at merrill lynch and chuck prince at citigroup are the most obvious examples. but... but they were paid, not tens, but into the hundreds of millions of dollars to run their

firms into the ground. >> kroft: by the fall of 2008, with a.i.g. and all of the big investment banks at some risk of going under, the government stepped in to bail out the very firms that had caused the crisis. a decision was made that a.i.g. was too big to let fail and that its gambling debts would be paid off 100 cents on the dollar, and the company that benefited the most was goldman sachs. do you believe it had anything to do with their political connections? >> lewis: it's hard to know; there's no proof. but it certainly didn't hurt. it certainly didn't hurt that the secretary of the treasury was a former goldman c.e.o. it certainly didn't hurt that a lot of the people at the table were former goldman employees. it certainly didn't hurt that the air that everybody breathed contained the assumption that we can never do anything to harm goldman sachs. so, sure, i mean, i can't really see how their political influence didn't have anything to do with it.

>> kroft: when we come back, a look at wall street's bonus culture and why michael lewis thinks it has become unsustainable. >> cbs moneywatch update sponsored by spirva. >> mike: good evening, greece will give an update on its efforts to curve its massive deficits. the european union financial add ministers tomorrow. gas rose to an average of 2.79 a gallon. and "alice in wonderland" is tops again at the weekend box office. i'm russ mitchell, cbs news. old. whether i'm at the batting cages... old. down by the lake or... fishing at the shore. i'm breathing better... with spiriva. announcer: spiriva is the only once-daily inhaled maintenance treatment for both forms of copd,

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>> kroft: wall street's bad bets nearly brought down the financial system in 2008. one thing that didn't end, michael lewis says, was the bonus culture and the sense of entitlement in the financial industry. according to the new york state comptroller, wall street employees split $20 billion in bonuses for 2009. that's up 17% over last year, but it's not a record. in fact, it's a third less than the $33 billion wall street divided up in 2007, the same year everyone on wall street began to acknowledge the sub- prime mortgage losses that would reach $1.75 trillion. the size of the bonuses has left michael lewis appalled, but not really surprised. more than 20 years ago, lewis collected a couple of bonuses himself as a young trader at salomon brothers, and he still can't figure out what he did to deserve them.

>> lewis: i got my wall street bonus in... i got two bonuses, in 1986 and 1987. and it was like winning the lottery. it was... the money was so shocking, even though it seems, in retrospect, so quaint. it was a couple of hundred thousand dollars. but i was 24, 25 years old. it was incredible that someone was going to give me a couple hundred thousand dollars for what i'd just done, because i couldn't figure out what was so terribly useful about what i'd just done. >> kroft: and lewis feels the same way about the latest round of bonuses that were paid out on $55 billion of wall street profits that he thinks wouldn't have been made without help from uncle sam. once the government decided the banks were too important to fail, lewis says the only way to get them back on their feet was to give them money. >> lewis: i think they assumed that, in response for this gift of life that they were giving these wall street firms, the people who ran the wall street firms would behave responsibly in a way that didn't attract... >> kroft: meaning what? >> lewis: meaning not pay themselves huge sums of money,

the... perhaps not even pay themselves anything. just say "thank you" and re- jigger their compensation systems. instead, they did not. instead, they used the market as an excuse for paying themselves. "if we don't pay our employees of goldman sachs huge sums of money, they're going to leave and go to j.p. morgan." and the j.p. morgan people say, "well, if we don't pay these special people huge sums of money, they can leave and go to goldman sachs." and... and you... you kind of want to back away from it and say, "well, wait a minute, why are they so valuable in the first place?" and really what's going on is the people at the top of firm want to make a lot of money, and if they're going to make a lot of money, they got to pay the people under them a lot of money. so it's a very elegant form of theft right now. >> kroft: well, their argument has been, "look, we're entitled to these bonuses this year because we made all of this money." >> lewis: yeah, no one ever asked them... they never explained how they made all this money. all right, if you look at their businesses right now, they're heavily government dependent; that if you were a goldman sachs, a morgan stanley, or j.p. morgan, you have access to a 0%

loan in virtually unlimited quantities from the federal reserve. you can take that money and reinvest it in treasury bonds or in government agency securities and you will get the spread, and you can... you could do it over and over. you're essentially borrowing from the government, and lending to the government, and taking out... taking a cut and... >> kroft: so the governments let them make the money. >> lewis: well, the government is still subsidizing these firms because the losses were sensational. i mean, in the financial system, there are now $1.75 trillion of losses from the sub-prime mortgage bonanza. and that's... they're firms that really... they look... they really shouldn't exist. if the market had been allowed to function, they would not exist. they'd be failed enterprises. i mean, even now, if the government said, "we have nothing to do with these places anymore. we're going to let them fail if they fail. they no longer have this effective government guarantee. and by the way, we're going to cut out these subsidies that we're... that we're handing them under the table," most of them would fail. >> kroft: but none of that has

changed the wall street bonus culture. lewis says there is a sense of entitlement to outrageous compensation that he thinks is way out of proportion to its contribution to the u.s. economy. how did that happen, that somebody thinks they're worth automatically millions of dollars a year? >> lewis: well, when you're surrounded by a lot of other people who are being paid millions of dollars of year, you're... you're not thinking, "oh, it's outrageous for someone to pay me millions of dollars a year." you're thinking, "it's outrageous that jim got $500,000 more than me." that... that... they are... they're looking to each other as reference points rather than to the larger society. >> kroft: are they worth that kind of money? >> lewis: what do you mean, "are they worth that kind of money?" >> kroft: do they deserve all that money? >> lewis: again, what do you mean, "do they deserve it?" did they... did they...? they worked really hard. they spent a lot of hours in the office.

so, you can't begrudge someone who starts a company and employs lots of people and so on and so forth for making a lot of money. i don't mind people making a lot of money. on wall street, the business has become very obviously divorced from productivity, from... from productive enterprise. so in that sense, no, they don't deserve it. they didn't earn it. what they did was finagle it. they were very good at putting themselves in the middle of large financial transactions that probably shouldn't have happened in the first place, and taking out little pieces of it. they generated trillions of dollars of sub-prime mortgage loans that should never have been made. but the world would be better off if that whole industry had never existed. so, that... that's crazy. >> kroft: lewis says the more people learn about what happened, the angrier they become. what about reform? do you see anything happening?

>> lewis: there are several things that obviously should be done that have not been done, and you can't explain to my mother why they haven't been done. only a really smart person on wall street could explain why they haven't been done. but, for example, all right, one of the things at the bottom of this crisis was we had these ratings agencies that called a lot of things triple-a-- gold- plated securities-- that were worthless. and the ratings agencies are paid, of course, by the wall street firms for their ratings. why is that allowed? why can you buy a rating? that seems like a very obvious thing to change. and people talk about it, but it hasn't happened. credit default swaps-- insurance contracts that we trade freely, but it's not... not classified as insurance. this market is the closest thing to, sort of, ground zero of the recent calamity and, yet, nothing has been done to change the market. nothing's been done to make it more transparent, nothing's been done to make it more like what it is, an insurance market. that's an obvious reform.

from the time i was at solomon brothers, it was incredible to me that the firm could advise customers what to buy and sell. at the same time, they are betting on the things that they're trying to sell their customers. so, i might call you up and say, "wow, this... these sub-prime mortgage loans, they look really, really good. this pile over here, you ought to... you ought to invest in that pile." and, meanwhile, the traders behind me are betting against it. >> kroft: lewis believes the financial industry is living in a world so disconnected from american life that it can't be sustained. he thinks it may take a while, but he believes wall street, as we know it, has done itself in. >> lewis: the leaders on wall street completely lost any sense of their responsibility to the society. and if you know you're going to blow up a.i.g. by putting $20 billion of bad sub-prime mortgage risk into it, even

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>> stahl: there are some people we meet in our "60 minutes" stories who we just can't let go, whose next chapter we're almost compelled to follow-- like derek, a masterful musician who is blind, with disabilities so severe, he can't tell his right hand from his left, or hold anything but the simplest of conversations.

we started following derek because of his gift at the piano, but it's what he's taught us about relationships, communication and what music is really all about that's kept us coming back. ♪ when derek paravicini is playing the piano, it's hard to believe there is anything he can't do. ♪ and yet, when you meet him away from the keyboard, as we first did in london six years ago, the contrast is shocking. can you hold up three fingers for me? >> derek paravicini: i can do that. >> stahl: can you hold up three? >> derek: i don't know how to do it. >> stahl: you want me to show you three? >> derek: yes, please, yes. >> stahl: derek is a musical savant, blessed with an island of extreme talent in a sea of profound disability. do you know how long you've been playing the piano? >> derek: was it about a year, wasn't it? >> stahl: just a year ago? no. >> derek: no, it wasn't. >> stahl: derek, do you know how old you are? >> derek: i don't know how old i

am, no. >> stahl: today, derek is 30. he grew up in an upper class british family, the nephew of camilla parker-bowles, now the duchess of cornwall. but none of that matters much to derek. you going to have pizza tonight? >> derek: yes, pepperoni. in new york, what do they have? if i come next year, what do they have there? >> stahl: derek was excited to show us the skills that make him so exceptional-- his ability to instantly call up any piece of music he's ever heard, like "ymca." can you play that one? >> derek: can play "ymca." ( plays "ymca" ) >> stahl: and i asked him to play a show tune. ( plays "my favorite things" ) but it isn't just that derek remembers them, he can transform them effortlessly and seamlessly into the styles of different musicians, like jazz greats. switch to oscar peterson.

( plays "my favorite things" a la oscar peterson ) how's about dave brubeck? ( plays "my favorite things" a la dave brubeck ) >> adam ockelford: it's like he's got libraries of pieces and styles in his head. >> stahl: adam ockelford is derek's teacher. >> ockelford: and he can just whip out a piece book and a style book and just bring them together. it just kind of explodes. >> stahl: how derek's fingers can do this, but can't button a button or zip a zipper, remains a mystery. there are lots of theories about savants, but few real answers. in derek's case, the problems started early. he was born more than three months premature, weighing just a pound and a half. he hung on, but was left blind and with severe cognitive impairment. derek's father, nic paravicini, says the first thing that really interested derek was a small toy keyboard.

>> nic paravicini: my daughter suddenly said one day, "he's just played one of the hymns we... we heard in church this morning." >> stahl: how old was he? >> nic paravicini: three. and he... he didn't know, because he couldn't see and no one had told him, that you're meant to use your fingers to play the piano. so he used karate chops and elbows, and even his nose, i seem to remember. >> stahl: derek had never met a piano teacher, until he literally crashed into one during a visit with his parents to a school for the blind. the teacher was adam ockelford, in the middle of a lesson. >> ockelford: suddenly, i felt a shove in the back. and he literally pushed me off the piano stool, and just started karate chopping the... the keyboard. >> nic paravicini: we were terribly embarrassed, of course. >> ockelford: i thought he was mad, actually, because it was just chaos of notes and hair and elbows and... but then, suddenly, i noticed out of all of that was coming "don't cry for me, argentina." i thought, "crikey, he's... he's not mad at all; he's brilliant." >> nic paravicini: adam rang up, and he said, "i'd like to teach him."

>> stahl: he called you and asked if he could teach your son? >> nic paravicini: yup. >> ockelford: it was almost as though derek's... derek, through his pushing me off the stool, was saying, "help," you know. he was saying, "i... i need... i need..." of course, he didn't, but, "i need teaching." >> stahl: so it was compassion. >> ockelford: it was compulsion, i think. >> stahl: but how to teach a child who couldn't see, didn't understand much, and wouldn't allow anyone to touch his piano? >> ockelford: well, he was only tiny. i just picked him up and popped him the other side of the room. and then in the ten seconds i had before he... he raced back, i could just play... ( plays a scale ) >> stahl: to get him to repeat. >> ockelford: to get him to copy. and of course, by the time i played that, he was back, and pushed me off... >> stahl: pushing you off. >> ockelford: and copied it-- ( plays scale ) with his karate chops. >> stahl: before long, derek seemed to get it-- this was not someone trying to take away his precious piano; this was someone trying to reach him. >> ockelford: i think suddenly it clicked that he could have a conversation in sound. and suddenly, he just blossomed. >> stahl: so that ability to

communicate was revelatory for him? >> ockelford: absolutely. from all this confusion that he must have experienced as a child, not understanding much language-- suddenly, here was a language that he could control, he could play with, he could dialogue. all the things that we normally do with words, derek did with... with notes. >> stahl: his progress was astounding. after three years of daily lessons, derek was invited to play a few songs at a major charity fundraiser. ♪ it was there that adam first saw the thrill derek got from performing, and from feeling the love of the crowd. >> ockelford: when you're on a big stage, the applause hits you like a wave. and derek just jumped off of his piano stool. ( applause ) he was trembling with excitement and elation, that people are reacting to his playing. ( applause )

>> stahl: and he's been performing ever since-- in jazz halls, at benefits, in churches, connecting with audiences in ways most musicians wouldn't dare. taking requests, with a twist. >> derek: would you like to have a piece, lady? >> my piece is "ain't no sunshine." do you know it? >> derek: i do know "ain't no sunshine." >> stahl: and the twist-- he'll play it in any key they choose. >> b major. >> ockelford: b major, derek. >> derek: b major. >> ockelford: ooh, wicked. >> stahl: and in any style. >> derek: what style would you like it in? >> ragtime. >> ockelford: ragtime. >> derek: ragtime. >> ockelford: okay-- so, "ain't no sunshine," b major, ragtime. >> derek: okay. ( plays "ain't no sunshine" in b major ) >> stahl: remember, he had no idea what song would be chosen, no rehearsal. new key and new style-- no problem. ( plays "ain't no sunshine" in b major )

it's breathtaking to watch. think about all the thinking almost anyone else would have to go through. >> ockelford: it's like having three computers all working at once, and you could just put them together straightaway without thinking. ♪ >> stahl: sometimes, when he's playing, he smiles. is that really him enjoying what he's doing? >> ockelford: yeah. sometimes, he does something quite funny, musically. you can see a little sparkle. >> stahl: he knows he's been adorable. >> ockelford: i think he's actually quite pleased with himself what he comes up with. ( music ends ) ( cheers and applause ) >> stahl: he loves people? >> nic paravicini: absolutely loves people. >> derek: bill. hello, bill. >> nic paravicini: he loves meeting people.

>> derek: marion. >> nic paravicini: and then, he wants to know when he's going to meet them again. >> derek: can i come and stay with you, marion? >> marion: yes, you can. of course you can. >> nic paravicini: and it's rather engaging, because he always operates in the same way. he will put his hand out... >> derek: hello, norwin's brother. i'm derek. >> nic paravicini: ... because he doesn't know where the other person's hand is going to come from. and he'll say, "i'm derek." >> derek: i'm derek, pippa. >> nic paravicini: i remember once coming out of... out of church, and we had the archbishop of canterbury there. >> stahl: eww. >> nic paravicini: yes. and i said, "you're going to now meet the archbishop of canterbury." of course, derek said, "hello. i'm derek. hello, archbishop of canterbury." ( laughter ) it's... it's very... it's very engaging, though. the ar... of course, the archbishop loved it. >> derek: see you on friday, kelly. >> ockelford: derek's an extraordinarily warm person. to be honest, if he was just a musical computer, he wouldn't be that interesting. but his real love is actually people. and music is... is his way to get to people... >> derek: hello, florence. >> ockelford: and to help people. >> stahl: now, i understand that he's actually begun to work with older people. >> ockelford: as people get

older and they start to lose some memories and language, music remains. ♪ music's the first thing to develop. before you're born, you're... you're musical way... way before language, and it's the last thing... >> stahl: the last thing. >> ockelford: ... to go. and of course, derek, like this super juke box, can tap into whatever they want. sometimes, people that haven't spoken for a year will start to sing. it's fantastic. >> stahl: derek's also given charitable concerts throughout his life that have raised in the millions. >> nic paravicini: they say good comes out of bad-- well, it certainly has in derek's case. without knowing it, he's done more good than most of us will ever do. ( applause ) >> stahl: 25 years after derek shoved him off his piano stool, adam continues to work with

derek weekly. he's written a book about him, helped him put out a cd, tried to give him all the opportunities he'd have as an artist were it not for his disabilities. last year, adam felt derek was ready to do something that once seemed unimaginable-- to headline his own full-length concert, with an orchestra, on a major london stage. it was a sell-out crowd. the featured piece in the performance was gershwin's "rhapsody in blue", a challenging piece for any pianist... ( playing "rhapsody in blue" ) ...not to mention one who is blind and needs to handle intricate back and forths with the orchestra without the benefit of seeing the conductor. >> ockelford: you could almost physically sense the connection between him and the orchestra and the audience.

the immense musicality and the power of his musical communication was just fantastic. >> stahl: and you think he's aware of that? >> ockelford: i think derek's learning about emotion through music, which, of course, is the reverse way around for most of us. >> stahl: and as we have discovered with derek, there's always something more. tonight, he was performer and, with a little help from the audience, composer. >> ockelford: first note? >> a "c". >> ockelford: second note? >> a b-flat. >> stahl: derek offered to create an original piece of music on the spot from three notes called out at random. >> ockelford: so, we've got c, b flat, f sharp. ( plays notes ) >> derek: f sharp. >> ockelford: can you do a blues on that? >> derek: i can do a blues on that. ♪ >> stahl: he's really improvising and he's truly creative? i mean, because you think of people with brain disorders, that there's a lot of rote involved.

>> ockelford: derek undoubtedly is improvising and truly creative. what's happened in the last five or six years is that his authentic voice has come through. >> stahl: it's almost a signature. you know it's derek. >> ockelford: he's a power... he's an insistent communicator. you can't not listen when derek's playing. there's something about his playing. ♪ >> stahl: did you used to think that derek was going to plateau? >> nic paravicini: that was something we were told. but it hasn't happened, and it won't happen now, because he keeps progressing, both musically and socially, and i think that will continue. no plateaus. ( cheers and applause ) >> stahl: and before leaving derek, we had a request for our own encore, something he'd compose just for "60 minutes." what if we called it "the tick,

tick, tick derek boogie"? >> derek: we can call it "the tick, tick, tick derek boogie," yeah. >> stahl: all right, well, let's play it. ( clock ticking; derek plays ) "60 minutes" never sounded so good. ♪ >> i am welcome to the cbs sports cup date. the men's ncaa basketball tournament brackets are set. kansas is testimony one overall and number one in the midwest, syracuse leads the way in the west. one of two big east teams. the scc champion kentucky is testimony one in the east and duke in the south. a reminder catch the ncaa

men's basketball tournament live on cbs and live on-line at ncaa madness on demand at cbssports.com. ,,,,

the best potatoes absolutely come from texas. we grow the best potatoes right here in california. the best potatoes come from new england. definitely michigan. nope. they come from florida. ♪

it's california. california? give me a break. the perfect chip every time. no, not michigan. have you seen those guys? -michigan. -michigan. it's florida. no sir. they come from texas. ♪ >> pelley: now, a few minutes with andy rooney. >> rooney: i got an e-mail from a friend i never heard of the other day, suggesting i do a story about the trouble that our u.s. postal service is in. that's what the post office calls itself, the u.s. postal service. i don't take suggestions gracefully, but they're thinking about closing post offices to save money, and i think it's crazy. according to them, there are

37,000 post offices in the united states, and if they closed 10% of them, they could save $3 billion a year. they're also talking about reducing mail delivery from six to five days a week and, naturally, they thought about raising the price of stamps again, too. most of us don't like any of these solutions to the post offices' problem. the best mail is the letter from a friend or a relative. it's sad to say that very little of what most of us get these days is that kind of mail. the postal service is a government agency, but it's supposed to operate like a business. most people don't realize that-- i know i didn't realize it-- but the post office doesn't get tax money; it has to pay for itself. in 1900, there were 77,000 post offices around the country. today, with four times as many people, there are only 37,000 post offices.

40,000 fewer post offices for 230 million more americans. no wonder it wasn't in the mail. we have a lot of things that need cutting, but post offices are not among them. there's something special about a letter-- we all like to get one. an email, on the other hand, has all the charm of a freight train. when i was growing up, we all knew when the mailman was coming and we waited for him, even though we hardly ever got a letter. people actually wrote letters to each other, though, which they don't do as much anymore. they email each other. i would rather have a mailman or woman deliver junk mail to me than to get an email. >> pelley: i'm scott pelley. we'll be back next week with another edition of "60 minutes."

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