bigshort

1
00:01:20,957 --> 00:01:23,293
Hiya, Frank.
How are the wife and kids?

2
00:01:23,376 --> 00:01:25,503
You know, for you,
I'm considering treasury bonds

3
00:01:25,587 --> 00:01:28,381
and utility stocks. Smoke?

4
00:01:28,465 --> 00:01:30,550
In the late '70s,
banking wasn't a job

5
00:01:30,633 --> 00:01:33,136
you went into
to make large sums of money.

6
00:01:34,053 --> 00:01:35,764
It was a fucking snooze.

7
00:01:35,847 --> 00:01:37,640
How about those Mets?

8
00:01:37,724 --> 00:01:40,393
Filled with losers.
Like selling insurance or

9
00:01:40,477 --> 00:01:41,811
accounting.

10
00:01:41,895 --> 00:01:43,021
And if banking was boring,

11
00:01:43,146 --> 00:01:45,815
then the bond department at the
bank was straight-up comatose.

12
00:01:46,649 --> 00:01:48,026
We all know about bonds.

13
00:01:48,109 --> 00:01:50,229
You give them to your
snot-nosed kid when he turns 15.

14
00:01:50,278 --> 00:01:52,280
Maybe when he's 30
he makes a hundred bucks.

15
00:01:52,363 --> 00:01:53,656
Boring.

16
00:01:53,740 --> 00:01:55,540
That is, until Lewis Ranieri
came on the scene

17
00:01:55,617 --> 00:01:56,659
at Salomon Brothers.

18
00:02:02,624 --> 00:02:04,834
You might not know who he is,
but he changed your life

19
00:02:04,918 --> 00:02:08,630
more than Michael Jordan,
the iPod and YouTube put together.

20
00:02:10,548 --> 00:02:12,359
All right, gentlemen!
Let's get some money in here!

21
00:02:12,383 --> 00:02:14,052
Let's make some money!
What do you say?

22
00:02:15,970 --> 00:02:17,806
You see,
Lewis didn't know it yet,

23
00:02:17,889 --> 00:02:19,808
but he had already
changed banking forever

24
00:02:19,891 --> 00:02:21,100
with one simple idea.

25
00:02:21,893 --> 00:02:26,564
The mortgage-backed security.
Or private-label MBS.

26
00:02:27,398 --> 00:02:29,234
You've got your
average person's mortgage.

27
00:02:29,317 --> 00:02:30,735
Fixed rate, 30 years.

28
00:02:30,819 --> 00:02:34,155
Boring, safe, small payoff, right? But,

29
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when you have thousands
of them all bundled together,

30
00:02:38,243 --> 00:02:41,788
suddenly the yield goes up
but the risk is still small because,

31
00:02:41,871 --> 00:02:42,871
well, they're mortgages!

32
00:02:42,914 --> 00:02:44,391
And who the hell
doesn't pay their mortgage?

33
00:02:44,415 --> 00:02:46,793
What exactly is the credit
rating on this bond?

34
00:02:46,876 --> 00:02:49,712
This bond, gentlemen, is AAA-rated.

35
00:02:50,255 --> 00:02:53,175
This is exactly what the Michigan state
pension fund has been looking for.

36
00:02:53,424 --> 00:02:54,926
I'll buy $20 million.

37
00:02:55,009 --> 00:02:56,177
Oh, come on, live a little.

38
00:02:56,302 --> 00:02:57,929
$25 million.

39
00:02:58,012 --> 00:03:00,974
The money came raining down,

40
00:03:01,057 --> 00:03:02,559
and for the first time,

41
00:03:02,642 --> 00:03:05,436
the banker went from the country club
to the strip club.

42
00:03:08,064 --> 00:03:11,276
Pretty soon, stocks and savings
were almost inconsequential.

43
00:03:11,442 --> 00:03:13,611
- They were doing $50, $100, $200 billion
- Whoo!

44
00:03:13,695 --> 00:03:16,322
In mortgage bonds and dozens of other
securities a year.

45
00:03:25,957 --> 00:03:28,251
And America barely noticed
as its number one industry

46
00:03:28,334 --> 00:03:30,420
became boring old banking.

47
00:03:34,090 --> 00:03:37,594
And then one day,
almost 30 years later, in 2008,

48
00:03:38,803 --> 00:03:40,555
it all came crashing down.

49
00:03:43,683 --> 00:03:46,436
March.
Bear Stearns was in a death spiral

50
00:03:46,519 --> 00:03:47,937
and the Fed brokered its sale.

51
00:03:48,021 --> 00:03:51,065
It's been called the
worst financial crisis in modern times.

52
00:03:51,399 --> 00:03:55,653
Certainly the largest financial disaster
in decades in this country,

53
00:03:55,737 --> 00:03:58,406
and perhaps the end of an era
in American business.

54
00:03:58,865 --> 00:04:01,117
In the end, Lewis Ranieri's
mortgage-backed security

55
00:04:01,200 --> 00:04:02,869
mutated into a monstrosity that

56
00:04:02,994 --> 00:04:04,662
collapsed the whole world economy.

57
00:04:05,330 --> 00:04:07,330
And none of the experts
or leaders or talking heads

58
00:04:07,373 --> 00:04:08,666
had a clue it was coming.

59
00:04:10,168 --> 00:04:13,129
I'm guessing most of you
still don't really know what happened.

60
00:04:13,630 --> 00:04:16,483
Yeah, you got a soundbite you repeat
so you don't sound dumb, but come on.

61
00:04:16,507 --> 00:04:18,927
Our financial institutions are strong.

62
00:04:20,178 --> 00:04:22,597
But there were some who saw it coming.

63
00:04:22,680 --> 00:04:24,766
While the whole world
was having a big old party,

64
00:04:24,849 --> 00:04:28,102
a few outsiders and weirdos
saw what no one else could.

65
00:04:28,186 --> 00:04:31,773
Not me. I'm not a weirdo.
I'm pretty fucking cool.

66
00:04:31,856 --> 00:04:33,858
But we'll meet again later.

67
00:04:34,359 --> 00:04:37,111
These outsiders saw the giant lie
at the heart of the economy.

68
00:04:37,195 --> 00:04:38,613
And they saw it by doing something

69
00:04:38,696 --> 00:04:41,491
the rest of the suckers
never thought to do.

70
00:04:42,408 --> 00:04:43,743
They looked.

71
00:04:56,547 --> 00:04:58,883
During the 1930s,

72
00:05:00,510 --> 00:05:05,181
the housing market collapsed nationwide

73
00:05:06,557 --> 00:05:08,685
by roughly 80%.

74
00:05:08,768 --> 00:05:13,898
I mean, half of all mortgage debt
was in default.

75
00:05:13,982 --> 00:05:16,651
And, I mean, there were very

76
00:05:17,777 --> 00:05:21,280
specific identifiers,
extremely recognizable.

77
00:05:24,200 --> 00:05:25,243
I mean, for instance,

78
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one of the hallmarks of mania

79
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is the rapid rise

80
00:05:30,373 --> 00:05:32,417
in complexity and the rates of fraud.

81
00:05:32,500 --> 00:05:35,920
And did you know that they're going up?

82
00:05:39,757 --> 00:05:40,758
Whoo!

83
00:05:55,440 --> 00:05:57,358
I've always been

84
00:05:57,442 --> 00:05:59,444
more comfortable alone.

85
00:06:06,743 --> 00:06:11,372
I believe maybe
it's because of my glass eye.

86
00:06:13,791 --> 00:06:16,586
I lost the eye in a childhood illness.

87
00:06:20,923 --> 00:06:23,259
It separates me from people.

88
00:06:27,305 --> 00:06:29,682
And did you know that they are going

89
00:06:29,766 --> 00:06:30,892
up?

90
00:06:30,975 --> 00:06:34,479
The highest fraud rates since the 1930s.

91
00:06:34,562 --> 00:06:36,898
Hey, hey, it's okay. It's okay.

92
00:06:36,981 --> 00:06:38,441
No, I didn't know that.

93
00:06:43,154 --> 00:06:47,325
In 1933, the fourth year
of the Great Depression.

94
00:06:47,492 --> 00:06:49,160
Let's wash it off and put it back in.

95
00:06:49,243 --> 00:06:51,204
You were playing so great, son.

96
00:06:51,329 --> 00:06:53,331
I even heard the coach say it.

97
00:06:54,499 --> 00:06:56,751
Can we just go home?

98
00:06:56,834 --> 00:07:01,005
Most social interactions
are awkward for me and for the person.

99
00:07:01,089 --> 00:07:04,592
Even when I try to compliment someone,

100
00:07:04,675 --> 00:07:06,052
it comes out wrong.

101
00:07:06,969 --> 00:07:10,556
You have a very nice haircut.
Did you do it yourself?

102
00:07:10,973 --> 00:07:12,642
What?

103
00:07:12,725 --> 00:07:15,228
No. No, I...

104
00:07:23,861 --> 00:07:25,696
I'm sorry. I'm just...

105
00:07:31,410 --> 00:07:32,578
I'm going on and on.

106
00:07:32,703 --> 00:07:34,330
My wife told me I need to share more.

107
00:07:34,413 --> 00:07:35,414
Mmm.

108
00:07:36,374 --> 00:07:38,209
- That seems healthy.
- Yeah.

109
00:07:38,292 --> 00:07:39,293
Mmm-hmm.

110
00:07:48,803 --> 00:07:49,804
Uh...

111
00:07:51,013 --> 00:07:52,390
So do I get the job?

112
00:07:52,515 --> 00:07:54,851
I really think I could help your fund.

113
00:07:56,227 --> 00:07:57,603
Yeah.

114
00:07:57,687 --> 00:07:59,313
Yeah, sure. Go on.

115
00:08:02,024 --> 00:08:05,278
- You're...
- David. Great.

116
00:08:05,361 --> 00:08:07,196
I guess I'll go find a desk.

117
00:08:07,280 --> 00:08:09,866
Is there anything you want me
to work on for start...

118
00:08:10,366 --> 00:08:11,367
Uh...

119
00:08:12,910 --> 00:08:14,287
Yeah.

120
00:08:14,370 --> 00:08:16,210
You could let me know later.
I could come back.

121
00:08:18,791 --> 00:08:23,337
Did you think it was strange when, um,

122
00:08:23,421 --> 00:08:25,923
the tech bubble burst in 2001

123
00:08:26,007 --> 00:08:28,801
and the housing market in San Jose,

124
00:08:28,885 --> 00:08:31,095
the tech capital of the world,

125
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went up?

126
00:08:34,432 --> 00:08:35,474
Wasn't that strange?

127
00:08:35,558 --> 00:08:36,558
No.

128
00:08:36,601 --> 00:08:39,187
No, it's housing.
Housing is always stable.

129
00:08:39,270 --> 00:08:40,313
Low risk. It's solid.

130
00:08:40,396 --> 00:08:42,356
That's the idea, yeah.

131
00:08:42,440 --> 00:08:44,192
I want you to get me

132
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the top 20 selling mortgage bonds.

133
00:08:47,570 --> 00:08:50,406
So you want to know what
the top 20 selling mortgage bonds are?

134
00:08:50,489 --> 00:08:54,827
No, no, no, I want to know
what mortgages are in each one.

135
00:08:56,245 --> 00:08:57,885
Okay, aren't those
mortgages made up of...

136
00:08:59,290 --> 00:09:00,750
Wait, aren't those bonds made up

137
00:09:00,833 --> 00:09:02,877
of thousands and thousands
of mortgages?

138
00:09:02,960 --> 00:09:04,420
Yeah.

139
00:09:08,466 --> 00:09:09,967
Right away, Dr. Burry.

140
00:09:29,028 --> 00:09:33,366
I am a nice guy all day long.

141
00:09:33,449 --> 00:09:36,118
Ask anyone, I'm a pleasure to work with.

142
00:09:38,037 --> 00:09:42,375
But the second my son screws up, I am...

143
00:09:43,042 --> 00:09:45,544
yelling at him
just like my dad did to me.

144
00:09:48,589 --> 00:09:50,749
I hear the words that are
coming out of my mouth and...

145
00:09:51,676 --> 00:09:54,470
Sorry I'm late! No cabs.

146
00:09:55,179 --> 00:09:56,180
Oh...

147
00:09:56,639 --> 00:09:58,224
So, get this.

148
00:09:58,975 --> 00:10:01,477
I met with this retail banker yesterday.

149
00:10:01,727 --> 00:10:04,146
I'm supposed to be getting him
to invest in a fund,

150
00:10:04,230 --> 00:10:05,564
but instead

151
00:10:05,648 --> 00:10:08,526
I start grilling him about
overdraft penalties

152
00:10:08,609 --> 00:10:11,612
and how his bank will let
a customer write 10-12 checks

153
00:10:11,696 --> 00:10:13,006
before they tell them they're overdrawn.

154
00:10:13,030 --> 00:10:16,951
And this creep is making billions
off screwing over people this way.

155
00:10:17,034 --> 00:10:18,828
And I'm getting madder and madder.

156
00:10:18,911 --> 00:10:22,290
And I ask him,
I look him in the face and I say,

157
00:10:22,373 --> 00:10:24,208
"How can you sleep at night

158
00:10:24,709 --> 00:10:28,170
"knowing that you are
ripping off working people?"

159
00:10:28,254 --> 00:10:29,964
And you know what he did? He left.

160
00:10:30,047 --> 00:10:32,758
He just walks out of the lunch,
doesn't say a word.

161
00:10:32,842 --> 00:10:33,843
What the fuck is that?

162
00:10:33,926 --> 00:10:36,262
Who's fucked up in that scenario? Am I?

163
00:10:36,345 --> 00:10:38,806
Or is this douchebag,
who leaves me hanging?

164
00:10:38,889 --> 00:10:40,141
Is he the fucked up one?

165
00:10:40,224 --> 00:10:43,019
We have talked about this
numerous times.

166
00:10:43,102 --> 00:10:46,230
You can't come in late
and hijack the entire session.

167
00:10:46,314 --> 00:10:47,833
What do you mean?
I didn't hijack the meeting.

168
00:10:47,857 --> 00:10:48,941
Did I hijack the session?

169
00:10:49,066 --> 00:10:50,192
Yeah.

170
00:10:50,651 --> 00:10:51,819
What do you do?

171
00:10:51,944 --> 00:10:53,112
I'm in commodities.

172
00:10:53,195 --> 00:10:54,488
Good luck with that.

173
00:10:54,572 --> 00:10:58,159
Mark, I know
you suffered a terrible loss.

174
00:10:58,242 --> 00:10:59,618
Maybe you want to talk about that.

175
00:10:59,702 --> 00:11:00,786
I don't talk about that.

176
00:11:00,870 --> 00:11:02,288
Hold on.

177
00:11:02,371 --> 00:11:03,706
Hold on...

178
00:11:03,789 --> 00:11:06,625
Shit, I have to take this. Sorry. Sorry.

179
00:11:07,543 --> 00:11:09,670
No... I don't care, Porter.

180
00:11:09,754 --> 00:11:11,398
This guy's whole business
is built on ripping people off.

181
00:11:11,422 --> 00:11:13,007
How long can that last?

182
00:11:14,467 --> 00:11:15,634
Bye, everybody!

183
00:11:16,719 --> 00:11:18,387
95...

184
00:11:18,637 --> 00:11:20,765
That's 30 days late... Sixty days late...

185
00:11:23,225 --> 00:11:25,686
They pay on time...

186
00:11:28,606 --> 00:11:30,232
These FICO scores...

187
00:11:36,822 --> 00:11:38,949
Late. And they caught up
on their payments...

188
00:11:39,033 --> 00:11:40,534
Another 30 days late...

189
00:11:40,618 --> 00:11:43,871
LTV, 95... LTV, 90...
They caught up on their payments...

190
00:11:43,954 --> 00:11:45,498
Sixty days late? Jesus!

191
00:11:45,581 --> 00:11:47,708
LTV, 110? I've never heard of that!

192
00:11:47,792 --> 00:11:49,126
Thirty days late, rate adjusts...

193
00:11:50,127 --> 00:11:51,379
In '07 rate adjusts...

194
00:11:51,462 --> 00:11:52,630
In '06 rate adjusts...

195
00:11:52,755 --> 00:11:55,049
95... 90... Jesus!

196
00:11:56,759 --> 00:11:58,386
He hasn't moved all day.

197
00:11:58,469 --> 00:12:00,805
He does this every few days.

198
00:12:00,888 --> 00:12:02,556
He hasn't spoken to me
since he hired me.

199
00:12:02,640 --> 00:12:04,058
Maybe the LTV's at... High-risk,

200
00:12:04,141 --> 00:12:06,394
interest-only... I never heard
of that mortgage history,

201
00:12:06,477 --> 00:12:09,230
I never heard of that... How?

202
00:12:09,313 --> 00:12:10,606
Michael, how are you, guy?

203
00:12:10,689 --> 00:12:13,734
Lawrence, I found
something really interesting.

204
00:12:13,818 --> 00:12:15,796
Great, Michael. Whenever you
find something interesting,

205
00:12:15,820 --> 00:12:17,029
we all tend to make money.

206
00:12:17,113 --> 00:12:18,489
What stock are you valuing?

207
00:12:18,614 --> 00:12:19,949
No, no, no, no. No stocks.

208
00:12:20,032 --> 00:12:22,076
I want to short the housing market.

209
00:12:23,494 --> 00:12:26,163
Really? But the housing market
is rock solid.

210
00:12:26,664 --> 00:12:28,082
Greenspan just said

211
00:12:28,165 --> 00:12:30,709
bubbles are regional, defaults are rare.

212
00:12:30,835 --> 00:12:32,962
Tell them I'll be there in a minute.

213
00:12:33,045 --> 00:12:34,839
- Say again?
- Look, look...

214
00:12:34,922 --> 00:12:36,757
Greenspan's wrong.

215
00:12:36,841 --> 00:12:40,261
I don't think you mean to do this,
but sometimes you sound very

216
00:12:40,344 --> 00:12:42,638
dismissive and superior.

217
00:12:42,721 --> 00:12:43,949
It's a fact. Greenspan's wrong.

218
00:12:43,973 --> 00:12:46,308
I don't know
how else you want me to say...

219
00:12:46,392 --> 00:12:47,768
Look, Michael.

220
00:12:47,852 --> 00:12:49,478
Metro Capital backed you four years ago

221
00:12:49,562 --> 00:12:51,355
when you were a doctor with a

222
00:12:51,439 --> 00:12:53,774
dinky webpage
and some inheritance money.

223
00:12:53,858 --> 00:12:54,859
We've all done very well.

224
00:12:54,942 --> 00:12:56,128
Why don't you just stick with stocks?

225
00:12:56,152 --> 00:12:58,279
Look. You know me. I, I, I...

226
00:12:58,362 --> 00:13:02,116
I look for value wherever it can be found.

227
00:13:02,199 --> 00:13:03,284
And the fact is

228
00:13:03,367 --> 00:13:06,579
that these mortgage-backed
securities are filled

229
00:13:06,704 --> 00:13:10,124
with extremely risky
subprime adjustable-rate loans.

230
00:13:10,207 --> 00:13:12,710
And when the majority
of the adjustable rates

231
00:13:12,793 --> 00:13:15,045
kick in, in '07,

232
00:13:15,212 --> 00:13:16,380
they will begin to fail.

233
00:13:16,464 --> 00:13:19,800
And if they fail above 15%,
the whole bond is worthless.

234
00:13:19,884 --> 00:13:22,052
Michael, just take a beat.

235
00:13:22,136 --> 00:13:23,405
We'll talk about this later, okay?

236
00:13:23,429 --> 00:13:26,474
Lawrence, please,
don't patronize me. Listen...

237
00:13:26,557 --> 00:13:28,017
Mortgage-backed securities.

238
00:13:28,100 --> 00:13:29,393
It, it, it...

239
00:13:29,518 --> 00:13:31,312
Subprime loans. Tranches.

240
00:13:31,395 --> 00:13:33,063
It's pretty confusing, right?

241
00:13:33,147 --> 00:13:35,774
Does it make you feel bored?
Or stupid?

242
00:13:35,858 --> 00:13:38,152
Well, it's supposed to.

243
00:13:38,235 --> 00:13:39,835
Wall Street loves to use confusing terms

244
00:13:39,904 --> 00:13:42,573
to make you think only they
can do what they do.

245
00:13:42,907 --> 00:13:44,116
Or, even better,

246
00:13:44,200 --> 00:13:46,577
for you to just leave them the fuck alone.

247
00:13:46,660 --> 00:13:48,700
So here's Margot Robbie
in a bubble bath to explain.

248
00:13:49,872 --> 00:13:52,875
Basically, Lewis Ranieri's
mortgage bonds

249
00:13:52,958 --> 00:13:55,252
were amazingly profitable
for the big banks.

250
00:13:55,336 --> 00:13:59,298
They made billions and billions
on their 2% fee

251
00:13:59,381 --> 00:14:01,592
they got for selling each of these bonds.

252
00:14:01,675 --> 00:14:03,475
But then they started
running out of mortgages

253
00:14:03,552 --> 00:14:05,095
to put in them.

254
00:14:05,179 --> 00:14:07,848
After all, there are only so many homes

255
00:14:07,932 --> 00:14:11,685
and so many people with
good enough jobs to buy them, right?

256
00:14:11,769 --> 00:14:13,854
So the banks started filling these bonds

257
00:14:13,938 --> 00:14:16,106
with riskier and riskier mortgages.

258
00:14:16,190 --> 00:14:17,358
Thank you, Benter.

259
00:14:17,441 --> 00:14:21,987
That way they can keep
that profit machine churning, right?

260
00:14:22,071 --> 00:14:26,450
By the way, these risky mortgages
are called subprime.

261
00:14:26,534 --> 00:14:28,911
So whenever you hear "subprime", think

262
00:14:28,994 --> 00:14:30,454
"shit".

263
00:14:30,538 --> 00:14:34,083
Our friend Michael Burry found out
that these mortgage bonds

264
00:14:34,166 --> 00:14:37,378
that were supposedly 65% AAA

265
00:14:37,461 --> 00:14:40,214
were actually just mostly full of shit.

266
00:14:40,798 --> 00:14:43,551
So now he's going to "short" the bonds.

267
00:14:43,634 --> 00:14:45,636
Which means to "bet against".

268
00:14:46,470 --> 00:14:47,513
Got it?

269
00:14:48,222 --> 00:14:49,473
Good.

270
00:14:52,560 --> 00:14:53,852
Now fuck off.

271
00:14:53,936 --> 00:14:56,331
It's only a matter of time before
someone else sees this investment.

272
00:14:56,355 --> 00:14:58,065
We have to act now!

273
00:14:58,148 --> 00:15:00,401
How do you know
the bonds are worthless?

274
00:15:00,484 --> 00:15:02,695
Aren't they filled with fucking thousands

275
00:15:02,778 --> 00:15:03,904
of pages of mortgages?

276
00:15:03,988 --> 00:15:06,240
I read them.

277
00:15:06,323 --> 00:15:08,242
- You read them?
- I read... Yes.

278
00:15:08,325 --> 00:15:11,537
No one reads them. Only the lawyers
who put them together read them.

279
00:15:11,620 --> 00:15:16,333
Look, I don't think that they
even know what they've made.

280
00:15:16,458 --> 00:15:19,712
The housing market
is propped up on these

281
00:15:20,004 --> 00:15:22,673
bad loans, and I'm...

282
00:15:22,756 --> 00:15:24,800
It's a time bomb, and I want to short it.

283
00:15:24,883 --> 00:15:27,177
Through what instrument, Michael?

284
00:15:27,261 --> 00:15:30,264
There are no insurance contracts
or options for mortgage bonds.

285
00:15:30,347 --> 00:15:31,599
The bonds are too stable.

286
00:15:31,724 --> 00:15:33,017
Lawrence...

287
00:15:36,353 --> 00:15:40,190
This is what I'm gonna do.
I am gonna get a bank

288
00:15:40,524 --> 00:15:42,568
to make me one.

289
00:15:43,193 --> 00:15:44,862
And then

290
00:15:45,696 --> 00:15:47,406
I'm gonna buy it.

291
00:15:48,824 --> 00:15:50,576
I don't want that kind of business.

292
00:15:50,659 --> 00:15:53,329
Money is not money.
That's bad money.

293
00:15:53,996 --> 00:15:56,206
Hey! Excuse me!

294
00:15:57,583 --> 00:16:00,502
Let me ask you this.
What company treats its customers

295
00:16:00,586 --> 00:16:03,172
that shittily and succeeds?

296
00:16:04,048 --> 00:16:05,883
Fine. Okay, Goldman. You're right.

297
00:16:05,966 --> 00:16:07,301
Mark Baum had built his career

298
00:16:07,384 --> 00:16:09,428
on never assuming anyone
or any company

299
00:16:09,511 --> 00:16:11,180
was legit without proving it.

300
00:16:11,263 --> 00:16:12,824
When he was a kid
he excelled at studying

301
00:16:12,848 --> 00:16:14,892
the Talmud in Yeshiva. Whatever.

302
00:16:14,975 --> 00:16:16,852
But one day his rabbi told his mom why.

303
00:16:18,062 --> 00:16:21,065
Paul is a fine boy,
and Mark is an excellent student

304
00:16:21,190 --> 00:16:23,776
of the Torah and the Talmud.

305
00:16:23,859 --> 00:16:25,819
Then what's the problem, rabbi?

306
00:16:25,903 --> 00:16:29,073
It's the reason Mark is studying so hard.

307
00:16:29,907 --> 00:16:33,077
He's looking for inconsistencies
in the word of God!

308
00:16:35,829 --> 00:16:37,998
So has he found any?

309
00:16:39,083 --> 00:16:42,336
Later, Baum started
his own fund on Wall Street.

310
00:16:42,419 --> 00:16:43,859
He had an amazing nose for bullshit.

311
00:16:43,921 --> 00:16:45,982
And he wasn't afraid to let
anyone know when and where

312
00:16:46,006 --> 00:16:48,634
the bull had gone number two.

313
00:16:48,717 --> 00:16:50,344
But then a tragedy happened to Mark,

314
00:16:50,427 --> 00:16:51,887
and it turned his world view dark

315
00:16:51,970 --> 00:16:54,306
and ready to believe
the whole system was a lie.

316
00:16:54,390 --> 00:16:55,933
Hold on.

317
00:16:56,016 --> 00:16:58,852
It's Cynthia.
I'll be in the office in 20 minutes.

318
00:16:59,770 --> 00:17:00,938
Hi, honey.

319
00:17:02,439 --> 00:17:06,110
The therapist called. You did it again.

320
00:17:06,527 --> 00:17:09,279
There were no cabs.
What was I supposed to do?

321
00:17:09,363 --> 00:17:11,031
I worry about you, Mark.

322
00:17:11,115 --> 00:17:12,449
At least I went.

323
00:17:13,742 --> 00:17:15,703
You're running around
like you have to right

324
00:17:15,786 --> 00:17:17,621
- every wrong in the world.
- Okay.

325
00:17:17,746 --> 00:17:18,914
You're so angry.

326
00:17:18,997 --> 00:17:20,416
Fine. You know what?

327
00:17:20,499 --> 00:17:23,419
I'm a mean guy and I'm pissed off.

328
00:17:23,502 --> 00:17:25,421
But it is a shit storm out here, sweetie.

329
00:17:25,504 --> 00:17:28,799
You have no idea
the kind of crap people are pulling.

330
00:17:28,882 --> 00:17:31,552
And everyone's walking around like
they're in a goddamn Enya video.

331
00:17:33,262 --> 00:17:34,781
They're all getting screwed, you know.

332
00:17:34,805 --> 00:17:37,391
You know what they care about?
They care about the ballgame.

333
00:17:37,474 --> 00:17:40,352
Or they care about
what actress just went into rehab.

334
00:17:40,436 --> 00:17:42,479
I think you should try medication.

335
00:17:42,563 --> 00:17:45,733
No, no. We agreed.
If it interfered with work.

336
00:17:45,816 --> 00:17:47,651
You hate Wall Street.
Maybe it's time to quit.

337
00:17:48,152 --> 00:17:50,112
- I love my job.
- You hate your job.

338
00:17:50,195 --> 00:17:51,196
I love my job.

339
00:17:51,280 --> 00:17:52,280
You're miserable.

340
00:17:52,322 --> 00:17:54,324
I love my job. I love my job, honey.

341
00:17:55,284 --> 00:17:56,577
Mark...

342
00:17:57,786 --> 00:18:00,873
I am sad every day
about what happened.

343
00:18:00,956 --> 00:18:04,293
I know you must feel the same,
but you never show it.

344
00:18:10,549 --> 00:18:13,051
I know how close you
were to your brother.

345
00:18:16,430 --> 00:18:17,514
Paul.

346
00:18:18,557 --> 00:18:20,184
Where'd you go, Paul?

347
00:18:25,439 --> 00:18:26,690
Paul!

348
00:18:32,362 --> 00:18:35,115
Every day I think you're
gonna talk about it, but you never do.

349
00:18:38,994 --> 00:18:42,748
Will you at least think about the idea
of making a change?

350
00:18:42,831 --> 00:18:45,667
Fine. Fine. Honey, you know what?
I will consider it.

351
00:18:45,751 --> 00:18:49,129
But, honestly, Cynthia.
I'm okay. I really am.

352
00:18:49,213 --> 00:18:51,173
Hey, hey, hey! No, no.

353
00:18:51,256 --> 00:18:54,635
My cab. That's my cab.
That's my cab. That is my cab.

354
00:18:54,718 --> 00:18:56,303
- Schmuck. Fuck you.
- Fuck you.

355
00:18:56,386 --> 00:18:57,888
- Fuck you.
- Fuck you.

356
00:18:59,056 --> 00:19:00,557
I'll call you later.

357
00:19:07,940 --> 00:19:12,027
I want to buy swaps on mortgage bonds.

358
00:19:12,110 --> 00:19:14,446
A credit default swap that will pay off

359
00:19:15,489 --> 00:19:17,991
if the underlying bond fails.

360
00:19:18,826 --> 00:19:20,386
You want to bet against
the housing market?

361
00:19:20,410 --> 00:19:22,371
- Yes.
- Why?

362
00:19:22,454 --> 00:19:23,622
Those bonds only fail

363
00:19:23,705 --> 00:19:26,166
if millions of Americans
don't pay their mortgages.

364
00:19:26,250 --> 00:19:28,669
That's never happened in history.

365
00:19:28,752 --> 00:19:31,672
If you'll excuse me, Dr. Burry,
it seems like a foolish investment.

366
00:19:31,755 --> 00:19:34,508
Well, based on prevailing sentiment

367
00:19:34,591 --> 00:19:36,635
of the market and banks
in popular culture,

368
00:19:36,718 --> 00:19:39,012
yes, it's a foolish investment.

369
00:19:39,096 --> 00:19:41,598
But, uh... Everyone's wrong.

370
00:19:43,183 --> 00:19:44,685
That's a good one.

371
00:19:47,020 --> 00:19:48,689
This is Wall Street, Dr. Burry.

372
00:19:48,772 --> 00:19:50,792
If you offer us free money,
we are going to take it.

373
00:19:50,816 --> 00:19:55,445
My one concern is that
when the bonds fail,

374
00:19:56,572 --> 00:20:00,117
uh, I want to be certain, um, of payment

375
00:20:00,200 --> 00:20:02,953
um, in case of solvency issues
with your bank.

376
00:20:03,954 --> 00:20:06,331
I'm sorry, are you for real?

377
00:20:06,415 --> 00:20:08,041
You wanna bet against
the housing market

378
00:20:08,125 --> 00:20:09,519
and you're worried we won't pay you?

379
00:20:09,543 --> 00:20:11,128
Yes, that's correct.

380
00:20:22,472 --> 00:20:24,352
Unless the market crashes.

381
00:20:24,474 --> 00:20:26,685
The market
on housing's never gonna crash

382
00:20:26,768 --> 00:20:29,563
because it's so solid right now.

383
00:20:29,646 --> 00:20:32,399
I mean, who doesn't
pay their mortgages?

384
00:20:36,320 --> 00:20:37,321
Mmm-hmm.

385
00:20:39,615 --> 00:20:40,657
Dr. Burry,

386
00:20:40,741 --> 00:20:43,076
we could work out
a pay-as-we-go structure

387
00:20:43,160 --> 00:20:45,162
that would pay out if the bonds fail.

388
00:20:45,245 --> 00:20:46,806
But it would also apply to your payments

389
00:20:46,830 --> 00:20:48,790
if the value of the mortgage bond
goes up.

390
00:20:48,874 --> 00:20:51,585
You'd have to pay us monthly premiums.

391
00:20:51,668 --> 00:20:54,379
Is that acceptable, Dr. Burry?

392
00:20:56,840 --> 00:20:58,175
Yes. Yes.

393
00:20:59,051 --> 00:21:01,595
Um, I have prospectuses on six

394
00:21:01,678 --> 00:21:04,556
mortgage-backed securities
I want to short.

395
00:21:09,019 --> 00:21:10,859
Majority of the mortgages...

396
00:21:22,074 --> 00:21:24,618
I don't see us
losing any money on these at all.

397
00:21:38,090 --> 00:21:40,759
Dr. Burry, these should be fine.

398
00:21:40,842 --> 00:21:42,761
Yeah. We're prepared
to sell you $5 million

399
00:21:42,844 --> 00:21:44,724
in credit default swaps
on these mortgage bonds.

400
00:21:45,931 --> 00:21:47,349
Can we make it $100 million?

401
00:21:50,227 --> 00:21:52,604
Uh, absolutely,
we can make it $100 million.

402
00:21:54,189 --> 00:21:57,401
We'll be in touch,
send some paperwork over.

403
00:21:58,235 --> 00:21:59,236
Um...

404
00:22:00,362 --> 00:22:01,738
I like these cups.

405
00:22:01,822 --> 00:22:03,490
Can I take one for my son?

406
00:22:03,573 --> 00:22:05,325
Have... Yes. Yes.

407
00:22:05,409 --> 00:22:06,910
Thank you.

408
00:22:06,994 --> 00:22:08,370
Have two.

409
00:22:28,348 --> 00:22:31,351
Is there any way to do $200 million?

410
00:22:32,811 --> 00:22:35,439
I mean, we can. But are you sure?

411
00:22:36,356 --> 00:22:39,526
Absolutely. Absolutely, we can do that.

412
00:22:53,248 --> 00:22:56,626
We do different projects.
We do gardening.

413
00:22:56,710 --> 00:22:59,963
The bonds I'd like to bet against.

414
00:23:00,172 --> 00:23:01,733
It's not bad seeing yourself
on the big screen.

415
00:23:01,757 --> 00:23:02,758
It's very cool.

416
00:23:03,800 --> 00:23:07,471
I ordered the 24-ounce T-bone,
which was choice.

417
00:23:07,554 --> 00:23:09,014
- I went for volume...
- Yeah.

418
00:23:09,097 --> 00:23:10,724
Rather than prime.

419
00:23:10,807 --> 00:23:13,477
I went for subprime, and the gist was...

420
00:23:20,817 --> 00:23:23,320
Can I have like, lettuce,
tomato, no onions?

421
00:23:23,945 --> 00:23:27,240
So, no onions.
Lettuce, tomato, Thousand Island okay?

422
00:23:27,324 --> 00:23:28,325
Yeah.

423
00:23:35,373 --> 00:23:37,084
Hey, Randall! What's with the Dom?

424
00:23:37,167 --> 00:23:39,044
Bonuses aren't for three months.

425
00:23:39,127 --> 00:23:43,090
We just sold $200 million
in credit swaps for mortgage bonds.

426
00:23:43,173 --> 00:23:45,342
Some fund manager from California.

427
00:23:45,467 --> 00:23:46,802
It's fucking crazy, right?

428
00:23:46,885 --> 00:23:48,029
A whole new way to make money, Doug.

429
00:23:48,053 --> 00:23:50,305
Wait, wait. I didn't know
there were swaps on mortgages.

430
00:23:50,388 --> 00:23:52,974
There are now.
We made it for him.

431
00:23:53,058 --> 00:23:54,786
He must have gone off
his Zoloft or something.

432
00:23:54,810 --> 00:23:56,144
I don't know.

433
00:23:56,228 --> 00:23:57,979
- Want to join? No?
- Just a second.

434
00:23:58,063 --> 00:23:59,064
Oh...

435
00:23:59,231 --> 00:24:00,649
Hey, Jared.

436
00:24:00,732 --> 00:24:02,251
Did you hear about the deal
that Randall just did

437
00:24:02,275 --> 00:24:03,485
with some fund manager?

438
00:24:03,568 --> 00:24:05,362
Randall? Bullshit.

439
00:24:05,821 --> 00:24:07,661
He's a foot soldier.
I'm sure it's a shit deal.

440
00:24:07,739 --> 00:24:08,990
No, it's for real.

441
00:24:10,200 --> 00:24:11,618
I told you we'd meet later.

442
00:24:11,701 --> 00:24:14,180
Unfortunately, it's in a place like this
which I would never be.

443
00:24:14,204 --> 00:24:16,873
I never hung out with
these idiots after work, ever.

444
00:24:16,957 --> 00:24:18,750
I had fashion friends.

445
00:24:19,167 --> 00:24:22,504
Apparently, this guy wanted $200 mil
in credit default swaps.

446
00:24:22,587 --> 00:24:24,339
Randall made the sale.
Can you believe it?

447
00:24:24,422 --> 00:24:26,633
Somebody shorted $200 mil
on mortgage bonds?

448
00:24:26,716 --> 00:24:30,137
That was just with Deutsche.
Word is he hit half the town.

449
00:24:31,012 --> 00:24:32,139
How much in total?

450
00:24:32,222 --> 00:24:33,932
$1.3 billion.

451
00:24:34,015 --> 00:24:37,853
What? That's pretty much
all of Scion's liquidity.

452
00:24:37,936 --> 00:24:40,021
Michael, this is highly distressing.

453
00:24:40,105 --> 00:24:41,523
Lawrence, that is not

454
00:24:41,606 --> 00:24:44,151
all of our liquidity.

455
00:24:44,234 --> 00:24:45,443
And I'm not certain

456
00:24:45,527 --> 00:24:47,737
that you really understand this trade.

457
00:24:47,863 --> 00:24:48,905
This is a certainty.

458
00:24:48,989 --> 00:24:52,075
Mike, I consider myself a mentor to you.

459
00:24:52,159 --> 00:24:55,996
But our company is not comfortable
with this investment. Am I being clear?

460
00:24:56,079 --> 00:24:58,331
Lawrence, I have full autonomy

461
00:24:58,415 --> 00:25:01,334
when it comes to investment strategy.

462
00:25:01,418 --> 00:25:02,544
You can read our agreement.

463
00:25:02,627 --> 00:25:05,964
Do not throw our inception agreement
in my face, Michael.

464
00:25:06,047 --> 00:25:08,425
We had an underlying understanding

465
00:25:08,592 --> 00:25:09,861
you wouldn't act like
a goddamn crazy man.

466
00:25:09,885 --> 00:25:11,469
This is not crazy.

467
00:25:11,553 --> 00:25:13,013
It's all very logical.

468
00:25:13,096 --> 00:25:15,307
So, now we pay up premiums
on these swaps

469
00:25:15,891 --> 00:25:18,643
against the housing market
until the mortgages fail?

470
00:25:18,727 --> 00:25:20,395
In other words, we lose millions

471
00:25:20,520 --> 00:25:23,190
until something that's
never happened before happens?

472
00:25:27,068 --> 00:25:28,069
That's correct.

473
00:26:01,603 --> 00:26:02,854
Hello, Mark Baum.

474
00:26:02,938 --> 00:26:05,023
Oh, hey, Kathy, you busted me.

475
00:26:05,106 --> 00:26:06,125
I had a personal thing this afternoon.

476
00:26:06,149 --> 00:26:07,150
I'm not your babysitter.

477
00:26:07,234 --> 00:26:09,861
If FrontPoint makes money
for Morgan Stanley, I'm happy.

478
00:26:09,945 --> 00:26:12,239
Okay. Hey, did I hear you're expecting?

479
00:26:12,322 --> 00:26:13,698
We're expecting to be expecting.

480
00:26:13,782 --> 00:26:15,509
IVF's are cleaning us out
but we're staying positive...

481
00:26:15,533 --> 00:26:17,035
That's exciting!

482
00:26:21,164 --> 00:26:24,167
Lump on my ball.
And I go in for a scan.

483
00:26:24,292 --> 00:26:25,293
Mmm-hmm.

484
00:26:25,377 --> 00:26:29,089
Turns out that I have a very large thing
called an epididymis.

485
00:26:29,172 --> 00:26:31,716
Which is a thing
that goes around the ball

486
00:26:31,800 --> 00:26:33,510
and is like a sac underneath.

487
00:26:33,593 --> 00:26:34,636
I have an extremely

488
00:26:34,719 --> 00:26:36,554
- pronounced epididymis.
- I'm riveted...

489
00:26:36,638 --> 00:26:38,682
I'm riveted by this.
Do you have any pictures?

490
00:26:38,765 --> 00:26:42,310
It's almost as large
as another testicle unto itself.

491
00:26:42,394 --> 00:26:44,479
So get this. Cynthia...

492
00:26:44,562 --> 00:26:47,607
Guys. Cynthia wants me to quit
and open a B&B in Vermont.

493
00:26:48,900 --> 00:26:52,279
That sounds great. I'd love to see
Mark Baum run a bed and breakfast.

494
00:26:52,362 --> 00:26:54,322
Like, "Here's your
steel-cut oatmeal, asshole."

495
00:26:54,406 --> 00:26:56,992
Mark refused to kiss the ring
of the people with the checkbooks,

496
00:26:57,075 --> 00:27:00,120
so he had to set up his fund
under Morgan Stanley's umbrella.

497
00:27:01,371 --> 00:27:03,915
His small team reflected
his distrust of the system.

498
00:27:03,999 --> 00:27:05,417
You guys are sick. You're sick.

499
00:27:05,542 --> 00:27:07,669
She says this job is making me unhappy.

500
00:27:07,752 --> 00:27:08,854
But you're happy
when you're unhappy.

501
00:27:08,878 --> 00:27:10,380
I am happy when I'm unhappy.

502
00:27:10,463 --> 00:27:11,464
Vinnie Daniel.

503
00:27:11,548 --> 00:27:12,733
You know how to make a muffin?

504
00:27:12,757 --> 00:27:14,477
- Mark's numbers guy.
- Do you even know how

505
00:27:14,551 --> 00:27:16,031
- to do laundry? Make a bed?
- Okay...

506
00:27:16,094 --> 00:27:18,722
Vinnie lost his father to a violent crime
when he was young.

507
00:27:18,805 --> 00:27:20,640
Just like Mark, he didn't talk about it.

508
00:27:20,724 --> 00:27:21,975
I don't talk about that.

509
00:27:22,058 --> 00:27:24,453
Cynthia's no joke. She could
actually make him move to Vermont.

510
00:27:24,477 --> 00:27:26,205
I mean, she made me
start wearing a seatbelt.

511
00:27:26,229 --> 00:27:27,939
- Hey, you want me to...
- Porter Collins.

512
00:27:28,064 --> 00:27:30,233
Former Olympic rower
who went to Brown.

513
00:27:30,317 --> 00:27:31,985
He worked with Baum at a previous firm

514
00:27:32,068 --> 00:27:34,046
and couldn't figure out
why no one listened to Baum.

515
00:27:34,070 --> 00:27:36,156
The guy with all the good ideas.

516
00:27:36,239 --> 00:27:38,033
Sorry. I think you have
the wrong FrontPoint.

517
00:27:38,158 --> 00:27:40,958
'Cause there is another FrontPoint
in this same building that is bonds.

518
00:27:40,994 --> 00:27:43,747
And Danny Moses.
The optimist of the bunch.

519
00:27:44,664 --> 00:27:45,874
And a hell of a trader.

520
00:27:45,957 --> 00:27:49,085
Which is the only reason they put up
with his bullshit optimism.

521
00:27:49,169 --> 00:27:50,420
That was a weird call.

522
00:27:50,503 --> 00:27:53,798
You take longer with a wrong number
than anybody else.

523
00:27:53,882 --> 00:27:56,509
It was this guy from Deutsche

524
00:27:56,593 --> 00:27:59,179
who was talking about
shorting housing bonds.

525
00:28:00,555 --> 00:28:01,824
And then in the middle of the call

526
00:28:01,848 --> 00:28:03,075
I realized he had the wrong FrontPoint.

527
00:28:03,099 --> 00:28:05,435
And then... 'Cause he wanted
the one on the 8th floor.

528
00:28:06,102 --> 00:28:08,021
He wanted to short housing bonds?

529
00:28:08,104 --> 00:28:09,206
Uh-huh. That happens
like five times a day

530
00:28:09,230 --> 00:28:10,750
that somebody gets
the wrong FrontPoint.

531
00:28:10,774 --> 00:28:12,942
- We should change our name.
- Wait. Wait.

532
00:28:13,026 --> 00:28:14,986
He wanted to short housing bonds?

533
00:28:15,278 --> 00:28:17,238
Who bets against housing?

534
00:28:18,031 --> 00:28:19,240
What's the ABX at?

535
00:28:19,366 --> 00:28:20,533
What's ABX?

536
00:28:20,617 --> 00:28:23,453
It tracks subprime mortgage bond value.
Go back to sleep.

537
00:28:23,870 --> 00:28:26,164
The ABX is at, uh...

538
00:28:26,289 --> 00:28:29,542
Wow, it's down! It's down
three points since last year.

539
00:28:29,626 --> 00:28:31,878
That's weird. I haven't
heard a peep about that.

540
00:28:31,961 --> 00:28:33,004
What was this guy's name?

541
00:28:33,088 --> 00:28:35,215
Jared Vennett. Vennett.

542
00:28:35,298 --> 00:28:37,550
That's right.
These lucky sons of bitches

543
00:28:37,634 --> 00:28:40,387
caught wind of one of the best trades
in Wall Street history

544
00:28:40,470 --> 00:28:42,055
from a wrong number.

545
00:28:42,138 --> 00:28:44,391
They should have paid 10%
to my fuckstick assistant.

546
00:28:44,474 --> 00:28:46,810
His name was
Jared Vennett. Vennett.

547
00:28:46,893 --> 00:28:48,788
Jared Vennett from Deutsche.
Sounded very sketchy.

548
00:28:48,812 --> 00:28:50,092
Sounds like a douchebag.

549
00:28:50,647 --> 00:28:52,440
Do you smell that?

550
00:28:52,524 --> 00:28:53,858
Do you smell that?

551
00:28:53,983 --> 00:28:55,235
I smell money.

552
00:28:56,027 --> 00:28:57,445
This is your basic mortgage...

553
00:29:01,241 --> 00:29:03,410
Okay, hi. How are you?

554
00:29:03,952 --> 00:29:05,161
Have a seat.

555
00:29:05,245 --> 00:29:07,997
Okay, Mr. Vennett
from Deutsche Bank. What do we have?

556
00:29:12,544 --> 00:29:14,129
There you go.

557
00:29:17,590 --> 00:29:20,135
So, how many people
have you talked to about this trade?

558
00:29:20,218 --> 00:29:22,971
A few. There's definitely some interest.

559
00:29:23,054 --> 00:29:24,472
- No!
- My boss would have my ass...

560
00:29:24,556 --> 00:29:25,974
- N.O.!
- You crazy, Jared?

561
00:29:26,057 --> 00:29:27,600
- Get lost.
- Fuck you.

562
00:29:28,351 --> 00:29:31,146
Which is why you're here talking to us,
a wrong number.

563
00:29:31,229 --> 00:29:32,706
Sounds like there's a lot of interest.

564
00:29:32,730 --> 00:29:35,066
All right. A few people have invited us in

565
00:29:35,150 --> 00:29:37,527
just to laugh at me on this deal.
Is that you?

566
00:29:37,610 --> 00:29:38,611
Is that what this is?

567
00:29:38,695 --> 00:29:39,737
That's not what this is.

568
00:29:39,821 --> 00:29:41,614
That's just how Mark is.

569
00:29:41,698 --> 00:29:43,050
- Let's see what you got.
- I'm sorry.

570
00:29:43,074 --> 00:29:44,742
You smell that? What is that?

571
00:29:44,868 --> 00:29:46,286
- What?
- What's that smell?

572
00:29:46,703 --> 00:29:47,704
Your cologne?

573
00:29:47,787 --> 00:29:48,830
No.

574
00:29:51,082 --> 00:29:52,375
Opportunity.

575
00:29:52,500 --> 00:29:53,793
No. Money.

576
00:29:53,877 --> 00:29:55,170
- Oh...
- Okay.

577
00:29:55,253 --> 00:29:56,796
- I smell money.
- Okay.

578
00:29:57,297 --> 00:29:59,966
- Chris, God damn it.
- Sorry.

579
00:30:03,178 --> 00:30:05,597
This is your
basic mortgage bond.

580
00:30:05,680 --> 00:30:07,932
All right? The originals were simple.

581
00:30:08,016 --> 00:30:11,686
They were just thousands
of AAA mortgages bundled together,

582
00:30:11,769 --> 00:30:13,521
guaranteed by the U.S. government.

583
00:30:13,605 --> 00:30:15,440
The modern ones are different.

584
00:30:15,523 --> 00:30:18,443
They're private. And they're
made up of layers of tranches.

585
00:30:23,698 --> 00:30:26,117
The highest level, AAA,
is getting paid first.

586
00:30:26,201 --> 00:30:29,370
The lowest rated, B, is getting paid last,
taking on defaults first.

587
00:30:29,454 --> 00:30:32,123
Now, obviously, if you're buying B's,
you could make more money.

588
00:30:32,207 --> 00:30:33,374
But they're a little risky.

589
00:30:33,458 --> 00:30:35,627
Sometimes they fail.

590
00:30:36,878 --> 00:30:38,213
Chris?

591
00:30:42,050 --> 00:30:44,302
Somewhere along the line,
these B's and BB's

592
00:30:44,385 --> 00:30:45,845
went from a little risky

593
00:30:45,929 --> 00:30:48,348
to dog shit. Where's the trash?

594
00:30:48,431 --> 00:30:49,631
It's right behind you.

595
00:30:49,807 --> 00:30:52,685
I'm talking rock-bottom FICO scores.

596
00:30:53,895 --> 00:30:55,396
No income verification.

597
00:30:56,606 --> 00:30:59,442
Adjustable rates. Dog shit!

598
00:31:00,902 --> 00:31:03,738
The default rates are already up
from 1% to 4%, fellas.

599
00:31:03,821 --> 00:31:06,032
And if they rise to 8%, and they will,

600
00:31:06,824 --> 00:31:09,077
a lot of these BBB's
are going to zero, too.

601
00:31:09,160 --> 00:31:10,578
And that... You're too close.

602
00:31:12,330 --> 00:31:13,331
Is an opportunity.

603
00:31:13,414 --> 00:31:14,414
Okay.

604
00:31:14,457 --> 00:31:18,086
You're saying that at 8% the bonds fail
and we are already at 4%?

605
00:31:18,169 --> 00:31:19,170
That's right.

606
00:31:19,254 --> 00:31:21,047
If they go to 8%, it's Armageddon?

607
00:31:21,130 --> 00:31:22,131
Yeah. That's right.

608
00:31:22,257 --> 00:31:23,967
How come nobody's talking about this?

609
00:31:24,092 --> 00:31:26,219
You're completely sure of the math?

610
00:31:26,302 --> 00:31:28,888
Look at him. That's my quant.

611
00:31:28,972 --> 00:31:30,014
Your what?

612
00:31:30,098 --> 00:31:31,891
My quantitative!

613
00:31:31,975 --> 00:31:34,644
My math specialist. Look at him.

614
00:31:34,769 --> 00:31:37,105
You notice anything different about him?
Look at his face.

615
00:31:37,188 --> 00:31:38,268
That's pretty racist.

616
00:31:38,314 --> 00:31:40,817
Look at his eyes!
I'll give you a hint.

617
00:31:40,900 --> 00:31:42,443
His name's Yang!

618
00:31:43,611 --> 00:31:46,906
He won a national
math competition in China!

619
00:31:46,990 --> 00:31:49,492
He doesn't even speak English!

620
00:31:49,576 --> 00:31:51,244
Yeah, I'm sure of the math.

621
00:31:52,954 --> 00:31:56,749
Actually, my name's Jiang
and I do speak English.

622
00:31:56,833 --> 00:31:58,352
Jared likes to say I don't
because he thinks

623
00:31:58,376 --> 00:32:00,211
it makes me seem more authentic.

624
00:32:00,295 --> 00:32:02,839
And I got second in that
national math competition.

625
00:32:03,423 --> 00:32:08,303
So you're offering us a chance
to short this pile of blocks? How?

626
00:32:08,386 --> 00:32:10,847
With something called
a credit default swap.

627
00:32:12,140 --> 00:32:14,642
It's like insurance on the bond,
and if it goes bust

628
00:32:14,726 --> 00:32:17,895
you can make 10-to-1,
even 20-to-1 return.

629
00:32:17,979 --> 00:32:20,106
And it's already slowly going bust!

630
00:32:20,356 --> 00:32:22,442
10-to-1? 20-to-1? No way.

631
00:32:22,525 --> 00:32:24,485
And no one's paying attention.

632
00:32:24,986 --> 00:32:27,405
No one is paying attention!

633
00:32:27,488 --> 00:32:30,950
Because the banks are too busy
getting paid obscene fees

634
00:32:31,034 --> 00:32:32,327
to sell these bonds.

635
00:32:32,410 --> 00:32:35,163
But wait. You are the bank.
You work for the bank.

636
00:32:35,246 --> 00:32:37,290
I bet your margins are pretty nice and fat.

637
00:32:37,373 --> 00:32:39,667
Let's not talk about
my margins, by the way.

638
00:32:39,751 --> 00:32:42,311
Being nice and fat, that's a nice shirt.
Do they make it for men?

639
00:32:43,171 --> 00:32:44,171
Aren't you the bank?

640
00:32:44,213 --> 00:32:47,133
I work for the bank.
I don't think like a bank.

641
00:32:47,216 --> 00:32:51,095
Big bank, small bank,
I like to make money. All right?

642
00:32:51,179 --> 00:32:53,890
Let me put it this way.
I'm standing in front of a burning house...

643
00:32:54,015 --> 00:32:56,768
And I'm offering you fire insurance on it.

644
00:32:56,851 --> 00:32:59,354
How can these underlying bonds
be as bad as you say?

645
00:32:59,479 --> 00:33:00,688
It wouldn't be legal.

646
00:33:00,772 --> 00:33:02,732
Nobody knows what's in them.

647
00:33:02,815 --> 00:33:04,317
Nobody knows what's in the bonds.

648
00:33:04,400 --> 00:33:07,487
I've seen some that are 65% AAA-rated

649
00:33:07,570 --> 00:33:10,531
that I know for a fact are filled with 95%

650
00:33:10,615 --> 00:33:13,409
subprime shit with FICOs below 550!

651
00:33:13,868 --> 00:33:14,994
Get the fuck out of here.

652
00:33:15,078 --> 00:33:16,513
You want me to really blow your mind?

653
00:33:16,537 --> 00:33:18,140
When the market deems
a bond too risky to buy,

654
00:33:18,164 --> 00:33:20,375
what do you think we do with it?

655
00:33:20,458 --> 00:33:21,584
Take a guess.

656
00:33:21,668 --> 00:33:23,086
I don't know. You tell me.

657
00:33:23,169 --> 00:33:27,090
All right. You think we just
warehouse it on the books? No.

658
00:33:27,173 --> 00:33:29,092
We just repackage it
with a bunch of other shit

659
00:33:29,175 --> 00:33:31,260
that didn't sell and put it into a CDO.

660
00:33:32,095 --> 00:33:34,138
- A CDO?
- Yes. A CDO.

661
00:33:34,931 --> 00:33:36,742
- What is that?
- This is where we take a bunch of B's,

662
00:33:36,766 --> 00:33:38,935
BB's and BBB's that haven't sold,

663
00:33:39,018 --> 00:33:40,698
and we put them in a pile.

664
00:33:42,230 --> 00:33:44,190
And when the pile
gets large enough,

665
00:33:44,315 --> 00:33:46,859
the whole thing is suddenly
considered diversified

666
00:33:46,943 --> 00:33:51,656
and the whores at the rating agency
give it a 92%-93% AAA rating,

667
00:33:51,739 --> 00:33:53,741
no questions asked.

668
00:33:55,410 --> 00:33:57,912
Hold it. What? Say that again.

669
00:33:58,204 --> 00:34:00,456
A collateralized debt obligation.

670
00:34:00,540 --> 00:34:02,101
It's important to understand
because it's what allowed

671
00:34:02,125 --> 00:34:06,254
a housing crisis to become
a nationwide economic disaster.

672
00:34:06,337 --> 00:34:09,549
Here's world-famous chef
Anthony Bourdain to explain.

673
00:34:14,137 --> 00:34:15,805
Okay, I'm a chef
on a Sunday afternoon

674
00:34:15,972 --> 00:34:17,640
setting the menu at a big restaurant.

675
00:34:17,807 --> 00:34:19,225
I ordered my fish on Friday,

676
00:34:19,308 --> 00:34:22,019
which is the mortgage bond
that Michael Burry shorted.

677
00:34:22,228 --> 00:34:24,230
But some of the fresh fish doesn't sell.

678
00:34:24,313 --> 00:34:25,940
I don't know why.
Maybe it just came out

679
00:34:26,065 --> 00:34:27,745
halibut has the intelligence of a dolphin.

680
00:34:27,775 --> 00:34:29,485
So, what am I going to do?

681
00:34:29,569 --> 00:34:33,072
Throw all this unsold fish,
which is the BBB level of the bond,

682
00:34:33,156 --> 00:34:35,616
in the garbage and take the loss?

683
00:34:36,576 --> 00:34:37,577
No way.

684
00:34:37,660 --> 00:34:40,079
Being the crafty
and morally onerous chef that I am,

685
00:34:40,163 --> 00:34:42,832
whatever crappy levels
of the bond I don't sell,

686
00:34:42,957 --> 00:34:44,917
I throw into a seafood stew.

687
00:34:45,001 --> 00:34:48,421
See, it's not old fish.
It's a whole new thing!

688
00:34:48,504 --> 00:34:52,216
And the best part is
they're eating 3-day-old halibut.

689
00:34:52,300 --> 00:34:53,968
That is a CDO.

690
00:34:54,093 --> 00:34:56,929
I just need to know,
how could these possibly be collated?

691
00:34:57,013 --> 00:34:59,432
Somehow you're like Dora the Explorer

692
00:34:59,515 --> 00:35:00,767
and you're the first person

693
00:35:00,850 --> 00:35:02,244
- who found this thing.
- Hold on. Hold on.

694
00:35:02,268 --> 00:35:04,145
So mortgage bonds are dog shit,

695
00:35:04,228 --> 00:35:06,439
CDOs are dog shit wrapped in cat shit.

696
00:35:07,982 --> 00:35:09,817
Yeah, that's right.

697
00:35:09,901 --> 00:35:13,404
Institutions treat these CDOs
like they're as solid as treasury bonds,

698
00:35:13,488 --> 00:35:14,739
and they're going to zero.

699
00:35:15,948 --> 00:35:18,159
No. That can't be right.
There were $500 billion

700
00:35:18,242 --> 00:35:20,578
in housing bonds sold last year alone.

701
00:35:20,870 --> 00:35:23,498
The rating agencies, the banks,
the fucking government,

702
00:35:23,581 --> 00:35:25,583
you're saying they're
all asleep at the wheel?

703
00:35:25,666 --> 00:35:29,128
Yeah. My whole department's
long on this stuff.

704
00:35:30,004 --> 00:35:33,883
They call me Chicken Little.
They call me Bubble Boy.

705
00:35:36,552 --> 00:35:39,972
A's, zero. B's, zero.

706
00:35:40,264 --> 00:35:43,518
BB's, zero. BBB's, zero.

707
00:35:45,937 --> 00:35:47,313
And then that happens.

708
00:35:47,396 --> 00:35:49,065
What is that?

709
00:35:50,942 --> 00:35:52,652
That's America's housing market.

710
00:35:55,613 --> 00:35:56,656
Thank you.

711
00:35:56,739 --> 00:35:57,740
Fuckin' A, Jared.

712
00:35:57,824 --> 00:35:59,826
Shut your fucking mouth.

713
00:35:59,909 --> 00:36:02,078
- Hang out with you.
- Good. Okay.

714
00:36:02,203 --> 00:36:04,330
Sack up, do the deal.
Let's be friends.

715
00:36:04,413 --> 00:36:05,623
We will see. Thank you.

716
00:36:05,706 --> 00:36:06,809
- Don't bullshit me.
- All right.

717
00:36:06,833 --> 00:36:08,018
You're gonna say no, aren't you?

718
00:36:08,042 --> 00:36:10,503
No. No, I'm just
evaluating right now.

719
00:36:10,586 --> 00:36:12,626
Thank you. Thank you for coming in.

720
00:36:13,381 --> 00:36:14,715
Bye, Jared.

721
00:36:20,763 --> 00:36:22,181
I don't like it.

722
00:36:23,140 --> 00:36:24,809
He's playing us.

723
00:36:25,935 --> 00:36:27,830
He's playing us.
He's got too much skin in the game

724
00:36:27,854 --> 00:36:29,522
and he's dumping his position.

725
00:36:30,481 --> 00:36:31,983
What if he's right?

726
00:36:32,066 --> 00:36:33,150
You want him to be right.

727
00:36:33,234 --> 00:36:34,777
Yes, I do.

728
00:36:35,361 --> 00:36:38,447
The banks have given us
25% interest rates on credit cards.

729
00:36:38,531 --> 00:36:40,241
They have screwed us on student loans

730
00:36:40,324 --> 00:36:42,076
that we can never get out from under.

731
00:36:42,159 --> 00:36:45,371
Then this guy walks into
my office and says

732
00:36:45,454 --> 00:36:48,416
those same banks got greedy,
they lost track of the market,

733
00:36:48,499 --> 00:36:50,543
and I can profit off of their stupidity?

734
00:36:50,626 --> 00:36:52,879
Fuck, yeah, I want him to be right!

735
00:36:52,962 --> 00:36:54,242
How come you
don't hate this guy?

736
00:36:54,297 --> 00:36:55,977
He's everything
you taught us not to trust.

737
00:36:56,048 --> 00:36:57,758
I can't hate him.
He is so transparent

738
00:36:57,842 --> 00:37:00,219
in his self-interest
that I kind of respect him.

739
00:37:00,303 --> 00:37:03,389
Would I buy a car from him? No.

740
00:37:03,639 --> 00:37:04,950
Is he right about the mortgage market?

741
00:37:04,974 --> 00:37:07,184
- No.
- Let's find out. Let's find out.

742
00:37:08,769 --> 00:37:10,605
Look. It's two very simple questions.

743
00:37:10,688 --> 00:37:12,189
Is there a housing bubble?

744
00:37:12,273 --> 00:37:14,859
And if there is,
how exposed are the banks?

745
00:37:14,942 --> 00:37:15,985
Yeah. Okay.

746
00:37:16,068 --> 00:37:17,486
Let's get on this quickly too.

747
00:37:17,570 --> 00:37:18,946
Because if he's right,

748
00:37:19,030 --> 00:37:22,491
every loser with a couple million bucks
and a fund is gonna be jumping on this.

749
00:37:23,034 --> 00:37:24,035
Let's go.

750
00:37:26,329 --> 00:37:27,830
Just that morning...

751
00:37:32,001 --> 00:37:35,338
JPMorgan Chase. JPMorgan Chase.

752
00:37:37,173 --> 00:37:39,467
Okay. Stop saying
"JPMorgan Chase".

753
00:37:39,550 --> 00:37:40,968
I got a good feeling about this.

754
00:37:41,052 --> 00:37:42,532
It's just a meeting though, you know?

755
00:37:43,262 --> 00:37:44,823
It's just a meeting. It's something like...

756
00:37:44,847 --> 00:37:46,974
People have meetings
all the time. You know?

757
00:37:47,058 --> 00:37:48,744
People drink their coffee,
they have a meeting.

758
00:37:48,768 --> 00:37:50,128
- Brownfield Fund?
- Yes!

759
00:37:50,186 --> 00:37:52,063
- Hey. Hello.
- Ted.

760
00:37:52,146 --> 00:37:53,481
Chris. I'm on Ted's desk.

761
00:37:53,606 --> 00:37:54,941
Chris. Okay.

762
00:37:55,024 --> 00:37:56,251
- I'm Charlie, Charlie Geller.
- Charlie.

763
00:37:56,275 --> 00:37:57,902
- Jamie Shipley. Hi.
- Jamie.

764
00:37:57,985 --> 00:38:00,947
We're so excited to get set up
on your trading platform.

765
00:38:01,030 --> 00:38:02,156
Cool.

766
00:38:02,239 --> 00:38:04,033
Here, have a seat a second.

767
00:38:04,784 --> 00:38:05,785
All right.

768
00:38:06,869 --> 00:38:09,789
So, I... Ted had asked me
to do some meeting prep.

769
00:38:09,872 --> 00:38:13,250
But I couldn't find
any marketing material on you guys.

770
00:38:13,334 --> 00:38:15,169
We just moved here from Boulder.

771
00:38:15,252 --> 00:38:16,754
- Yeah.
- Got it.

772
00:38:16,837 --> 00:38:19,215
Could we see some
of your offering documents?

773
00:38:19,298 --> 00:38:21,801
Well, Brownfield is its own money.

774
00:38:22,385 --> 00:38:24,095
- It's our money.
- Yeah.

775
00:38:24,178 --> 00:38:25,972
Can you tell us how much you manage?

776
00:38:26,055 --> 00:38:29,517
Of course. We're doing
$30 million right now.

777
00:38:29,600 --> 00:38:30,810
Um, but we started

778
00:38:30,893 --> 00:38:33,646
- four years ago with $110,000.
- Wow.

779
00:38:33,729 --> 00:38:38,359
So, as you can see,
that's pretty phenomenal returns.

780
00:38:38,442 --> 00:38:41,654
We want to get an ISDA agreement
with JPMorgan so we can

781
00:38:41,779 --> 00:38:44,281
deal in long-term options.

782
00:38:44,365 --> 00:38:45,700
- That's really cool.
- Yeah.

783
00:38:58,587 --> 00:39:00,381
That is so cool.

784
00:39:00,464 --> 00:39:01,549
Thank you.

785
00:39:01,632 --> 00:39:05,803
But you guys are under
the capital requirements for an ISDA.

786
00:39:05,928 --> 00:39:06,929
By how much?

787
00:39:07,596 --> 00:39:08,597
Uh...

788
00:39:08,806 --> 00:39:12,184
One billion four hundred
seventy million, so...

789
00:39:13,185 --> 00:39:14,729
a lot.

790
00:39:15,980 --> 00:39:17,440
This makes us look bad, doesn't it,

791
00:39:17,523 --> 00:39:20,693
that we didn't know
what the capital requirements were?

792
00:39:20,776 --> 00:39:21,777
Uh...

793
00:39:22,361 --> 00:39:23,779
It's not great.

794
00:39:24,280 --> 00:39:25,573
But, uh,

795
00:39:25,656 --> 00:39:28,117
keep up those returns and give us a call

796
00:39:28,200 --> 00:39:29,994
way down the line. You know.

797
00:39:30,077 --> 00:39:31,078
Okay?

798
00:39:31,162 --> 00:39:32,455
- Okay.
- Thanks, Chris.

799
00:39:32,580 --> 00:39:33,580
Have a good one, guys.

800
00:39:33,622 --> 00:39:34,665
Thank you, Chris.

801
00:39:38,961 --> 00:39:39,962
Shit!

802
00:39:41,130 --> 00:39:42,410
Who the fuck schedules a meeting

803
00:39:42,465 --> 00:39:44,592
- at 4:50 in the afternoon?
- Oh, my, God.

804
00:39:44,675 --> 00:39:46,427
That was so painful.

805
00:39:46,510 --> 00:39:50,139
Dude, B of A and Bear
didn't even return our calls.

806
00:39:50,222 --> 00:39:52,391
And even fucking Wachovia

807
00:39:52,475 --> 00:39:54,143
- blew us off, man!
- I know.

808
00:39:54,310 --> 00:39:56,562
Here's the prospectuses
of all the other losers

809
00:39:56,645 --> 00:39:58,355
who didn't make it past the lobby.

810
00:39:58,439 --> 00:40:00,316
I don't think I can
do this anymore. You know.

811
00:40:00,399 --> 00:40:03,235
I'm young, yet.
I can still do something with my life.

812
00:40:03,319 --> 00:40:05,404
I miss Colorado anyway.
The weed's better.

813
00:40:06,363 --> 00:40:08,365
Gentlemen, I need you to leave.

814
00:40:08,491 --> 00:40:09,867
Yep, yep, we're going. Let's go.

815
00:40:09,992 --> 00:40:11,118
Look at this. Look at this.

816
00:40:11,202 --> 00:40:12,536
This guy

817
00:40:12,620 --> 00:40:15,539
says that the housing market's
a giant bubble.

818
00:40:17,917 --> 00:40:20,086
Okay, so this part
isn't totally accurate, you know.

819
00:40:20,169 --> 00:40:22,254
We didn't find Jared Vennett's
housing bubble pitch

820
00:40:22,338 --> 00:40:24,256
in the lobby of a bank that rejected us.

821
00:40:24,340 --> 00:40:25,800
The truth is, um,

822
00:40:25,883 --> 00:40:28,761
a friend had told Charlie about it,
and I read about it

823
00:40:28,844 --> 00:40:30,262
in Grant's Interest Rate Observer.

824
00:40:30,346 --> 00:40:31,680
This is crazy.

825
00:40:31,764 --> 00:40:34,266
This is crazy stuff.

826
00:40:34,350 --> 00:40:37,019
Shit, he's saying
that there's 10-to-1 returns

827
00:40:37,103 --> 00:40:40,731
on credit default swaps
for mortgage-backed securities?

828
00:40:40,856 --> 00:40:43,484
And the whole housing market
is about to collapse?

829
00:40:44,193 --> 00:40:45,945
For Jamie and Charlie,
the housing market

830
00:40:46,028 --> 00:40:48,447
doomsday prediction
was music to their ears.

831
00:40:56,080 --> 00:40:58,040
They had started working
out of Jamie's garage

832
00:40:58,124 --> 00:41:00,042
with $110,000 Jamie had saved

833
00:41:00,126 --> 00:41:02,211
taking sailboats up and down
the East Coast.

834
00:41:04,130 --> 00:41:05,923
Our investment strategy was simple.

835
00:41:06,006 --> 00:41:08,050
People hate to think about
bad things happening,

836
00:41:08,134 --> 00:41:10,469
so they always underestimate
their likelihood.

837
00:41:10,553 --> 00:41:13,055
Their strategy
was simple and brilliant.

838
00:41:13,597 --> 00:41:14,682
What he said.

839
00:41:14,765 --> 00:41:17,476
Jamie and Charlie found markets
will sell options very cheaply

840
00:41:17,560 --> 00:41:19,770
on things they think will never happen.

841
00:41:19,854 --> 00:41:21,498
So when they were wrong,
they were wrong small,

842
00:41:21,522 --> 00:41:23,482
but when they were right,
they were right big.

843
00:41:30,322 --> 00:41:34,076
Within a few years they had
turned $110,000 into $30 million.

844
00:41:34,160 --> 00:41:35,880
But then it was time
to go to New York City.

845
00:41:35,911 --> 00:41:38,539
And so far, it wasn't going very well.

846
00:41:38,622 --> 00:41:40,374
So what if it does seem interesting. No...

847
00:41:40,457 --> 00:41:43,961
No bank will give us our ISDA.
We're dead in the water.

848
00:41:45,462 --> 00:41:47,882
These kind of trades
are totally out of the question.

849
00:41:47,965 --> 00:41:49,592
We got to call Ben.

850
00:41:51,802 --> 00:41:53,304
Let's call Ben!

851
00:41:54,180 --> 00:41:56,265
Ben Rickert was
a former trader in Singapore

852
00:41:56,348 --> 00:41:59,101
for Chase who quit
the whole game in disgust.

853
00:41:59,185 --> 00:42:01,580
He happened to be Jamie's neighbor
when they were in Colorado

854
00:42:01,604 --> 00:42:03,772
and they met walking dogs.

855
00:42:03,856 --> 00:42:05,316
But Ben was dark.

856
00:42:05,441 --> 00:42:07,484
He didn't just think
the whole system would fail.

857
00:42:07,568 --> 00:42:09,778
He thought the whole world
was going down.

858
00:42:11,822 --> 00:42:13,942
Every one of these vegetables
is fresh from my garden.

859
00:42:16,410 --> 00:42:17,762
You guys should
start your own garden.

860
00:42:17,786 --> 00:42:20,122
What you got to do is get
your soil off the petrochemicals.

861
00:42:20,206 --> 00:42:21,248
Hmm.

862
00:42:21,332 --> 00:42:23,542
I used wood ash and urine
to help restore the soil.

863
00:42:23,626 --> 00:42:25,211
It creates ammonium nitrate.

864
00:42:25,294 --> 00:42:27,046
Seeds are gonna be the new currency.

865
00:42:27,171 --> 00:42:29,173
And not those Franken-seeds
from Monsanto.

866
00:42:29,256 --> 00:42:31,842
I'm talking about good,
healthy, organic seeds.

867
00:42:31,926 --> 00:42:33,052
Make yourself a garden.

868
00:42:33,135 --> 00:42:34,654
- Learn to live off the land.
- You're a fucking lunatic.

869
00:42:34,678 --> 00:42:36,889
Ben had real
experience in a big bank.

870
00:42:36,972 --> 00:42:40,643
Jamie and Charlie had never even
been in a Manhattan bank bathroom.

871
00:42:40,768 --> 00:42:42,436
But Ben was done
with the banking world.

872
00:42:42,519 --> 00:42:43,854
He was very clear.

873
00:42:43,938 --> 00:42:45,522
All right,
let's crunch some numbers

874
00:42:45,606 --> 00:42:47,983
and then maybe
we'll talk about calling Ben.

875
00:42:48,067 --> 00:42:49,169
We're always crunching numbers.

876
00:42:49,193 --> 00:42:50,295
When haven't we
crunched the numbers?

877
00:42:50,319 --> 00:42:51,463
We're gonna crunch
the numbers like harder...

878
00:42:51,487 --> 00:42:52,487
I need you out of here.

879
00:42:52,529 --> 00:42:53,572
Of course. One second.

880
00:42:53,656 --> 00:42:54,656
Yes, ma'am. We're going.

881
00:42:57,534 --> 00:42:59,894
Oh, God. I hate this.
This is a total waste of time.

882
00:43:00,037 --> 00:43:02,373
Oh, come on. Would you relax?

883
00:43:03,123 --> 00:43:06,252
There's a housing development
45 minutes outside town.

884
00:43:06,335 --> 00:43:08,212
Mark wants us to check that out first.

885
00:43:08,295 --> 00:43:10,357
Well, I hope there are some
Cuban restaurants on the way there.

886
00:43:10,381 --> 00:43:13,008
Because I heard the Cuban food
is amazing in Miami.

887
00:43:13,092 --> 00:43:15,803
Please don't be chipper
in the face of me being miserable.

888
00:43:15,886 --> 00:43:17,554
It really makes me hate you.

889
00:43:17,638 --> 00:43:20,182
How is wanting to eat good food
being chipper?

890
00:43:21,892 --> 00:43:23,060
Hello?

891
00:43:24,478 --> 00:43:25,729
Hello?

892
00:43:26,522 --> 00:43:27,856
What do these go for?

893
00:43:29,525 --> 00:43:31,235
$425,000 each?

894
00:43:53,090 --> 00:43:54,675
What's up, man?
What do you want?

895
00:43:54,758 --> 00:43:58,095
Hello. I'm surveying mortgage owners
who are over 90 days delinquent.

896
00:43:58,178 --> 00:44:00,723
I'm looking for a Harvey Humpsey.

897
00:44:00,806 --> 00:44:01,974
You want my landlord's dog?

898
00:44:04,143 --> 00:44:05,662
Your landlord filled out
his mortgage application

899
00:44:05,686 --> 00:44:08,147
using his dog's name?

900
00:44:08,230 --> 00:44:09,690
I guess so.

901
00:44:09,773 --> 00:44:12,276
Wait, has that asshole
not been paying his mortgage?

902
00:44:12,359 --> 00:44:13,694
'Cause I've been paying my rent.

903
00:44:13,777 --> 00:44:15,696
Well, yeah, he is over
90 days delinquent.

904
00:44:16,071 --> 00:44:17,656
Seriously, man,

905
00:44:17,740 --> 00:44:19,533
am I gonna have to leave?

906
00:44:22,077 --> 00:44:24,455
'Cause my kid just got
settled in school, man.

907
00:44:24,538 --> 00:44:26,707
Hey. How are ya?

908
00:44:27,374 --> 00:44:28,542
My name's Ken.

909
00:44:28,667 --> 00:44:29,877
You're Ken?

910
00:44:29,960 --> 00:44:31,813
Um, you should talk
to your landlord about that.

911
00:44:31,837 --> 00:44:33,398
I'm sorry, I don't have
any more information.

912
00:44:33,422 --> 00:44:34,798
But you, um...

913
00:44:35,466 --> 00:44:37,051
You have a great day.
See ya, Ken.

914
00:44:37,134 --> 00:44:38,552
There's books everywhere!

915
00:44:38,635 --> 00:44:40,888
Books everywhere?

916
00:44:40,971 --> 00:44:44,224
Seriously, man,
is everything gonna be okay?

917
00:44:44,308 --> 00:44:47,394
You should...
You should call him.

918
00:44:47,478 --> 00:44:48,558
You should give him a call.

919
00:44:48,604 --> 00:44:50,324
It's not my fault, dude.
I've been paying...

920
00:44:54,151 --> 00:44:55,235
Hello!

921
00:44:59,156 --> 00:45:01,283
Looks like the Mary Celeste.

922
00:45:01,367 --> 00:45:04,119
Look. All they took was the TV.

923
00:45:04,912 --> 00:45:06,872
It's weird.

924
00:45:06,955 --> 00:45:09,291
They didn't even
clean out the cat litter.

925
00:45:17,841 --> 00:45:18,884
Oh, God.

926
00:45:30,521 --> 00:45:32,439
It's like Chernobyl.

927
00:45:32,523 --> 00:45:35,943
There's like a hundred houses.
There can't be four people living here.

928
00:45:37,986 --> 00:45:40,155
- Oh, fuck that!
- Shit!

929
00:45:55,045 --> 00:45:56,272
He's been in there for seven hours.

930
00:45:56,296 --> 00:45:57,881
Where does he go to the bathroom?

931
00:45:58,507 --> 00:45:59,591
I heard he had a breakdown.

932
00:45:59,675 --> 00:46:01,675
He's letting the fund tank.

933
00:46:01,718 --> 00:46:03,178
My buddy in Manhattan said...

934
00:46:03,303 --> 00:46:04,847
Dr. Burry's office.

935
00:46:05,180 --> 00:46:06,860
No, he actually prefers
that you email him.

936
00:46:06,890 --> 00:46:08,183
Excuse me.

937
00:46:08,517 --> 00:46:09,518
Mr. Fields, Mr...

938
00:46:13,647 --> 00:46:15,399
- Hi, Lawrence.
- Holy shit!

939
00:46:17,025 --> 00:46:20,571
We have no confidence
in your ability to identify

940
00:46:20,654 --> 00:46:22,239
macroeconomic trends.

941
00:46:24,575 --> 00:46:27,119
You flew here
to tell me that? Why?

942
00:46:27,202 --> 00:46:30,622
Anyone can see
that there is a real estate bubble.

943
00:46:30,706 --> 00:46:32,541
Actually, no one can see a bubble.

944
00:46:32,624 --> 00:46:33,834
That's what makes it a bubble.

945
00:46:33,917 --> 00:46:36,211
That's dumb, Lawrence.

946
00:46:36,295 --> 00:46:37,880
There's always markers.

947
00:46:38,630 --> 00:46:41,091
Mortgage fraud has

948
00:46:41,175 --> 00:46:42,926
quintupled since 2000

949
00:46:43,051 --> 00:46:45,888
and the average take-home pay is flat,

950
00:46:45,971 --> 00:46:47,431
but home prices are soaring.

951
00:46:47,514 --> 00:46:49,600
That means the homes
are debt, not assets.

952
00:46:49,683 --> 00:46:51,894
So Mike Burry of San Jose, a guy who

953
00:46:52,895 --> 00:46:56,273
gets his hair cut at Supercuts
and doesn't wear shoes,

954
00:46:56,398 --> 00:46:59,234
knows more than Alan Greenspan
and Hank Paulson.

955
00:46:59,401 --> 00:47:00,402
Well...

956
00:47:01,111 --> 00:47:03,739
Dr. Mike Burry,
yes, he does.

957
00:47:04,948 --> 00:47:06,742
That's cute. That's cute.

958
00:47:06,825 --> 00:47:09,161
Are you being sarcastic with us, Mike?

959
00:47:12,289 --> 00:47:13,707
Lawrence,

960
00:47:13,790 --> 00:47:16,293
I don't know how to be sarcastic.

961
00:47:16,960 --> 00:47:19,755
I don't know how to be funny.
I don't know how to

962
00:47:20,422 --> 00:47:21,882
work people.

963
00:47:21,965 --> 00:47:23,133
I...

964
00:47:23,217 --> 00:47:25,552
I just know how to read numbers.

965
00:47:25,636 --> 00:47:28,138
How big is your short position right now?

966
00:47:28,514 --> 00:47:29,556
Um...

967
00:47:29,640 --> 00:47:31,225
Just $1.3 billion.

968
00:47:31,808 --> 00:47:33,185
And the premiums?

969
00:47:33,310 --> 00:47:34,645
Well, we pay, uh,

970
00:47:35,103 --> 00:47:38,440
roughly $80 to 90 million

971
00:47:38,565 --> 00:47:40,025
each year, which is high,

972
00:47:40,108 --> 00:47:42,194
but I was the first to do this trade.

973
00:47:42,277 --> 00:47:45,739
Watch. It will pay. I may have
been early, but I'm not wrong.

974
00:47:45,822 --> 00:47:48,158
It's the same thing.
It's the same thing, Mike!

975
00:47:48,992 --> 00:47:53,121
You're managing a fund of,
what, $555 million?

976
00:47:53,664 --> 00:47:57,167
In six years, it'll all be gone.

977
00:47:57,960 --> 00:47:59,378
On one bet.

978
00:47:59,461 --> 00:48:02,631
No, the second quarter of '07 is
when the adjustable rates kick in.

979
00:48:02,756 --> 00:48:04,258
The defaults will skyrocket.

980
00:48:04,341 --> 00:48:06,051
Yeah. Says you.

981
00:48:06,134 --> 00:48:08,595
How much is eligible
for withdrawal before they do?

982
00:48:08,679 --> 00:48:10,597
Say, in the next two quarters.

983
00:48:11,306 --> 00:48:13,308
If your investors panic.

984
00:48:16,853 --> 00:48:17,896
$302 million?

985
00:48:17,980 --> 00:48:18,981
I...

986
00:48:19,856 --> 00:48:21,483
My God, Mike.

987
00:48:26,321 --> 00:48:28,240
No one will pull out.
That would be suicide.

988
00:48:28,323 --> 00:48:30,742
I mean, I'm down 17% for the year.

989
00:48:30,867 --> 00:48:33,161
But if they trust me,
and they trust me, because...

990
00:48:33,245 --> 00:48:35,872
No one trusts you! No one!

991
00:48:35,956 --> 00:48:38,375
I sent several emails to my investors

992
00:48:38,500 --> 00:48:40,544
letting them know that the...

993
00:48:42,170 --> 00:48:44,590
the second quarter of '07 is when our

994
00:48:44,715 --> 00:48:47,175
housing positions show returns and...

995
00:48:48,552 --> 00:48:49,803
I've been very clear.

996
00:48:50,596 --> 00:48:53,432
People will withdraw their money.

997
00:48:54,016 --> 00:48:57,477
Lawrence, that would be so stupid.
I mean, the...

998
00:48:57,561 --> 00:49:01,064
If the fund's capitals
drop too much,

999
00:49:01,523 --> 00:49:04,610
then the swaps contracts are voided.

1000
00:49:04,693 --> 00:49:07,946
And then the banks get to
keep all of the collateral.

1001
00:49:08,030 --> 00:49:10,240
- Wait a minute. Wait.
- All of it.

1002
00:49:10,365 --> 00:49:12,492
The contracts are voided?

1003
00:49:12,576 --> 00:49:14,369
The contracts are voided?

1004
00:49:15,078 --> 00:49:16,747
Holy shit!

1005
00:49:17,205 --> 00:49:18,206
Oh, motherfucker!

1006
00:49:18,874 --> 00:49:20,375
Michael?

1007
00:49:20,751 --> 00:49:22,419
Give me my money back.

1008
00:49:25,839 --> 00:49:29,217
Michael, do you hear me?
I want my money back.

1009
00:49:31,720 --> 00:49:34,056
Give me my fucking money back...

1010
00:49:35,098 --> 00:49:36,516
you motherfucker.

1011
00:49:37,434 --> 00:49:40,562
The market's in an itsy-bitsy
little gully right now.

1012
00:49:40,687 --> 00:49:42,939
It's like everybody said,
"Okay, that was crazy.

1013
00:49:43,023 --> 00:49:44,900
"Let's just all calm down."

1014
00:49:46,735 --> 00:49:49,946
I sold that house for $350,000
the year it was built.

1015
00:49:50,614 --> 00:49:52,783
Two years later, $480,000.

1016
00:49:52,908 --> 00:49:56,078
Then $585,000 maybe 18 months ago.

1017
00:49:56,203 --> 00:49:58,747
This couple bought it
for $650,000 last year.

1018
00:49:59,247 --> 00:50:01,083
He'd let it go for that.

1019
00:50:01,166 --> 00:50:02,834
Hi, John.

1020
00:50:02,918 --> 00:50:03,960
No, no, no.

1021
00:50:04,586 --> 00:50:06,064
It will break his heart,
but he'll let it go.

1022
00:50:06,088 --> 00:50:07,839
Why is he selling?

1023
00:50:07,923 --> 00:50:09,758
Neither one's working right now.

1024
00:50:10,759 --> 00:50:13,387
Marlene, you'd say
they're motivated, right?

1025
00:50:13,470 --> 00:50:16,473
As motivated as one can be
in this neighborhood.

1026
00:50:16,556 --> 00:50:19,101
This house on the left,
I would say they're probably motivated.

1027
00:50:19,184 --> 00:50:21,144
Wow, a lot of people
seem very motivated.

1028
00:50:21,228 --> 00:50:22,548
Oh, it's just the gully.

1029
00:50:22,604 --> 00:50:24,356
That's all. Just...

1030
00:50:24,439 --> 00:50:25,857
Just nerves.

1031
00:50:25,941 --> 00:50:27,651
So where do we stand?

1032
00:50:28,819 --> 00:50:31,321
I need to talk to my wife. Um...

1033
00:50:31,405 --> 00:50:32,698
This market won't last.

1034
00:50:32,781 --> 00:50:34,574
Actually, could I talk
to a mortgage broker?

1035
00:50:34,658 --> 00:50:36,493
Anybody you recommend?
Anybody you like.

1036
00:50:36,576 --> 00:50:38,578
Yes, yes, I have
someone. Absolutely.

1037
00:50:38,662 --> 00:50:39,913
Yeah, bitch better like me.

1038
00:50:39,996 --> 00:50:41,248
Sent her ass to Cabo.

1039
00:50:42,874 --> 00:50:45,460
So is Morgan Stanley
recruiting us? Is that it?

1040
00:50:45,752 --> 00:50:48,714
Oh, no. No.
The bank owns our hedge fund,

1041
00:50:48,797 --> 00:50:49,941
but we're not really part of it.

1042
00:50:49,965 --> 00:50:52,426
We invest in financial service companies

1043
00:50:52,509 --> 00:50:55,470
and we're trying to understand
the residential mortgage business.

1044
00:50:55,554 --> 00:50:58,473
How many loans
do you write each month?

1045
00:50:58,598 --> 00:51:00,142
- About 60.
- Yeah.

1046
00:51:00,225 --> 00:51:01,685
What was it four years ago?

1047
00:51:02,644 --> 00:51:03,979
Ten...

1048
00:51:04,062 --> 00:51:05,313
Maybe 15.

1049
00:51:05,397 --> 00:51:07,691
Yeah, I was a bartender.
Now I own a boat.

1050
00:51:07,774 --> 00:51:08,774
You own a...

1051
00:51:08,817 --> 00:51:12,070
So how many of these are
adjustable-rate mortgages?

1052
00:51:12,154 --> 00:51:13,822
- Well, most.
- Oh, yeah.

1053
00:51:13,905 --> 00:51:15,866
Yeah, I'd say about 90%.

1054
00:51:15,949 --> 00:51:19,077
The bonuses on those
skyrocketed a few years ago.

1055
00:51:19,161 --> 00:51:20,481
Adjustable's our bread and honey.

1056
00:51:20,537 --> 00:51:23,081
So do applicants ever get rejected?

1057
00:51:27,419 --> 00:51:28,628
Seriously?

1058
00:51:29,504 --> 00:51:31,590
Look, if they get rejected,
I suck at my job.

1059
00:51:31,673 --> 00:51:33,175
Even if they have no money?

1060
00:51:33,258 --> 00:51:36,136
Well, my firm offers NINJA loans.

1061
00:51:36,219 --> 00:51:38,680
- Okay.
- "No Income, No Job."

1062
00:51:39,014 --> 00:51:41,224
I just leave the income section
blank if I want.

1063
00:51:41,308 --> 00:51:42,559
Corporate doesn't care.

1064
00:51:42,642 --> 00:51:45,937
These people just want homes.
And they go with the flow.

1065
00:51:46,021 --> 00:51:47,022
Good for you.

1066
00:51:47,105 --> 00:51:48,225
Your companies don't verify?

1067
00:51:51,860 --> 00:51:53,862
If I write a loan on Friday afternoon,

1068
00:51:54,738 --> 00:51:56,740
a big bank will buy it by Monday lunch.

1069
00:51:57,282 --> 00:51:58,617
Yeah. Same here.

1070
00:52:00,410 --> 00:52:01,787
Could you hold on a second?

1071
00:52:01,912 --> 00:52:03,288
Yeah.

1072
00:52:08,960 --> 00:52:11,630
I don't get it.
Why are they confessing?

1073
00:52:11,713 --> 00:52:13,673
They're not confessing.

1074
00:52:13,799 --> 00:52:15,467
They're bragging.

1075
00:52:24,226 --> 00:52:28,230
Do people have any idea
what they are buying?

1076
00:52:29,189 --> 00:52:31,441
I focus on
the immigrants, you know.

1077
00:52:31,525 --> 00:52:33,002
Once they find out
they're getting a home,

1078
00:52:33,026 --> 00:52:34,611
they sign where you tell them to sign.

1079
00:52:34,694 --> 00:52:36,822
Don't ask questions.
Don't understand the rates.

1080
00:52:36,905 --> 00:52:38,365
- Fucking idiots.
- Yeah.

1081
00:52:38,448 --> 00:52:39,866
And you target immigrants, too?

1082
00:52:39,950 --> 00:52:42,786
Well, their credit actually
isn't bad enough for him.

1083
00:52:44,704 --> 00:52:46,373
Look, I'm a yield guy.

1084
00:52:46,873 --> 00:52:47,916
Okay...

1085
00:52:49,000 --> 00:52:52,420
I make $2,000
on a fixed-rate prime loan, right?

1086
00:52:52,504 --> 00:52:56,132
But I can make $10,000
on a subprime adjustable.

1087
00:52:56,216 --> 00:52:59,177
Trust me, I'm not driving a 7 Series
without strippers.

1088
00:52:59,261 --> 00:53:02,556
No one on the pole has good credit
and they're all cash rich.

1089
00:53:02,639 --> 00:53:04,975
I think I read Warren Buffett
say something like that.

1090
00:53:05,475 --> 00:53:07,727
What? Who's Warren Buffett?

1091
00:53:08,270 --> 00:53:10,981
Okay, so strippers.
Like exotic dancers?

1092
00:53:11,064 --> 00:53:12,274
Yeah, yeah, yeah.

1093
00:53:12,357 --> 00:53:14,317
Nude, you know, topless.

1094
00:53:14,401 --> 00:53:16,236
- Strippers.
- Yeah.

1095
00:53:19,823 --> 00:53:21,032
Can you introduce us?

1096
00:53:21,116 --> 00:53:23,535
Yes! Yes.

1097
00:53:25,620 --> 00:53:28,540
I always get option-pay adjustables.
I'm a private contractor.

1098
00:53:28,623 --> 00:53:30,292
What? I can't hear you. I'm sorry.

1099
00:53:30,375 --> 00:53:32,210
I always get option-pay adjustables.

1100
00:53:32,294 --> 00:53:34,546
I'm a private contractor.
I need flexibility.

1101
00:53:34,629 --> 00:53:37,215
And you tell the mortgage company
what you do?

1102
00:53:37,299 --> 00:53:39,301
I write "therapist".

1103
00:53:39,384 --> 00:53:40,844
- You can touch me.
- Always?

1104
00:53:41,469 --> 00:53:42,512
Only in V.I.P.

1105
00:53:42,596 --> 00:53:45,223
No, no, no, you say
you always do adjustables.

1106
00:53:45,307 --> 00:53:47,107
And you have more than
one loan on a property?

1107
00:53:47,183 --> 00:53:49,394
Everybody does.
At least down here.

1108
00:53:49,477 --> 00:53:50,478
I'm sorry, what?

1109
00:53:50,562 --> 00:53:53,148
Everybody does.
At least down here.

1110
00:53:53,231 --> 00:53:55,400
That way you only put down, like, 5%.

1111
00:53:55,483 --> 00:53:57,277
Prices have leveled off, though, right?

1112
00:53:57,360 --> 00:53:59,195
Yeah. There's a gully.

1113
00:53:59,279 --> 00:54:02,991
Would you mind not moving anymore?
I'll still pay you.

1114
00:54:06,786 --> 00:54:09,497
Sorry. We're not alone.

1115
00:54:09,581 --> 00:54:12,208
Okay, look. If home prices don't go up,

1116
00:54:12,292 --> 00:54:14,586
you are not going to be able to refinance.

1117
00:54:14,669 --> 00:54:17,797
And you'll be stuck paying
whatever your monthly payment is

1118
00:54:17,881 --> 00:54:20,592
once it jumps up
after your teaser rate expires.

1119
00:54:21,009 --> 00:54:23,053
Your monthlies could go up 200%-300%.

1120
00:54:23,470 --> 00:54:25,513
James says I can always refinance.

1121
00:54:25,597 --> 00:54:27,390
Well, he's a liar.

1122
00:54:27,474 --> 00:54:30,602
Actually, in this particular case,
James probably is wrong.

1123
00:54:30,685 --> 00:54:33,980
200 percent? On all my loans?

1124
00:54:34,064 --> 00:54:35,440
What do you mean "all" your loans?

1125
00:54:35,523 --> 00:54:37,943
We're talking about two loans
on one house, right?

1126
00:54:38,777 --> 00:54:40,737
I have five houses.

1127
00:54:40,862 --> 00:54:42,822
And a condo.

1128
00:54:44,699 --> 00:54:46,201
Hey, there's a bubble.

1129
00:54:46,284 --> 00:54:47,285
How do you know?

1130
00:54:47,369 --> 00:54:50,789
Trust me. Call Vennett,
buy $50 million in swaps on the MBS.

1131
00:54:50,872 --> 00:54:53,792
What do we got? Garibaldi IV, BBB.

1132
00:54:53,875 --> 00:54:55,377
Mark, are you sure?

1133
00:54:55,460 --> 00:54:57,295
Yeah. Yeah, it's time to call bullshit.

1134
00:54:57,379 --> 00:55:00,048
- Bullshit on what?
- Every fucking thing.

1135
00:55:24,239 --> 00:55:25,907
FrontPoint! FrontPoint!

1136
00:55:27,742 --> 00:55:29,536
Is this America's angriest hedge fund?

1137
00:55:29,619 --> 00:55:31,939
All right, listen.
I got one last question for you.

1138
00:55:32,914 --> 00:55:34,749
How are you fucking us?

1139
00:55:36,584 --> 00:55:38,184
There's a nicer way to say that, Vinnie.

1140
00:55:38,211 --> 00:55:39,754
I'm serious.

1141
00:55:39,838 --> 00:55:42,924
We'll buy your swaps,
but only if you say how you're fucking us.

1142
00:55:43,008 --> 00:55:45,510
I'm not fucking you, Vinnie.
I'm kissing you.

1143
00:55:45,593 --> 00:55:48,346
I'm looking deep into your eyes
as I make love to you, Vinnie.

1144
00:55:48,430 --> 00:55:51,766
I'm handing you the deal of the century
on a fucking platter.

1145
00:55:51,850 --> 00:55:54,227
What do I get out of it? Easy.

1146
00:55:54,310 --> 00:55:56,730
I got a $20-million-a-month
negative carry.

1147
00:55:56,813 --> 00:55:58,249
I got bosses trying to pull the plug

1148
00:55:58,273 --> 00:56:00,692
because they think
I'm out of my fucking mind.

1149
00:56:00,775 --> 00:56:01,776
All right?

1150
00:56:01,860 --> 00:56:02,944
We make this trade,

1151
00:56:03,028 --> 00:56:05,363
those problems aren't so big anymore.

1152
00:56:05,447 --> 00:56:09,200
And sure, swaps are a dark market,
so I set the price.

1153
00:56:09,284 --> 00:56:10,785
Whatever price I want.

1154
00:56:10,869 --> 00:56:12,287
And when you come for the payday,

1155
00:56:12,412 --> 00:56:14,622
I'm gonna rip your eyes out,
I'm gonna make a fortune.

1156
00:56:15,749 --> 00:56:17,309
But the good news is, Vinnie,
you're not gonna care

1157
00:56:17,333 --> 00:56:19,544
because you're gonna make
so much fucking money.

1158
00:56:19,627 --> 00:56:20,920
That's what I get out of it.

1159
00:56:21,004 --> 00:56:22,356
Want to know what you get out of it?

1160
00:56:22,380 --> 00:56:25,884
You get the ice cream, the hot fudge,
the banana, and the nuts.

1161
00:56:25,967 --> 00:56:27,719
Right now, I get the sprinkles, and, yeah,

1162
00:56:27,802 --> 00:56:30,430
if this goes through, I get the cherry.

1163
00:56:30,513 --> 00:56:32,724
But you get the sundae, Vinnie.

1164
00:56:32,807 --> 00:56:34,476
You get the sundae.

1165
00:56:36,936 --> 00:56:39,731
All right, I buy that. Thank you.

1166
00:56:39,814 --> 00:56:41,983
So what do you say?

1167
00:56:42,067 --> 00:56:43,943
- You want me to make you a market?
- Yeah.

1168
00:56:44,027 --> 00:56:47,530
We'll take $50 million, Garibaldi IV, BBB.

1169
00:56:48,990 --> 00:56:51,034
Sharpen your pencils.
I'll get the paperwork ready.

1170
00:56:53,745 --> 00:56:55,246
Fuck you, too.

1171
00:56:57,207 --> 00:56:58,708
Yes!

1172
00:57:00,668 --> 00:57:01,669
That's right.

1173
00:57:03,797 --> 00:57:05,715
Oh, man.

1174
00:57:05,799 --> 00:57:10,011
He has so many numbers,
and I always forget

1175
00:57:10,136 --> 00:57:11,822
which one he prefers,
because he's very specific.

1176
00:57:11,846 --> 00:57:13,056
Start with the first one.

1177
00:57:13,139 --> 00:57:14,450
I don't know if it's the first one.

1178
00:57:14,474 --> 00:57:15,767
Just try it.

1179
00:57:15,850 --> 00:57:17,393
Okay. I... Okay.

1180
00:57:35,036 --> 00:57:37,789
- Ben Rickert.
- Hey, Ben. It's Jamie.

1181
00:57:39,332 --> 00:57:41,412
Jamie, you know you're
not supposed to use this line.

1182
00:57:43,670 --> 00:57:44,921
Told you.

1183
00:57:46,297 --> 00:57:48,967
Okay, let's try number two out of 14.

1184
00:58:00,562 --> 00:58:01,563
Ben Rickert.

1185
00:58:01,646 --> 00:58:03,648
Ben, why do you do that, man? I mean...

1186
00:58:03,731 --> 00:58:06,210
You're a retired trader, okay?
No one is listening to your calls.

1187
00:58:06,234 --> 00:58:08,003
The NSA has a $52 billion budget
and the ability

1188
00:58:08,027 --> 00:58:09,463
to monitor tens of millions
of calls a second.

1189
00:58:09,487 --> 00:58:11,823
You think they're not using it?

1190
00:58:11,906 --> 00:58:14,742
Hey, I promise I will refrain from saying

1191
00:58:14,826 --> 00:58:16,995
"Ben Rickert" and "dirty bomb"
in the same sent...

1192
00:58:18,872 --> 00:58:20,540
- Jesus fucking Christ.
- I'm sorry, dude.

1193
00:58:22,167 --> 00:58:23,251
Ben Rickert.

1194
00:58:23,376 --> 00:58:25,753
Did you get a chance to look
at what we sent you, Ben?

1195
00:58:25,837 --> 00:58:28,006
It's Charlie. I'm here, too.

1196
00:58:28,756 --> 00:58:31,092
Hi, Charlie. Yeah, I did. Hold on.

1197
00:58:37,098 --> 00:58:38,183
Ben, you still there?

1198
00:58:38,308 --> 00:58:39,434
Yeah.

1199
00:58:40,185 --> 00:58:42,228
I'll be honest, gentlemen.

1200
00:58:42,312 --> 00:58:44,230
It scared the shit out of me.

1201
00:58:44,355 --> 00:58:45,732
But that's a good thing, right?

1202
00:58:45,815 --> 00:58:48,610
That means this Vennett guy's
not wrong.

1203
00:58:49,319 --> 00:58:50,403
No, he's not.

1204
00:58:53,114 --> 00:58:54,115
Cool.

1205
00:58:54,199 --> 00:58:55,783
Tell me more about these CDOs.

1206
00:58:55,867 --> 00:58:59,621
Yeah, yeah. Okay, so, you know,
Vennett mentions the CDOs,

1207
00:58:59,746 --> 00:59:01,289
but actually, we took a look

1208
00:59:01,372 --> 00:59:03,092
and they're way worse
than even he realizes.

1209
00:59:03,124 --> 00:59:04,542
These things don't make any sense!

1210
00:59:04,626 --> 00:59:05,906
We can't even model them.

1211
00:59:05,960 --> 00:59:08,671
These are 100 times bigger
than the MBS.

1212
00:59:08,755 --> 00:59:10,340
And 90% AAA-rated.

1213
00:59:10,423 --> 00:59:12,175
- Yes! Exactly!
- Over 90%.

1214
00:59:12,300 --> 00:59:13,384
It's incredible.

1215
00:59:13,468 --> 00:59:16,638
I took a good hard look
at the CDOs you want to short.

1216
00:59:17,388 --> 00:59:19,807
They're brilliant. Worthless. Total crap.

1217
00:59:20,475 --> 00:59:22,644
Jamie. Very good.

1218
00:59:22,727 --> 00:59:26,231
What can I say?
I'm good at finding shit.

1219
00:59:26,314 --> 00:59:29,067
So, Ben, we shorted
the BB's and the BBB's,

1220
00:59:29,150 --> 00:59:31,236
and the risk is relatively low.

1221
00:59:31,319 --> 00:59:33,988
- Payoff is, like, 25-to-1.
- Yeah.

1222
00:59:36,324 --> 00:59:38,469
Okay, so, why are you calling me?
I don't do this anymore.

1223
00:59:38,493 --> 00:59:39,661
Look, Ben?

1224
00:59:40,995 --> 00:59:44,749
We need you to help us get the ISDA.

1225
00:59:44,832 --> 00:59:47,919
If we get a hunting license,
we can short this crap.

1226
00:59:48,002 --> 00:59:49,271
And we know you hate Wall Street.

1227
00:59:49,295 --> 00:59:50,522
We're not asking you to do the trading.

1228
00:59:50,546 --> 00:59:54,509
We're simply asking you
to help us get a seat

1229
00:59:54,592 --> 00:59:57,762
at the fucking table.

1230
00:59:57,845 --> 00:59:59,764
It's a pretty ugly table, guys.

1231
00:59:59,847 --> 01:00:04,852
Look, Ben, the system fucked up
in a big, big way here, okay?

1232
01:00:04,936 --> 01:00:07,021
And somehow, uh,

1233
01:00:07,355 --> 01:00:10,024
we know before anyone else.

1234
01:00:10,358 --> 01:00:13,278
You know?
This is a once-in-a-lifetime deal.

1235
01:00:15,863 --> 01:00:16,864
I'm thinking.

1236
01:00:21,953 --> 01:00:23,871
Okay. I'll call Deutsche Bank.

1237
01:00:23,955 --> 01:00:26,207
Thank you, Ben. Thank you.

1238
01:00:26,291 --> 01:00:29,877
And Bear. What about Bear?
They have some reprehensible product.

1239
01:00:30,211 --> 01:00:32,547
Okay. Bear will trade with anybody.

1240
01:01:20,678 --> 01:01:23,431
All right.
I'll see if I can push it through.

1241
01:01:23,514 --> 01:01:25,350
Thank you, Noah.
And thank Jared for us.

1242
01:01:27,310 --> 01:01:28,519
Couldn't we go inside?

1243
01:01:28,644 --> 01:01:29,854
Yeah, me, too.

1244
01:02:13,981 --> 01:02:16,317
Hi. It's Mark. I need to
talk to Vinnie right now.

1245
01:02:16,401 --> 01:02:19,821
We're just asking you to explain to us

1246
01:02:19,987 --> 01:02:22,448
just how it is that you are fucking us,

1247
01:02:22,532 --> 01:02:23,783
because what we are seeing...

1248
01:02:26,661 --> 01:02:27,995
Morgan Stanley building, fast.

1249
01:02:28,955 --> 01:02:31,416
Are we hooked up
to the same computer screen?

1250
01:02:31,499 --> 01:02:33,167
It doesn't make any sense.

1251
01:02:36,003 --> 01:02:37,463
Vinnie, you there?

1252
01:02:37,880 --> 01:02:38,881
Mark, you there?

1253
01:02:38,965 --> 01:02:39,965
Yeah, did you hear?

1254
01:02:40,007 --> 01:02:41,767
Mortgage defaults have
gone through the roof.

1255
01:02:41,843 --> 01:02:43,362
Is anybody jumping off of buildings yet?

1256
01:02:43,386 --> 01:02:45,596
Why would they?
Subprime mortgage bond prices are up.

1257
01:02:45,680 --> 01:02:46,722
What?

1258
01:02:46,806 --> 01:02:50,101
Vennett wants $1.9 million more
in collateral by close.

1259
01:02:50,184 --> 01:02:51,537
Vennett's asking us to post collateral.

1260
01:02:51,561 --> 01:02:52,979
What the hell is going on?

1261
01:02:53,062 --> 01:02:55,082
We don't know, but Deutsche's
on the phone demanding payment.

1262
01:02:55,106 --> 01:02:56,941
Call Vennett. Call that little shit.

1263
01:02:57,024 --> 01:02:58,985
Call Vennett.
Tell him to get his ass down here.

1264
01:02:59,068 --> 01:03:00,862
So subprime loans go bad,

1265
01:03:00,945 --> 01:03:04,157
but subprime bonds, which are made up
of subprime loans, are more valuable?

1266
01:03:04,240 --> 01:03:06,701
I know. They want another
$1.9 million by market close.

1267
01:03:06,826 --> 01:03:08,953
What about the ratings agencies?
Moody's, S&P...

1268
01:03:09,036 --> 01:03:11,456
Are they downgrading the CDOs
and mortgage bonds?

1269
01:03:11,539 --> 01:03:12,683
Where are the ratings agencies at?

1270
01:03:12,707 --> 01:03:14,208
They're the fucking same.

1271
01:03:14,333 --> 01:03:15,793
No, they're all still AAA.

1272
01:03:15,877 --> 01:03:18,379
What the hell?
Are you fucking kidding me?

1273
01:03:18,463 --> 01:03:20,548
Those fuckers! Those motherfuckers!

1274
01:03:20,631 --> 01:03:23,631
They go public, and all they care about
is their bottom line and their shit.

1275
01:03:23,676 --> 01:03:25,428
Hey, Mark, that's not all.

1276
01:03:25,511 --> 01:03:26,864
The Morgan Stanley risk guys are here.

1277
01:03:26,888 --> 01:03:28,264
They called in Kathy Tao.

1278
01:03:28,347 --> 01:03:30,534
They're trying to convince her
to make us sell our swaps.

1279
01:03:30,558 --> 01:03:32,810
Apparently, tying up six years
of insurance payments

1280
01:03:32,894 --> 01:03:34,645
in hopes of a housing Armageddon

1281
01:03:34,729 --> 01:03:35,980
is not prudent investing.

1282
01:03:36,105 --> 01:03:37,356
What did Kathy say?

1283
01:03:37,440 --> 01:03:40,151
Nothing yet. She keeps asking
if this is one of your crusades.

1284
01:03:40,234 --> 01:03:42,153
Okay, I want you to walk back in there

1285
01:03:42,236 --> 01:03:43,905
and very calmly, very politely,

1286
01:03:43,988 --> 01:03:46,657
tell the risk assessors to fuck off.

1287
01:03:46,782 --> 01:03:48,462
And then meet me over
at Standard & Poor's.

1288
01:03:48,534 --> 01:03:50,036
We're gonna talk to Georgia.

1289
01:03:50,119 --> 01:03:51,162
All right. Okay.

1290
01:03:51,245 --> 01:03:53,164
Get that fuck Jared Vennett in this office.

1291
01:03:53,247 --> 01:03:55,041
I'm gonna bash his fucking head in.

1292
01:04:00,046 --> 01:04:01,631
Uh, gentlemen?

1293
01:04:01,714 --> 01:04:04,759
I spoke with Mark Baum.
He says to fuck off.

1294
01:04:18,564 --> 01:04:20,900
I can't see a damn thing.

1295
01:04:22,276 --> 01:04:24,779
My eye doctor's always busy.

1296
01:04:24,862 --> 01:04:26,715
I end up taking
any appointment they'll give me,

1297
01:04:26,739 --> 01:04:29,075
and then the whole morning
gets shot to hell!

1298
01:04:30,243 --> 01:04:31,744
So...

1299
01:04:32,245 --> 01:04:33,746
All righty,

1300
01:04:34,121 --> 01:04:36,624
FrontPoint Partners,

1301
01:04:37,166 --> 01:04:39,544
how can Standard & Poor's help you?

1302
01:04:39,627 --> 01:04:40,878
Well, we don't understand why

1303
01:04:40,962 --> 01:04:43,589
the ratings agencies haven't
downgraded subprime bonds

1304
01:04:43,673 --> 01:04:46,717
since the underlying loans
are clearly deteriorating.

1305
01:04:46,801 --> 01:04:49,220
Well, the delinquency rates
do have people worried,

1306
01:04:49,303 --> 01:04:51,097
but they're actually within our models.

1307
01:04:51,180 --> 01:04:53,140
- So...
- Says you.

1308
01:04:54,308 --> 01:04:56,727
You're convinced
the underlying mortgages

1309
01:04:56,811 --> 01:04:59,230
in these bonds are solid loans.

1310
01:04:59,355 --> 01:05:01,232
That is our opinion, yes.

1311
01:05:01,315 --> 01:05:03,401
Have you looked at the loan-level data?

1312
01:05:03,484 --> 01:05:05,236
I mean, they're giving these loans

1313
01:05:05,319 --> 01:05:06,630
to anybody with a credit score
and a pulse.

1314
01:05:06,654 --> 01:05:09,240
Excuse me, sir. What do you think
we do here all day?

1315
01:05:09,323 --> 01:05:10,425
We're not sure.
That's why we're here.

1316
01:05:10,449 --> 01:05:11,635
Here's what I don't understand...

1317
01:05:11,659 --> 01:05:13,369
We check, recheck, recheck again.

1318
01:05:13,494 --> 01:05:14,846
If these mortgage bonds
are so stable...

1319
01:05:14,870 --> 01:05:16,581
Perhaps you could check your friend.

1320
01:05:16,664 --> 01:05:18,666
Have you ever refused to rate...

1321
01:05:18,749 --> 01:05:20,084
Ma'am, that's delusional.

1322
01:05:20,167 --> 01:05:21,294
We stand behind them.

1323
01:05:21,377 --> 01:05:22,962
Georgia,
have you ever refused to rate

1324
01:05:23,045 --> 01:05:26,340
any of these bonds upper tranches AAA?

1325
01:05:26,424 --> 01:05:28,009
Can we see the paperwork
on those deals?

1326
01:05:28,092 --> 01:05:30,094
I am under no obligation
to share that information

1327
01:05:30,177 --> 01:05:31,321
with you, whoever you might be.

1328
01:05:31,345 --> 01:05:33,055
Just answer the question, Georgia.

1329
01:05:33,180 --> 01:05:35,141
Can you name one time in the past year

1330
01:05:35,224 --> 01:05:36,559
where you checked the tape

1331
01:05:36,642 --> 01:05:40,855
and you didn't give the banks
the AAA percentage they wanted?

1332
01:05:43,107 --> 01:05:44,334
If we don't give them the ratings,

1333
01:05:44,358 --> 01:05:46,277
they'll go to Moody's,
right down the block.

1334
01:05:47,194 --> 01:05:50,531
If we don't work with them,
they will go to our competitors.

1335
01:05:51,198 --> 01:05:54,368
Not our fault.
Simply the way the world works.

1336
01:05:58,706 --> 01:06:01,208
- Holy shit.
- Yes, now you see.

1337
01:06:02,251 --> 01:06:04,295
And I never said that.

1338
01:06:04,378 --> 01:06:06,797
They're selling ratings for fees.

1339
01:06:06,881 --> 01:06:07,881
A ratings shop.

1340
01:06:07,923 --> 01:06:10,760
You can afford to make less. Make less.

1341
01:06:10,843 --> 01:06:12,720
Nobody said that.

1342
01:06:12,803 --> 01:06:14,972
And it is not my decision.
I have a boss.

1343
01:06:15,056 --> 01:06:16,390
Are you kidding me?

1344
01:06:16,557 --> 01:06:17,850
No, I am not "kidding you".

1345
01:06:17,933 --> 01:06:20,227
How'd your boss do on the IPO?

1346
01:06:20,311 --> 01:06:21,580
Is that the angle you're taking?

1347
01:06:21,604 --> 01:06:25,149
So, now, anyone who has a boss
can't be held responsible

1348
01:06:25,232 --> 01:06:26,672
for doing shitty and illegal things.

1349
01:06:26,734 --> 01:06:28,319
What are you, four?

1350
01:06:28,402 --> 01:06:32,698
No, I am not four, Mr. Baum.
I am not, no.

1351
01:06:32,782 --> 01:06:36,160
And I wonder what
your incentives might be.

1352
01:06:36,285 --> 01:06:37,828
Is it maybe in your best interest

1353
01:06:37,912 --> 01:06:40,915
to have the ratings change?
Is it, perhaps?

1354
01:06:42,708 --> 01:06:45,252
How many credit default swaps
do you own? Hmm?

1355
01:06:47,296 --> 01:06:49,173
It doesn't make me wrong.

1356
01:06:49,256 --> 01:06:50,383
No.

1357
01:06:50,466 --> 01:06:52,593
It just makes you a hypocrite.

1358
01:07:33,217 --> 01:07:35,219
Fuck!

1359
01:07:35,302 --> 01:07:36,488
Mortgage delinquencies went up

1360
01:07:36,512 --> 01:07:38,556
and the CDOs got more valuable.
Unbelievable.

1361
01:07:38,639 --> 01:07:40,891
- Unbelievable.
- We know. It's completely backwards.

1362
01:07:40,975 --> 01:07:42,560
I just called an old friend at Bear.

1363
01:07:42,643 --> 01:07:44,311
He didn't even know what a CDO is.

1364
01:07:44,395 --> 01:07:48,733
Yeah, I just had to wire
Bear and Deutsche $70,000.

1365
01:07:48,816 --> 01:07:51,152
It's like two plus two equals

1366
01:07:51,652 --> 01:07:52,820
fish.

1367
01:07:52,903 --> 01:07:55,573
It's rigged.
We bought into a rigged game.

1368
01:07:55,656 --> 01:07:57,450
We're gonna lose everything.

1369
01:07:57,533 --> 01:07:59,994
I'm gonna have to move
back in with my mom.

1370
01:08:00,536 --> 01:08:01,912
Can't do that.

1371
01:08:01,996 --> 01:08:04,165
All right.
Well, I got a colonic appointment.

1372
01:08:04,248 --> 01:08:05,916
Wait a minute. Hold on, Ben.

1373
01:08:06,000 --> 01:08:07,334
Ben, look.

1374
01:08:07,418 --> 01:08:09,795
Either the banks are clueless

1375
01:08:09,879 --> 01:08:12,173
and they don't know
how to value these CDOs,

1376
01:08:12,256 --> 01:08:17,261
or they're such crooks
that the CDOs are worth shit

1377
01:08:17,428 --> 01:08:19,013
and they're hiding it.

1378
01:08:21,348 --> 01:08:22,808
I think we should buy more swaps.

1379
01:08:23,350 --> 01:08:24,393
What?

1380
01:08:24,477 --> 01:08:26,479
Suck it up and pay up, fellas.
We made a deal.

1381
01:08:26,562 --> 01:08:28,606
No way! No!

1382
01:08:28,689 --> 01:08:30,107
Are you fucking kidding me?

1383
01:08:30,191 --> 01:08:32,526
Are you serious?
You think this is a game?

1384
01:08:32,610 --> 01:08:33,861
No. No. No. No. No.

1385
01:08:34,028 --> 01:08:35,279
Yeah. Yeah.

1386
01:08:41,827 --> 01:08:43,496
No! No! No!

1387
01:08:43,621 --> 01:08:45,289
No, seriously,
a colonic once a year.

1388
01:08:45,372 --> 01:08:46,373
Ass!

1389
01:08:46,457 --> 01:08:48,793
And you got a matching
little butler boy, you buttfuck!

1390
01:08:53,130 --> 01:08:54,965
- Are you done?
- I think so, yeah.

1391
01:08:55,049 --> 01:08:57,802
God! I pulled a muscle
in my back from yelling.

1392
01:08:58,719 --> 01:08:59,720
Ow!

1393
01:09:00,387 --> 01:09:03,724
Mortgage defaults
have done nothing but go up.

1394
01:09:04,058 --> 01:09:07,228
Yet you quote us
a higher price on the bonds.

1395
01:09:08,103 --> 01:09:10,290
Please explain that to me.
There's no way that makes sense.

1396
01:09:10,314 --> 01:09:13,317
There's no way you're marking
these swaps appropriately.

1397
01:09:13,984 --> 01:09:15,944
Why shouldn't we back out
of this trade right now?

1398
01:09:18,405 --> 01:09:20,074
Didn't I say when
we made this deal

1399
01:09:20,199 --> 01:09:21,826
that the ratings agencies, the SEC

1400
01:09:21,909 --> 01:09:24,411
and the big banks were clueless?
Didn't I say that?

1401
01:09:24,495 --> 01:09:25,788
- Yes.
- Didn't I say it?

1402
01:09:25,871 --> 01:09:27,706
Yes, you did. You did.

1403
01:09:27,832 --> 01:09:29,291
Shut up.

1404
01:09:29,375 --> 01:09:30,769
Now their foot's on fire, they think

1405
01:09:30,793 --> 01:09:32,395
their steak is done,
and you're surprised?

1406
01:09:32,419 --> 01:09:35,214
That's not stupidity. That's fraud.

1407
01:09:35,297 --> 01:09:37,067
Tell me the difference
between stupid and illegal,

1408
01:09:37,091 --> 01:09:39,093
and I'll have my wife's brother arrested.

1409
01:09:40,970 --> 01:09:41,971
That was funny.

1410
01:09:42,096 --> 01:09:45,766
I guess you just don't realize
how clueless the system really is.

1411
01:09:45,850 --> 01:09:48,185
Yes, there's some
shady shit going down,

1412
01:09:48,269 --> 01:09:51,605
but trust me, it's fueled by stupidity!

1413
01:09:52,815 --> 01:09:54,149
Look at yourselves.

1414
01:09:54,942 --> 01:09:58,404
You know,
you pass yourself off as cynical people

1415
01:09:58,487 --> 01:10:00,865
but you still have some faith
in the system, don't you?

1416
01:10:00,948 --> 01:10:02,241
I don't.

1417
01:10:02,324 --> 01:10:05,202
Well, except for Vinnie.
And who gives a shit?

1418
01:10:05,286 --> 01:10:07,037
- No way!
- Look...

1419
01:10:07,121 --> 01:10:10,291
Either we're right or we're wrong
in a giant, giant way.

1420
01:10:10,374 --> 01:10:12,251
And if we're wrong,
then we got to find someone

1421
01:10:12,334 --> 01:10:13,961
to help us get out of this trade.

1422
01:10:14,044 --> 01:10:16,797
I'm not feeling remotely confident
that we're right.

1423
01:10:16,881 --> 01:10:20,301
And if we're wrong,
who's gonna tell us?

1424
01:10:20,384 --> 01:10:23,804
Who understands this stuff?
It makes no sense!

1425
01:10:26,265 --> 01:10:28,058
I think we need to go to Vegas.

1426
01:10:28,142 --> 01:10:30,311
- What's in Vegas?
- Vegas?

1427
01:10:30,394 --> 01:10:32,271
What the hell's in Las Vegas?

1428
01:10:33,355 --> 01:10:36,567
The American Securitization Forum
is there next week.

1429
01:10:36,650 --> 01:10:39,069
Every bond and CDO salesman,
subprime lender

1430
01:10:39,153 --> 01:10:41,238
and swap trader is gonna be there.

1431
01:10:41,322 --> 01:10:44,074
I'm telling you,
your bet is against dumb money.

1432
01:10:44,158 --> 01:10:46,994
It's about time you find out
just how dumb that money really is.

1433
01:10:47,077 --> 01:10:48,203
God, I hate Vegas.

1434
01:10:48,329 --> 01:10:49,806
I hear the food has gotten
really good in Vegas.

1435
01:10:49,830 --> 01:10:51,332
They have a Nobu now.

1436
01:10:51,415 --> 01:10:52,791
Would you fucking stop it?

1437
01:11:39,380 --> 01:11:40,381
Any sense?

1438
01:11:40,547 --> 01:11:42,049
And if a bond is "rich" it is...

1439
01:11:42,383 --> 01:11:45,469
- I don't know, loaded with assets?
- "Rich" just means overpriced.

1440
01:11:45,552 --> 01:11:47,513
I can't sleep on planes,
so I did my homework.

1441
01:11:47,596 --> 01:11:50,015
Okay, let's focus. What's our goal?

1442
01:11:50,099 --> 01:11:52,434
To figure out if this
is a deal of a lifetime

1443
01:11:52,518 --> 01:11:54,311
or if everyone here
knows something we don't

1444
01:11:54,395 --> 01:11:56,230
and we're gonna get royally screwed.

1445
01:11:56,313 --> 01:11:59,066
Right. Remember that
when you meet with the guys from Bear.

1446
01:11:59,233 --> 01:12:00,985
I set you up with a face-to-face.

1447
01:12:01,068 --> 01:12:02,361
- Awesome.
- Where is that?

1448
01:12:02,444 --> 01:12:06,782
Holy shit. Five years ago,
Securitization was a loser convention.

1449
01:12:06,865 --> 01:12:08,951
100, maybe 200 people would show.

1450
01:12:09,076 --> 01:12:11,203
$500 billion a year later, you get this.

1451
01:12:11,286 --> 01:12:13,014
There's a lot of
smug-looking people in here, huh?

1452
01:12:13,038 --> 01:12:16,500
It's like someone hit a piñata
filled with white people who suck at golf.

1453
01:12:16,583 --> 01:12:18,085
I mean, who are all these clowns?

1454
01:12:18,168 --> 01:12:19,545
Oh, come on.
I think it looks fun.

1455
01:12:19,628 --> 01:12:23,090
Certainly. Vennett says these
are the people we're betting against.

1456
01:12:23,173 --> 01:12:25,050
- Yeah, here we go. Here we go.
- There he is.

1457
01:12:25,134 --> 01:12:26,885
Chris, on my left. Chris, on my left.

1458
01:12:27,344 --> 01:12:28,470
Gentlemen.

1459
01:12:28,554 --> 01:12:32,141
When do we get a chance to face time
with some of these lovely folks?

1460
01:12:32,224 --> 01:12:33,642
Chris, give him the keycards.

1461
01:12:33,767 --> 01:12:35,036
Do you even know which keycards
you're giving out?

1462
01:12:35,060 --> 01:12:36,121
- You're just giving them out?
- Thank you.

1463
01:12:36,145 --> 01:12:38,856
First of all, how was your travel?
How are you? Uneventful?

1464
01:12:38,939 --> 01:12:40,149
- Uneventful.
- Okay.

1465
01:12:40,232 --> 01:12:42,002
I've been here for six hours.
I've already been to the gym,

1466
01:12:42,026 --> 01:12:43,360
I had two poached eggs

1467
01:12:43,444 --> 01:12:45,130
and I played blackjack
with Harry Dean Stanton.

1468
01:12:45,154 --> 01:12:46,613
Thank you for your diary.

1469
01:12:47,072 --> 01:12:48,699
Face time. I'd like some face time.

1470
01:12:48,782 --> 01:12:50,301
Just remember.
We're here to gather information.

1471
01:12:50,325 --> 01:12:51,744
We're gathering information, okay?

1472
01:12:51,827 --> 01:12:54,204
We're not advertising
our short position. All right?

1473
01:12:54,288 --> 01:12:55,974
We don't want to spook everybody.
Can you do that?

1474
01:12:55,998 --> 01:12:57,600
I know you got a big mouth,
you like to run it.

1475
01:12:57,624 --> 01:12:59,376
Can you just keep it shut for a few days?

1476
01:12:59,460 --> 01:13:00,586
Okay. Okay.

1477
01:13:00,669 --> 01:13:02,504
Yeah, don't worry. We'll play nice.

1478
01:13:02,629 --> 01:13:03,922
Ladies and gentlemen.

1479
01:13:04,006 --> 01:13:06,216
Business is good.

1480
01:13:06,300 --> 01:13:07,718
Profits are strong

1481
01:13:07,801 --> 01:13:10,721
and the mortgage continues
to be the bedrock

1482
01:13:10,804 --> 01:13:13,140
on which this economy is built.

1483
01:13:17,811 --> 01:13:19,396
And, yes, we had to take some losses

1484
01:13:19,480 --> 01:13:22,775
in our subprime department last year,
but those losses

1485
01:13:22,858 --> 01:13:25,486
will be contained at only 5%.

1486
01:13:25,652 --> 01:13:27,780
Now, in our residential sector...

1487
01:13:27,863 --> 01:13:29,031
Mark, it's not a Q and A.

1488
01:13:29,156 --> 01:13:30,884
Our rollout of those
variable rate packages

1489
01:13:30,908 --> 01:13:32,534
were gobbled up by the consumers!

1490
01:13:32,659 --> 01:13:34,703
I have a question, please.

1491
01:13:36,497 --> 01:13:37,498
Uh...

1492
01:13:37,664 --> 01:13:39,750
Sir, the Q and A is after my statements.

1493
01:13:39,833 --> 01:13:42,252
But you know what? You seem anxious.
How can I help you?

1494
01:13:42,336 --> 01:13:44,254
- Thank you. How are you?
- Fine, thank you.

1495
01:13:44,338 --> 01:13:47,466
Would you say that it is a possibility

1496
01:13:47,549 --> 01:13:52,179
or a probability that
subprime losses stop at 5%?

1497
01:13:52,387 --> 01:13:53,472
Thank you.

1498
01:13:53,555 --> 01:13:58,352
I would say it is a very
strong probability, indeed.

1499
01:13:58,852 --> 01:14:01,396
So back to the residential sector.

1500
01:14:01,522 --> 01:14:03,607
When we rolled out the new
variable rates package...

1501
01:14:03,690 --> 01:14:06,193
- Excuse me.
- Um...

1502
01:14:07,694 --> 01:14:08,779
Yes, sir.

1503
01:14:08,862 --> 01:14:12,241
Zero! Zero!

1504
01:14:12,366 --> 01:14:15,119
There is a 0% chance

1505
01:14:15,202 --> 01:14:18,997
that your subprime losses
will stop at 5%.

1506
01:14:19,081 --> 01:14:20,201
Zero.

1507
01:14:20,249 --> 01:14:21,792
Excuse me.

1508
01:14:21,875 --> 01:14:22,918
I have to take this.

1509
01:14:23,001 --> 01:14:24,962
He must be from Bank of America.

1510
01:14:26,672 --> 01:14:29,400
- Our subprime department is fine.
- No, I'm not doing anything right now.

1511
01:14:29,424 --> 01:14:31,027
As I was saying,
our residential department...

1512
01:14:31,051 --> 01:14:32,219
How are the kids?

1513
01:14:32,344 --> 01:14:34,721
Consumers
reacted to our packages...

1514
01:14:34,805 --> 01:14:36,473
Mark Baum really did that.

1515
01:14:36,557 --> 01:14:37,867
When we were in Vegas, he did that.

1516
01:14:37,891 --> 01:14:40,060
He said that, he took the call.

1517
01:14:40,519 --> 01:14:42,229
Now you see what I had to deal with?

1518
01:14:55,909 --> 01:14:58,036
Yeah, the Beretta... Meh.

1519
01:14:58,120 --> 01:15:00,330
But this Uzi is fucking awesome!

1520
01:15:00,414 --> 01:15:03,000
I need this CDO machine
to run for another two years.

1521
01:15:03,083 --> 01:15:06,336
And then I'm rich as fuck
and I got my house in Aspen.

1522
01:15:06,420 --> 01:15:09,631
But do you have any concerns
about the performance

1523
01:15:09,715 --> 01:15:11,300
of the underlying securitizations?

1524
01:15:11,383 --> 01:15:13,177
It's easy to see that delinquencies

1525
01:15:13,260 --> 01:15:16,138
and default rates
are on the rise right now.

1526
01:15:16,221 --> 01:15:18,390
Could you please stop
being such a buzzkill, dude?

1527
01:15:18,765 --> 01:15:21,310
We didn't bring you out here
to talk about work, bro.

1528
01:15:21,393 --> 01:15:22,853
Why did you bring us out here?

1529
01:15:22,936 --> 01:15:26,148
Because we need to be able
to expense the ammo to a client.

1530
01:15:26,231 --> 01:15:29,234
I'm gonna go shoot some terrorists.
Watch how it's done, boys!

1531
01:15:29,443 --> 01:15:30,694
These guys are morons.

1532
01:15:30,819 --> 01:15:32,446
- Fucking tool.
- Whoo!

1533
01:15:32,779 --> 01:15:33,822
These guys are morons.

1534
01:15:34,948 --> 01:15:36,116
Fuck, yes! Boom!

1535
01:15:36,283 --> 01:15:37,409
Yeah, man!

1536
01:15:37,492 --> 01:15:39,929
We need to be buying up every swap
we can get our hands on here.

1537
01:15:39,953 --> 01:15:42,247
Just hold on, okay? Hold on.

1538
01:15:42,331 --> 01:15:44,625
My brother's ex-girlfriend
works for the SEC.

1539
01:15:44,750 --> 01:15:46,585
She just told me she's in town, okay?

1540
01:15:46,668 --> 01:15:48,795
So, if we're missing something,
maybe she can tell me.

1541
01:15:48,921 --> 01:15:50,547
You know, give me some insight.

1542
01:15:50,631 --> 01:15:52,382
In the meantime, you go to the main floor

1543
01:15:52,466 --> 01:15:54,176
and price some swaps.

1544
01:15:54,635 --> 01:15:56,053
Well, actually, we're

1545
01:15:56,136 --> 01:15:58,639
about to invest in housing bonds, and...

1546
01:15:58,722 --> 01:16:01,391
I was wondering if the SEC
is worried about them at all.

1547
01:16:01,475 --> 01:16:04,228
I know you're not allowed
to tell me specifics, but just generally.

1548
01:16:04,311 --> 01:16:06,521
Oh, we don't
investigate mortgage bonds.

1549
01:16:06,605 --> 01:16:09,942
Truth is, since we got our budget cut,
we don't investigate much.

1550
01:16:11,985 --> 01:16:14,947
- Then why are you here? I thought...
- I'm not here for the SEC.

1551
01:16:15,030 --> 01:16:16,698
I'm here on my own dime.

1552
01:16:17,658 --> 01:16:20,869
I'm floating my resume
to some big banks.

1553
01:16:20,953 --> 01:16:22,537
How's your brother, by the way?

1554
01:16:22,621 --> 01:16:24,498
How are you floating
your resume to big banks?

1555
01:16:24,581 --> 01:16:26,059
I mean, you're supposed to be the ones,

1556
01:16:26,083 --> 01:16:27,417
you know, policing the big banks.

1557
01:16:27,501 --> 01:16:28,919
Grow up, Jamie.

1558
01:16:29,002 --> 01:16:32,756
There must be some kind of law against
working for a financial institution

1559
01:16:32,839 --> 01:16:36,051
right after you've been working
in financial regulation, right?

1560
01:16:36,134 --> 01:16:38,220
No. No.

1561
01:16:39,304 --> 01:16:41,848
Hey! Dougie!

1562
01:16:42,683 --> 01:16:45,644
Hey! Come over here.
What are you doing at Caesars?

1563
01:16:45,727 --> 01:16:47,229
He's at Goldman.

1564
01:16:47,854 --> 01:16:48,897
See you.

1565
01:16:48,981 --> 01:16:54,027
We can do BBB-level swaps
at 500 basis points. Maybe.

1566
01:16:54,111 --> 01:16:57,906
You're pricing the swaps
like the bond is gonna collapse

1567
01:16:57,990 --> 01:17:00,367
even though the bond value's
going up? Really?

1568
01:17:00,909 --> 01:17:01,994
Sign of the times.

1569
01:17:02,077 --> 01:17:03,437
What the hell is going on?

1570
01:18:01,970 --> 01:18:05,766
Lewis, can you come in
early tomorrow, please?

1571
01:18:05,849 --> 01:18:08,143
I need to unload the AIG
and Countrywide

1572
01:18:08,226 --> 01:18:09,686
and Freddie Mac positions

1573
01:18:09,770 --> 01:18:12,272
so that we can afford
the premiums on the...

1574
01:18:13,523 --> 01:18:16,443
core mortgage shorts on the swaps.

1575
01:18:16,902 --> 01:18:18,403
No problem, Dr. Burry.

1576
01:18:20,447 --> 01:18:21,615
- Dr. Burry?
- Hmm?

1577
01:18:25,202 --> 01:18:26,244
If the investors withdraw,

1578
01:18:26,328 --> 01:18:29,081
what's going to happen here?
Are we done?

1579
01:18:29,206 --> 01:18:31,124
Honestly, I don't know.

1580
01:18:38,799 --> 01:18:41,051
The bonds aren't going down.

1581
01:18:42,302 --> 01:18:44,971
They won't move. It's possible

1582
01:18:45,389 --> 01:18:49,976
that we are in a completely
fraudulent system.

1583
01:18:51,395 --> 01:18:54,064
Or... You're wrong.

1584
01:18:58,819 --> 01:18:59,903
Sure.

1585
01:19:00,654 --> 01:19:04,658
It's possible I'm wrong.
I just don't know how.

1586
01:19:09,371 --> 01:19:13,542
I guess when someone's wrong,
they never...

1587
01:19:13,917 --> 01:19:16,169
They never know how.

1588
01:19:20,465 --> 01:19:21,508
See you in the morning.

1589
01:19:21,633 --> 01:19:22,676
Yeah.

1590
01:19:24,469 --> 01:19:26,471
Even Bear upped their prices.

1591
01:19:27,055 --> 01:19:29,558
And they keep calling us Brownhole.

1592
01:19:29,641 --> 01:19:31,327
You just don't have the money
or the reputation.

1593
01:19:31,351 --> 01:19:32,686
Don't take it personally.

1594
01:19:32,811 --> 01:19:34,163
I don't think I have
the strip club in me tonight.

1595
01:19:34,187 --> 01:19:37,858
I'm just gonna get some ginger ale
and watch some pay-per-view.

1596
01:19:37,941 --> 01:19:40,318
I'll book us some flights out
for the morning.

1597
01:19:41,736 --> 01:19:44,364
A deal.
We need a deal, right? A deal.

1598
01:19:44,448 --> 01:19:46,241
We need a deal we can afford.

1599
01:19:46,366 --> 01:19:48,660
We need a deal
that they're not gonna refuse.

1600
01:19:48,743 --> 01:19:52,080
So... What can we do? We can...

1601
01:19:53,373 --> 01:19:56,293
The AA tranches. What if we
bet against the AA tranches?

1602
01:19:56,376 --> 01:19:57,711
Who's not gonna take that bet?

1603
01:19:58,420 --> 01:20:01,339
We know they say
they're 95% AAA-rated,

1604
01:20:01,423 --> 01:20:03,425
but in reality they're more like 25%.

1605
01:20:03,508 --> 01:20:05,927
Some of them are 0%!

1606
01:20:06,011 --> 01:20:08,638
We also know that if
the bottom tranches fail at over 8%,

1607
01:20:08,722 --> 01:20:09,949
the upper tranches are affected.

1608
01:20:09,973 --> 01:20:11,183
They go to zero.

1609
01:20:11,433 --> 01:20:14,394
I'll bet you right now
that those AA's are actually like B's.

1610
01:20:14,853 --> 01:20:17,939
I rarely ever say these words,
but I think Charlie's right.

1611
01:20:18,273 --> 01:20:19,941
Look, Ben.

1612
01:20:21,610 --> 01:20:23,028
The payoff

1613
01:20:23,528 --> 01:20:24,946
is 200 to 1.

1614
01:20:25,030 --> 01:20:27,073
But they're all taking
the ratings at face value.

1615
01:20:27,199 --> 01:20:30,577
So they're charging pennies
on the dollar a bet against the AA's.

1616
01:20:32,204 --> 01:20:35,040
Just when I start thinking
you guys are clowns...

1617
01:20:35,123 --> 01:20:37,626
No one on the planet's
betting against AA's.

1618
01:20:37,709 --> 01:20:40,629
The banks will think we're either high
or having a stroke.

1619
01:20:40,712 --> 01:20:43,048
They'll take every dime we have to offer.

1620
01:20:45,634 --> 01:20:46,968
Kinda brilliant.

1621
01:20:48,762 --> 01:20:50,847
This is what we did
that no one else thought of.

1622
01:20:50,931 --> 01:20:53,850
Not even Baum or Burry
thought to short the AA's.

1623
01:20:53,934 --> 01:20:55,310
But we did.

1624
01:20:55,393 --> 01:20:56,937
Little Brownhole Capital.

1625
01:20:57,270 --> 01:21:02,192
We're interested in shorting
some of the AA tranche of CDOs.

1626
01:21:02,275 --> 01:21:04,069
Come on, guys, what's the angle?

1627
01:21:04,152 --> 01:21:06,446
Oh, got no angle.
We're new to this. We're just excited.

1628
01:21:06,571 --> 01:21:10,283
We want to do $15 million
in swaps on the AA tranche.

1629
01:21:10,742 --> 01:21:11,826
I don't understand.

1630
01:21:11,910 --> 01:21:14,538
You can buy as much
AA tranche as you want.

1631
01:21:16,748 --> 01:21:18,875
$40 million against the AA.

1632
01:21:18,959 --> 01:21:21,169
Brother, I will sell you
as much as you want.

1633
01:21:21,461 --> 01:21:23,672
You understand perfectly, Bob.
You want the deal?

1634
01:21:25,840 --> 01:21:27,842
That's cool. That's all right with me.

1635
01:21:30,053 --> 01:21:31,263
Pleasure.

1636
01:21:36,101 --> 01:21:37,978
Oh!

1637
01:21:39,479 --> 01:21:41,559
Don't do that. Stop. Stop.

1638
01:21:42,107 --> 01:21:43,316
- Stop that.
- Charlie.

1639
01:21:44,025 --> 01:21:45,485
Stop it! Stop.

1640
01:21:47,904 --> 01:21:48,989
What?

1641
01:21:50,407 --> 01:21:51,967
Do you have any idea what you just did?

1642
01:21:52,200 --> 01:21:53,928
Come on. We just made
the deal of our lifetimes!

1643
01:21:53,952 --> 01:21:55,120
We should celebrate.

1644
01:21:55,203 --> 01:21:57,122
You just bet against
the American economy.

1645
01:21:57,205 --> 01:21:58,707
Fuck, yeah, we did!

1646
01:21:58,790 --> 01:22:00,750
- Fuck, yeah!
- Which means...

1647
01:22:00,834 --> 01:22:03,503
Which means if we're right...

1648
01:22:04,546 --> 01:22:07,924
If we're right, people lose homes.
People lose jobs.

1649
01:22:08,008 --> 01:22:11,177
People lose retirement savings.
People lose pensions.

1650
01:22:11,303 --> 01:22:12,530
You know what I hate
about fucking banking?

1651
01:22:12,554 --> 01:22:14,156
It reduces people to numbers.
Here's a number.

1652
01:22:14,180 --> 01:22:17,017
Every 1% unemployment goes up,
40,000 people die. Did you know that?

1653
01:22:17,100 --> 01:22:18,602
- No.
- Did you know that?

1654
01:22:18,685 --> 01:22:20,270
No, I didn't know that.

1655
01:22:21,730 --> 01:22:23,398
We were just excited.

1656
01:22:25,817 --> 01:22:27,819
Just don't fucking dance.

1657
01:22:28,486 --> 01:22:30,326
- All right.
- Where are you going?

1658
01:22:34,701 --> 01:22:36,870
Whoa, I just got really scared.

1659
01:22:38,413 --> 01:22:40,332
First of all, great show today.

1660
01:22:40,415 --> 01:22:41,875
- You were terrific.
- Thank you.

1661
01:22:41,958 --> 01:22:43,585
Your big mouth was a revelation.

1662
01:22:43,668 --> 01:22:45,378
I appreciate that.

1663
01:22:45,503 --> 01:22:47,315
You worried you and your swaps
are getting played?

1664
01:22:47,339 --> 01:22:50,467
Well, this is an opportunity for you
to meet who you're betting against.

1665
01:22:50,550 --> 01:22:52,403
Try not to get too righteous
and listen a little.

1666
01:22:52,427 --> 01:22:53,803
Okay, fine. Who is this guy?

1667
01:22:53,928 --> 01:22:55,597
A real solid-gold asshole.

1668
01:22:55,764 --> 01:22:56,848
I'm a CDO manager.

1669
01:22:56,973 --> 01:22:58,016
A "CDO manager"?

1670
01:22:58,099 --> 01:22:59,517
Yeah, at Harding Advisors.

1671
01:23:00,101 --> 01:23:03,229
I didn't realize that there was
anything to manage with CDOs.

1672
01:23:04,189 --> 01:23:05,190
Oh.

1673
01:23:05,940 --> 01:23:08,485
We select the securities
that go into the CDO portfolio

1674
01:23:08,568 --> 01:23:09,944
and monitor the assets.

1675
01:23:10,028 --> 01:23:11,821
I do most of Merrill Lynch's CDOs.

1676
01:23:11,905 --> 01:23:14,866
Do you represent the investors
or Merrill Lynch?

1677
01:23:14,949 --> 01:23:15,992
The investors.

1678
01:23:16,076 --> 01:23:17,118
You do.

1679
01:23:17,202 --> 01:23:18,536
- Yeah.
- But...

1680
01:23:18,745 --> 01:23:20,625
Merrill Lynch isn't gonna
send you any customers

1681
01:23:20,705 --> 01:23:24,250
unless you put Merrill Lynch's bonds
in your CDO.

1682
01:23:25,377 --> 01:23:28,088
Good question. Let's just say
Merrill and I have, um...

1683
01:23:28,713 --> 01:23:30,799
We have a good relationship.

1684
01:23:30,924 --> 01:23:33,134
You have a good relationship
with Merrill Lynch.

1685
01:23:33,218 --> 01:23:34,945
We've been doing business
together for a long time.

1686
01:23:34,969 --> 01:23:37,430
And so the CDOs that you create

1687
01:23:37,555 --> 01:23:41,476
are of the highest quality
and the highest value.

1688
01:23:41,559 --> 01:23:43,478
- Absolutely. Yep.
- Absolutely.

1689
01:23:43,561 --> 01:23:47,107
Are you at all concerned
about the rising default rates?

1690
01:23:49,067 --> 01:23:52,237
I assume no risk for these
products myself, Mark.

1691
01:23:54,906 --> 01:23:56,074
Okay.

1692
01:23:57,659 --> 01:24:00,829
So let me get this straight.
The bank calls you up.

1693
01:24:01,413 --> 01:24:03,015
They give you the bonds
they want to sell.

1694
01:24:03,039 --> 01:24:04,374
They give you clients,

1695
01:24:04,457 --> 01:24:06,835
they give you money
to run your business.

1696
01:24:06,918 --> 01:24:08,628
Give you fat fees for doing so.

1697
01:24:08,712 --> 01:24:10,714
But you represent the investors?

1698
01:24:12,257 --> 01:24:13,299
Is that right?

1699
01:24:13,425 --> 01:24:14,467
Yeah.

1700
01:24:14,551 --> 01:24:16,070
But we're not
in the Merrill Lynch building.

1701
01:24:16,094 --> 01:24:17,738
- Okay. Where are you?
- We're in New Jersey.

1702
01:24:17,762 --> 01:24:19,848
You're 20 minutes away.

1703
01:24:19,931 --> 01:24:21,850
Well, five if you use a helicopter.

1704
01:24:23,727 --> 01:24:24,853
That's funny, huh?

1705
01:24:24,978 --> 01:24:26,146
That's hilarious.

1706
01:24:29,357 --> 01:24:30,400
Oh, boy.

1707
01:24:30,775 --> 01:24:32,986
Your boss is about to explode.

1708
01:24:33,069 --> 01:24:34,696
No, he's too curious to explode.

1709
01:24:34,779 --> 01:24:36,239
Hold on. Say that again.

1710
01:24:36,322 --> 01:24:38,450
CDO "A" has parts of CDO "B".

1711
01:24:38,533 --> 01:24:40,452
And CDO "B" has parts of CDO "A".

1712
01:24:40,535 --> 01:24:42,787
But then they both
get put inside CDO "C".

1713
01:24:42,871 --> 01:24:44,622
Yeah, that one's called CDO squared.

1714
01:24:44,706 --> 01:24:46,791
A CDO of a CDO.

1715
01:24:47,208 --> 01:24:48,209
All right?

1716
01:24:48,376 --> 01:24:50,336
And then there's CDOs
made up of the opposite side

1717
01:24:50,420 --> 01:24:51,963
of the bet you made with your swaps.

1718
01:24:52,213 --> 01:24:54,507
We call them synthetic CDOs.

1719
01:24:54,632 --> 01:24:56,801
What did you say? Synthetic CDOs.

1720
01:24:56,885 --> 01:24:58,595
That is fucking crazy.

1721
01:24:58,720 --> 01:25:00,388
It's not. It's awesome.

1722
01:25:01,806 --> 01:25:05,310
His face is starting to boil.
He looks like the bad guy from Dune.

1723
01:25:09,397 --> 01:25:11,316
All right, let's say

1724
01:25:11,816 --> 01:25:15,153
you have a pool of $50 million
in subprime loans.

1725
01:25:15,487 --> 01:25:18,072
How much money could be
out there betting on it,

1726
01:25:18,156 --> 01:25:20,950
in your synthetic CDOs and swaps

1727
01:25:21,034 --> 01:25:22,619
right now, tonight?

1728
01:25:22,702 --> 01:25:25,330
Let's see, $50 million... Hmm...

1729
01:25:26,331 --> 01:25:27,331
A billion dollars.

1730
01:25:27,373 --> 01:25:28,374
What?

1731
01:25:29,501 --> 01:25:31,479
If the mortgage bonds
that Michael Burry discovered

1732
01:25:31,503 --> 01:25:32,837
were the match...

1733
01:25:34,255 --> 01:25:36,674
How much bigger is the market
for insuring mortgage bonds

1734
01:25:36,758 --> 01:25:38,218
than actual mortgages?

1735
01:25:39,385 --> 01:25:40,553
About 20 times.

1736
01:25:40,720 --> 01:25:42,806
If the mortgage bonds
were the match

1737
01:25:42,889 --> 01:25:45,600
and the CDOs were
the kerosene-soaked rags,

1738
01:25:45,683 --> 01:25:47,727
then the synthetic CDO
was the atomic bomb

1739
01:25:47,811 --> 01:25:50,772
with the drunk President
holding his finger over the button.

1740
01:25:50,855 --> 01:25:53,107
It was at that moment
in that dumb restaurant

1741
01:25:53,191 --> 01:25:56,361
with that stupid look on his face
that Mark Baum realized

1742
01:25:56,444 --> 01:25:58,863
that the whole world economy
might collapse.

1743
01:26:02,492 --> 01:26:04,410
And I know what you're thinking.

1744
01:26:04,494 --> 01:26:06,830
"What the fuck is a synthetic CDO?"

1745
01:26:09,207 --> 01:26:12,836
Well, here's Dr. Richard Thaler,
father of behavioral economics

1746
01:26:12,919 --> 01:26:15,547
and Selena Gomez to explain.

1747
01:26:15,880 --> 01:26:19,050
Okay. So here's how
a synthetic CDO works.

1748
01:26:19,133 --> 01:26:22,011
Let's say I bet $10 million
on a blackjack hand.

1749
01:26:22,095 --> 01:26:24,597
$10 million because this hand
is meant to represent

1750
01:26:24,973 --> 01:26:27,225
a single mortgage bond.

1751
01:26:30,186 --> 01:26:33,606
Okay, Selena has a pretty good
hand here, showing 18.

1752
01:26:33,731 --> 01:26:34,732
Dealer showing seven.

1753
01:26:34,816 --> 01:26:36,860
That's a really good hand for Selena.

1754
01:26:36,943 --> 01:26:38,420
Good odds. In fact,
her chances of winning

1755
01:26:38,444 --> 01:26:40,822
this hand are 87%.

1756
01:26:40,905 --> 01:26:44,284
So, my odds are good.
I'm on a winning streak.

1757
01:26:44,367 --> 01:26:47,036
Everybody in this place
wants to get in on the action.

1758
01:26:47,120 --> 01:26:48,496
How could I lose, right?

1759
01:26:48,580 --> 01:26:50,081
Now, this is a classic error.

1760
01:26:50,164 --> 01:26:53,126
In basketball it's called
the Hot Hand Fallacy.

1761
01:26:53,209 --> 01:26:55,753
A player makes a bunch
of shots in a row.

1762
01:26:55,837 --> 01:26:58,131
People are sure they're
gonna make the next one.

1763
01:26:58,214 --> 01:27:00,174
People think that whatever's
happening now

1764
01:27:00,258 --> 01:27:03,011
is gonna continue to
happen into the future.

1765
01:27:03,094 --> 01:27:06,431
During the real estate boom,
markets were going up and up

1766
01:27:06,514 --> 01:27:08,234
and people thought
they would never go down.

1767
01:27:08,266 --> 01:27:10,810
So people who are watching
and think that I won't lose

1768
01:27:10,894 --> 01:27:12,353
will make a side bet.

1769
01:27:12,437 --> 01:27:14,689
Now, this is the first synthetic CDO.

1770
01:27:14,772 --> 01:27:16,357
I love Selena Gomez.

1771
01:27:16,441 --> 01:27:17,942
I bet you $50 million she wins.

1772
01:27:18,026 --> 01:27:20,111
And I'll give you 3-to-1 odds.

1773
01:27:20,194 --> 01:27:24,032
3-to-1 odds? Okay, I'll take that bet.

1774
01:27:24,115 --> 01:27:27,452
Now, somebody else
is gonna want to make a bet

1775
01:27:27,535 --> 01:27:28,661
on the outcome of their bet.

1776
01:27:28,828 --> 01:27:29,954
Bet you 50 million she wins.

1777
01:27:30,038 --> 01:27:32,999
That will lead to synthetic
CDO number two.

1778
01:27:33,082 --> 01:27:36,252
Hey, I bet you $200 million
that lady in the glasses

1779
01:27:36,419 --> 01:27:37,921
wins that bet.

1780
01:27:38,087 --> 01:27:41,174
She probably will win.
So I want a great payoff.

1781
01:27:41,341 --> 01:27:42,425
How about 20-to-1?

1782
01:27:42,550 --> 01:27:43,676
Deal.

1783
01:27:44,010 --> 01:27:48,306
And this will go on and on with more
and more synthetic CDOs.

1784
01:27:48,389 --> 01:27:52,435
And we can transform an original
$10 million investment

1785
01:27:52,602 --> 01:27:54,520
into billions of dollars.

1786
01:27:55,438 --> 01:27:56,773
You okay?

1787
01:27:58,191 --> 01:27:59,192
No.

1788
01:28:00,568 --> 01:28:02,403
I actually feel pretty sick.

1789
01:28:07,617 --> 01:28:09,535
So I'm going to leave.

1790
01:28:11,120 --> 01:28:13,373
You think I'm a parasite,
don't you, Mr. Baum?

1791
01:28:14,082 --> 01:28:18,002
But, apparently,
society values me very much.

1792
01:28:19,045 --> 01:28:20,797
In fact, let's do this.

1793
01:28:22,840 --> 01:28:25,843
I'll tell you how much I'm worth.

1794
01:28:26,386 --> 01:28:27,887
You tell me how much you're worth.

1795
01:28:29,097 --> 01:28:34,185
God, you are an incredibly
big piece of shit.

1796
01:28:39,941 --> 01:28:41,818
Short everything that guy has touched.

1797
01:28:41,901 --> 01:28:43,528
I want half a billion more in swaps.

1798
01:28:44,070 --> 01:28:46,340
You sure about that?
The collateral calls could bankrupt you.

1799
01:28:46,364 --> 01:28:47,364
Yeah. Yeah.

1800
01:28:47,407 --> 01:28:48,408
Where are you going?

1801
01:28:48,491 --> 01:28:51,494
I am going to try to find
moral redemption

1802
01:28:51,577 --> 01:28:53,413
at the roulette table.

1803
01:29:57,602 --> 01:29:58,978
Hey, hey, hey!

1804
01:30:03,066 --> 01:30:04,525
Things are worse than I thought.

1805
01:30:06,652 --> 01:30:08,571
I honestly think
the economy might collapse.

1806
01:30:08,988 --> 01:30:10,114
But you've been saying

1807
01:30:10,198 --> 01:30:13,284
that the system's broken
for years, Mark. So...

1808
01:30:13,743 --> 01:30:15,661
Why are you so shocked?

1809
01:30:18,164 --> 01:30:21,584
It's more twisted
than I could have imagined.

1810
01:30:21,667 --> 01:30:23,544
You love to be the virtuous one.

1811
01:30:24,003 --> 01:30:25,588
I'm a banker. I'm a part of it.

1812
01:30:25,671 --> 01:30:27,965
You always have, Mark.
Like you're untainted.

1813
01:30:28,049 --> 01:30:31,511
It changed me.
It changed me into a person

1814
01:30:32,095 --> 01:30:33,930
who is not able to
reach out to someone...

1815
01:30:34,013 --> 01:30:35,932
He was in pain.
My brother was in real pain.

1816
01:30:36,516 --> 01:30:38,851
There's no perfect way to help.

1817
01:30:41,854 --> 01:30:44,315
It's sad. It's scary.

1818
01:30:44,440 --> 01:30:47,610
So stop trying to fix the world.

1819
01:30:47,693 --> 01:30:48,778
He told me...

1820
01:30:48,861 --> 01:30:50,196
You're not a saint.

1821
01:30:50,279 --> 01:30:52,031
Saints don't live on Park Avenue.

1822
01:30:52,240 --> 01:30:53,866
That he was having bad thoughts.

1823
01:30:53,950 --> 01:30:56,744
Just feel the feelings
like the rest of us.

1824
01:30:57,078 --> 01:31:01,249
My first response
was to offer him some money.

1825
01:31:01,582 --> 01:31:04,085
I offered him fucking money!

1826
01:31:09,757 --> 01:31:12,385
His face was so smashed.

1827
01:31:31,445 --> 01:31:32,780
That's right.

1828
01:32:39,472 --> 01:32:40,806
Michael?

1829
01:32:40,890 --> 01:32:42,225
- Michael?
- Yes. Yes.

1830
01:32:42,308 --> 01:32:44,393
- Is everything okay?
- Yes, honey.

1831
01:32:44,477 --> 01:32:46,604
- You sure?
- Yeah, baby.

1832
01:32:48,397 --> 01:32:49,690
I'm fine.

1833
01:32:58,658 --> 01:33:00,326
To all investors.

1834
01:33:00,409 --> 01:33:01,494
As you may know,

1835
01:33:02,495 --> 01:33:06,082
our agreement allows me
to take extraordinary measures

1836
01:33:06,540 --> 01:33:09,460
when markets
aren't functioning properly.

1837
01:33:09,543 --> 01:33:13,256
I currently have reason to
believe the mortgage bond market

1838
01:33:13,923 --> 01:33:15,675
is fraudulent.

1839
01:33:17,843 --> 01:33:22,598
So, in order to protect investors
from this fraudulent market,

1840
01:33:22,682 --> 01:33:25,935
I've decided to restrict
investors' withdrawals

1841
01:33:26,018 --> 01:33:27,687
until further notice.

1842
01:33:28,020 --> 01:33:31,691
Sincerely, Dr. Michael J. Burry.

1843
01:34:39,258 --> 01:34:40,843
I never would have guessed my life

1844
01:34:40,926 --> 01:34:43,429
could change as much
as it has since I moved to L.A.

1845
01:34:43,512 --> 01:34:45,890
It's not just, like,
that easy to, like, not see you.

1846
01:34:45,973 --> 01:34:49,060
He lashed out at rumors
he used performance enhancing drugs.

1847
01:34:49,268 --> 01:34:50,686
This record is not tainted.

1848
01:34:50,770 --> 01:34:51,937
Oh, my God, dude.

1849
01:34:52,021 --> 01:34:53,731
Will you please stop
changing the channels?

1850
01:34:53,814 --> 01:34:55,441
- You're driving me crazy.
- All right.

1851
01:34:55,524 --> 01:34:57,485
- Fine.
- Just put the business news on.

1852
01:34:58,444 --> 01:34:59,671
And the S&P
picked up three points.

1853
01:34:59,695 --> 01:35:00,696
Jesus!

1854
01:35:00,780 --> 01:35:02,531
Mortgage meltdown continued today.

1855
01:35:02,615 --> 01:35:05,326
Subprime mortgage lender
New Century Financial,

1856
01:35:05,451 --> 01:35:08,079
once the industry leader, by the way,
filed for bankruptcy.

1857
01:35:08,162 --> 01:35:10,042
- The company immediately...
- Whoa, whoa, whoa.

1858
01:35:10,706 --> 01:35:11,933
Good time for my voice to go...

1859
01:35:11,957 --> 01:35:14,210
Fired 3,200 workers.

1860
01:35:14,293 --> 01:35:16,629
The manufacturing index also
fell in the month of March...

1861
01:35:16,712 --> 01:35:17,797
It's starting.

1862
01:35:17,880 --> 01:35:19,524
A warning that
economic growth could slow.

1863
01:35:19,548 --> 01:35:21,008
The Institute of Supply Management

1864
01:35:21,133 --> 01:35:22,551
also reported a rise in prices...

1865
01:35:22,635 --> 01:35:24,261
I'm gonna call my mom.

1866
01:35:26,514 --> 01:35:29,392
The principal source
of the slowdown in economic growth...

1867
01:35:29,475 --> 01:35:31,519
Time and time and time again,

1868
01:35:31,644 --> 01:35:33,771
I have gone to bat for you, Mark!

1869
01:35:33,854 --> 01:35:35,207
We've known each other
for seven years...

1870
01:35:35,231 --> 01:35:37,566
She's got some lungs on her.
I'm impressed.

1871
01:35:38,734 --> 01:35:40,569
I can't help but enjoy it.

1872
01:35:41,487 --> 01:35:43,173
There's no fucking way.
There's no fucking way

1873
01:35:43,197 --> 01:35:44,657
that the big banks are that stupid.

1874
01:35:45,658 --> 01:35:47,493
Bye, Kathy!

1875
01:35:52,164 --> 01:35:53,165
Well?

1876
01:35:54,375 --> 01:35:56,377
Kathy thinks
that it would be a good idea

1877
01:35:56,460 --> 01:35:58,003
if we sold our shorts.

1878
01:35:58,087 --> 01:35:59,088
What else is new?

1879
01:35:59,171 --> 01:36:01,048
And she said that
Morgan Stanley will buy them.

1880
01:36:01,132 --> 01:36:02,133
Holy shit!

1881
01:36:02,842 --> 01:36:04,093
What did you say?

1882
01:36:04,176 --> 01:36:05,845
I told her we're not selling shit.

1883
01:36:12,017 --> 01:36:15,855
Uh, if you need the files for 2005...

1884
01:36:16,021 --> 01:36:19,024
Mr. Fields' suit is very specific
to files from the past year.

1885
01:36:19,775 --> 01:36:22,528
Good. Then get out.
Say hi to Lawrence for me.

1886
01:36:22,611 --> 01:36:23,779
Will do.

1887
01:36:26,824 --> 01:36:28,492
You can't call me back for a week?

1888
01:36:28,576 --> 01:36:30,411
I am so sorry, Mike.

1889
01:36:30,786 --> 01:36:33,956
Goldman had a systems failure.
I lost a ton of messages.

1890
01:36:34,039 --> 01:36:36,083
Yeah, B of A said
they had a power outage,

1891
01:36:36,208 --> 01:36:39,378
and Morgan Stanley
said their server crashed.

1892
01:36:39,503 --> 01:36:40,629
Huh. That's weird.

1893
01:36:40,713 --> 01:36:43,257
Well, I would call it improbable.

1894
01:36:43,340 --> 01:36:46,886
So where do you have
our position marked?

1895
01:36:47,720 --> 01:36:49,472
I think it's the same, Mike.

1896
01:36:49,555 --> 01:36:51,432
What? Can you explain
that to me, please,

1897
01:36:51,515 --> 01:36:54,810
because how can the value
of an insurance contract

1898
01:36:54,894 --> 01:36:59,106
not be affected by the demise
of the very thing it insures?

1899
01:36:59,190 --> 01:37:01,984
They're independent markets.
They're not always correlated.

1900
01:37:02,067 --> 01:37:03,068
I know it sounds odd,

1901
01:37:03,152 --> 01:37:05,613
but these are very complicated products.

1902
01:37:06,447 --> 01:37:08,324
They are correlated.

1903
01:37:08,407 --> 01:37:10,469
They're gonna lose their houses,
they're gonna lose their jobs,

1904
01:37:10,493 --> 01:37:11,573
they're gonna lose their...

1905
01:37:14,371 --> 01:37:16,207
Will you listen to me?

1906
01:37:16,415 --> 01:37:19,043
This is like the end of capitalism.

1907
01:37:19,168 --> 01:37:22,505
This is like the Dark Ages all over again.

1908
01:37:23,547 --> 01:37:24,673
I don't want to talk to Dad.

1909
01:37:24,757 --> 01:37:27,301
Okay, I love you, too.
Save your money.

1910
01:37:28,010 --> 01:37:32,014
She says I need to be on Xanax
and double my dose of Zoloft.

1911
01:37:32,181 --> 01:37:34,141
I asked Bear Stearns to price our shorts.

1912
01:37:34,225 --> 01:37:35,865
They tell me the CDOs
still haven't moved.

1913
01:37:35,893 --> 01:37:37,686
This is fucking insane!

1914
01:37:37,770 --> 01:37:39,331
You realize that?
These people are crooks

1915
01:37:39,355 --> 01:37:41,398
and they should be in prison.

1916
01:37:41,565 --> 01:37:42,691
Look at the TABX.

1917
01:37:42,775 --> 01:37:44,610
You can see that the CDOs
are worth zero!

1918
01:37:44,693 --> 01:37:45,795
So you know what they're doing, huh?

1919
01:37:45,819 --> 01:37:46,963
You know what they're doing, right?

1920
01:37:46,987 --> 01:37:48,656
Yeah. They're unloading them.

1921
01:37:48,739 --> 01:37:52,034
They're selling their dog shit CDOs,
then they go to another bank

1922
01:37:52,117 --> 01:37:54,161
and short the shit they just fucking sold!

1923
01:37:54,328 --> 01:37:55,913
Let's go to the press, man!

1924
01:37:55,996 --> 01:37:59,291
This is a massive story.
Who wouldn't publish it?

1925
01:38:00,251 --> 01:38:01,585
Robert Redford!

1926
01:38:02,002 --> 01:38:03,462
No, you don't understand!

1927
01:38:03,546 --> 01:38:05,089
I got it, guys. I got it.

1928
01:38:06,840 --> 01:38:08,425
What am I supposed to do?

1929
01:38:08,509 --> 01:38:10,278
Do you want me to write a piece called
"We're All Fucked"?

1930
01:38:10,302 --> 01:38:12,179
Yes! That's a perfect title!

1931
01:38:12,263 --> 01:38:16,433
Casey, right now every bank in town
is unloading these shit bonds

1932
01:38:16,600 --> 01:38:18,310
onto unsuspecting customers.

1933
01:38:18,394 --> 01:38:21,397
And they won't devalue them
until they get them off their books.

1934
01:38:21,480 --> 01:38:23,941
This level of criminality
is unprecedented,

1935
01:38:24,024 --> 01:38:26,277
even on fucking Wall Street.

1936
01:38:27,403 --> 01:38:30,239
Jamie... And this is me
being honest here, okay?

1937
01:38:30,531 --> 01:38:33,075
It took me years to build
my relationships on Wall Street.

1938
01:38:33,158 --> 01:38:37,329
No bank or ratings agency is going
to confirm a story like this

1939
01:38:37,413 --> 01:38:39,915
just because it comes
from two guys in a...

1940
01:38:40,040 --> 01:38:43,294
Sorry, garage band hedge fund
that thinks it's the apocalypse.

1941
01:38:44,962 --> 01:38:45,963
Wow.

1942
01:38:46,130 --> 01:38:47,482
I thought you were for real, Casey.

1943
01:38:47,506 --> 01:38:49,025
You know, I'll have to say I really did.

1944
01:38:49,049 --> 01:38:50,050
Really?

1945
01:38:50,301 --> 01:38:52,445
Yeah, Jamie, you try being for real
with a three-year-old

1946
01:38:52,469 --> 01:38:54,305
and a wife getting her master's degree.

1947
01:38:54,555 --> 01:38:57,891
I'm not gonna burn my reputation
on your wild hunch.

1948
01:38:58,726 --> 01:38:59,893
Wow.

1949
01:39:00,060 --> 01:39:01,228
Wow.

1950
01:39:01,395 --> 01:39:02,438
Thanks for coming, guys.

1951
01:39:02,521 --> 01:39:03,748
Totally fucking awesome to see you.

1952
01:39:03,772 --> 01:39:05,774
Yeah, Casey. I've always hated you,

1953
01:39:05,899 --> 01:39:07,901
because you were a prick in college

1954
01:39:07,985 --> 01:39:10,321
and you are a prick today!

1955
01:39:10,779 --> 01:39:13,282
Thanks, Charlie.
Still living with your mom?

1956
01:39:13,824 --> 01:39:15,284
Charlie, come on!

1957
01:39:15,367 --> 01:39:17,286
Mark Baum again. Call me.

1958
01:39:17,870 --> 01:39:19,496
Subprime bonds fell off a cliff.

1959
01:39:19,580 --> 01:39:21,540
Rumor has it
the default numbers are huge.

1960
01:39:21,624 --> 01:39:24,418
Who got the remittance data early?
I bet it's Goldman.

1961
01:39:24,501 --> 01:39:25,836
Yeah, fuck you very much.

1962
01:39:25,919 --> 01:39:28,756
Jared, it's chaos down here.
Where are we?

1963
01:39:29,173 --> 01:39:32,384
"And Caesar wept, for there
were no more worlds to conquer."

1964
01:39:33,969 --> 01:39:35,220
Shane?

1965
01:39:35,596 --> 01:39:36,847
Shane?

1966
01:39:38,432 --> 01:39:41,143
Well, nobody's buying CDO
or mortgage bonds anymore

1967
01:39:41,226 --> 01:39:42,519
and everybody wants swaps.

1968
01:39:42,853 --> 01:39:45,189
Swaps are now the most
popular product on the street.

1969
01:39:45,272 --> 01:39:47,107
- That's good for us.
- Yes and no.

1970
01:39:47,191 --> 01:39:48,668
I heard from somebody
who heard from somebody...

1971
01:39:48,692 --> 01:39:51,403
No, Alex, no. Sorry.

1972
01:39:54,573 --> 01:39:56,408
Bennie Cleager
over at Morgan is taking on

1973
01:39:56,492 --> 01:39:58,092
some heavy losses
in the bond department.

1974
01:39:59,578 --> 01:40:01,121
Your ship might be taking on water.

1975
01:40:01,622 --> 01:40:03,957
It might be time to get
our lifejacket and get out.

1976
01:40:04,708 --> 01:40:06,210
I'm jacked.

1977
01:40:06,752 --> 01:40:09,254
I'm jacked! I'm jacked to the tits!

1978
01:40:09,880 --> 01:40:10,923
Good.

1979
01:40:11,006 --> 01:40:13,092
- Do you feel it?
- No.

1980
01:40:19,264 --> 01:40:20,724
What'd you hear, Tommy?

1981
01:40:22,893 --> 01:40:23,894
It's happening.

1982
01:40:23,977 --> 01:40:25,813
Everybody wants our swaps.

1983
01:40:26,021 --> 01:40:28,023
Kathy's office is looking for you.

1984
01:40:28,357 --> 01:40:30,776
They're singing
a different tune now, aren't they?

1985
01:40:32,111 --> 01:40:33,612
That's not good.

1986
01:40:38,450 --> 01:40:39,827
Maybe later. Not now.

1987
01:40:39,910 --> 01:40:42,287
This is a joke. Never.

1988
01:40:45,791 --> 01:40:46,875
Listening.

1989
01:40:47,292 --> 01:40:48,877
- Dr. Burry?
- Yeah.

1990
01:40:48,961 --> 01:40:50,379
Deeb Winston, Goldman Sachs.

1991
01:40:50,462 --> 01:40:52,023
Listen, I've been reviewing your position.

1992
01:40:52,047 --> 01:40:54,328
I wanted to discuss your marks
and make sure they're fair.

1993
01:40:54,383 --> 01:40:57,219
Yeah,
I think you mean that you've

1994
01:40:57,302 --> 01:41:00,055
secured a net short position yourselves.

1995
01:41:00,222 --> 01:41:02,975
So you're free to mark my swaps
accurately for once

1996
01:41:03,142 --> 01:41:05,811
because it's now
in your interest to do so.

1997
01:41:07,980 --> 01:41:10,065
I'm not sure what you want me to say.

1998
01:41:10,232 --> 01:41:11,734
I think that...

1999
01:41:13,235 --> 01:41:15,320
I think that you've already said it.

2000
01:41:23,162 --> 01:41:25,348
You tell Jeff at Goldman
that I'm not transferring funds.

2001
01:41:25,372 --> 01:41:26,999
This is bullshit!

2002
01:41:34,173 --> 01:41:35,924
Okay, we'll talk later.

2003
01:41:36,425 --> 01:41:37,843
Thank you.

2004
01:41:40,345 --> 01:41:42,222
Thanks for coming so quickly, Mark.

2005
01:41:42,306 --> 01:41:43,640
- Yeah.
- Um...

2006
01:41:43,932 --> 01:41:45,243
I know you've been hearing rumblings

2007
01:41:45,267 --> 01:41:46,787
about some losses Morgan has suffered.

2008
01:41:46,852 --> 01:41:48,812
- Congratulations.
- On what?

2009
01:41:49,438 --> 01:41:50,481
Oh.

2010
01:41:51,190 --> 01:41:52,691
Thanks. Um...

2011
01:41:52,775 --> 01:41:54,109
Having fun?

2012
01:41:55,152 --> 01:41:56,487
Yes.

2013
01:41:57,696 --> 01:41:59,031
Tons. Um...

2014
01:41:59,531 --> 01:42:01,867
I just wanted you to know that, um...

2015
01:42:02,451 --> 01:42:04,131
That, yes,
Morgan has suffered some losses,

2016
01:42:04,203 --> 01:42:07,998
but our liquidity is strong
and there's no cause for concern.

2017
01:42:08,207 --> 01:42:11,043
Would Bennie Cleager be concerned?

2018
01:42:11,376 --> 01:42:12,711
Because word on the street

2019
01:42:12,795 --> 01:42:15,631
is that he took some pretty heavy losses.

2020
01:42:16,965 --> 01:42:18,759
Kathy, come on.
We know each other.

2021
01:42:18,842 --> 01:42:21,053
What's going on?

2022
01:42:21,470 --> 01:42:22,971
How bad is this?

2023
01:42:23,138 --> 01:42:24,306
Okay.

2024
01:42:25,098 --> 01:42:28,143
Two years ago, Bennie Cleager
in Morgan's bond department

2025
01:42:28,227 --> 01:42:31,772
also started shorting subprime housing,
$2 billion in BBBs.

2026
01:42:31,855 --> 01:42:33,166
Bennie is smarter than I thought.

2027
01:42:33,190 --> 01:42:34,608
No, he's not smart at all.

2028
01:42:34,691 --> 01:42:37,069
The premiums on the swap
ate into his desk's profit.

2029
01:42:37,152 --> 01:42:39,112
To cover his BBB shorts,

2030
01:42:39,196 --> 01:42:41,698
he sold a lot of A and AA swaps
as protection.

2031
01:42:41,782 --> 01:42:42,783
A lot.

2032
01:42:43,492 --> 01:42:46,662
He believed that there was no way
that they could be affected.

2033
01:42:47,246 --> 01:42:50,582
Tell me Morgan Stanley doesn't hold
the contracts on these swaps.

2034
01:42:53,919 --> 01:42:55,420
Holy shit.

2035
01:42:56,088 --> 01:42:59,508
All this time I've been trying to figure
out who I'm betting against,

2036
01:42:59,758 --> 01:43:01,593
and it's Morgan Stanley.

2037
01:43:02,553 --> 01:43:03,887
Which is me.

2038
01:43:05,597 --> 01:43:07,933
What's your exposure? $3 billion?

2039
01:43:08,851 --> 01:43:10,686
Please, don't tell me it's more than four.

2040
01:43:10,853 --> 01:43:12,479
I can't answer that.
I can't answer that.

2041
01:43:12,563 --> 01:43:15,732
Yes, you can answer that,
because I walk in here

2042
01:43:15,816 --> 01:43:18,902
and people are crying in your hallway.

2043
01:43:19,278 --> 01:43:20,445
Kathy,

2044
01:43:20,946 --> 01:43:22,990
you bring me in to tell me
everything's fine,

2045
01:43:23,073 --> 01:43:24,283
and everything's not fine.

2046
01:43:24,950 --> 01:43:26,827
What, what is happening?

2047
01:43:29,037 --> 01:43:31,206
The long exposure is...

2048
01:43:33,125 --> 01:43:34,626
$15 billion.

2049
01:43:40,591 --> 01:43:41,717
Jesus!

2050
01:43:41,800 --> 01:43:44,177
He kept saying defaults
over 8% were impossible.

2051
01:43:44,261 --> 01:43:45,262
Oh, my God.

2052
01:43:45,345 --> 01:43:46,905
That there would be a million homeless!

2053
01:43:48,015 --> 01:43:50,267
Yeah, but we have nothing
to do with Morgan Stanley.

2054
01:43:53,186 --> 01:43:54,313
Yeah...

2055
01:43:54,646 --> 01:43:56,481
Tell the bankruptcy court.

2056
01:43:56,732 --> 01:43:59,860
Morgan fails, all our accounts
go on their balance sheet.

2057
01:44:00,485 --> 01:44:02,112
It's just crazy.

2058
01:44:02,321 --> 01:44:03,655
Morgan makes the sucker's bet

2059
01:44:03,739 --> 01:44:06,074
and we pay their fucking gambling debt?

2060
01:44:06,575 --> 01:44:09,077
Short the bank stocks. Then we wait.

2061
01:44:12,998 --> 01:44:15,000
Or we sell our swaps
when the market opens.

2062
01:44:16,752 --> 01:44:19,796
We get our bonuses,
our investors get their profits, we get...

2063
01:44:19,880 --> 01:44:22,382
What, 30 cents on the dollar?
It's not bad.

2064
01:44:22,674 --> 01:44:24,176
We're three times that.

2065
01:44:24,259 --> 01:44:26,029
Not if there's
no market left to sell them in.

2066
01:44:26,053 --> 01:44:27,971
Forget it.
We're not giving out any lifeboats.

2067
01:44:28,055 --> 01:44:30,432
If Morgan goes under,
we end up with nothing.

2068
01:44:30,515 --> 01:44:31,516
Vinnie.

2069
01:44:33,268 --> 01:44:36,438
Jesus, come on.
I say when we sell.

2070
01:44:40,567 --> 01:44:42,945
Look, I get that this is personal for you,

2071
01:44:43,028 --> 01:44:45,322
but we have a fiduciary responsibility.

2072
01:44:45,405 --> 01:44:46,907
No. No, we don't.

2073
01:44:47,199 --> 01:44:49,368
Nobody's acting responsible.

2074
01:44:49,534 --> 01:44:52,287
Fuck responsibility. Are you kidding me?

2075
01:44:52,788 --> 01:44:54,873
The assholes at the big banks will take...

2076
01:44:54,957 --> 01:44:56,059
You boys want any appetizers?

2077
01:44:56,083 --> 01:44:57,834
We're talking, please!

2078
01:44:58,585 --> 01:45:00,087
- Excuse us.
- Sorry.

2079
01:45:02,214 --> 01:45:05,008
We are going to wait,
and we are going to wait,

2080
01:45:05,133 --> 01:45:06,635
and we are going to wait

2081
01:45:06,802 --> 01:45:10,555
until they feel the pain,
until they start to bleed.

2082
01:45:10,889 --> 01:45:13,016
- That is what I want.
- But what about our clients

2083
01:45:13,100 --> 01:45:14,452
who've entrusted us with their savings...

2084
01:45:14,476 --> 01:45:15,644
I say when we sell.

2085
01:45:15,727 --> 01:45:16,770
This isn't about you.

2086
01:45:16,853 --> 01:45:18,164
This isn't about you
and your Upper East Side

2087
01:45:18,188 --> 01:45:19,374
- mahogany soapbox.
- Hey! Hey!

2088
01:45:19,398 --> 01:45:20,732
I say when we sell!

2089
01:45:22,317 --> 01:45:24,069
Whatever you say, Mark.

2090
01:45:30,784 --> 01:45:32,577
Dude, did you hear the news?

2091
01:45:34,413 --> 01:45:36,748
Okay. So, not only do
two mortgage hedge funds

2092
01:45:36,832 --> 01:45:38,625
backed by Bear Stearns go belly up,

2093
01:45:38,709 --> 01:45:41,837
but now there's
a class-action lawsuit against Bear.

2094
01:45:41,920 --> 01:45:43,088
Holy shit!

2095
01:45:43,171 --> 01:45:45,674
Let's go! Push! Push!

2096
01:45:45,757 --> 01:45:47,235
So, what?
Bear could really collapse here.

2097
01:45:47,259 --> 01:45:49,112
- This is a risk we really shouldn't take.
- Then what?

2098
01:45:49,136 --> 01:45:51,138
We bought 80%
of our swaps at Bear.

2099
01:45:51,221 --> 01:45:52,806
- We'd lose everything.
- So what?

2100
01:45:52,889 --> 01:45:54,307
- Hey, sir?
- One second!

2101
01:45:54,433 --> 01:45:55,433
That's my opinion.

2102
01:45:55,475 --> 01:45:56,715
We bought these fucking things.

2103
01:45:56,768 --> 01:45:57,996
We have no clue how to sell them.

2104
01:45:58,020 --> 01:45:59,460
I know. We have to get Ben to do it.

2105
01:45:59,521 --> 01:46:01,582
I've been trying to call him
and he won't get back to me.

2106
01:46:01,606 --> 01:46:03,859
No. He's on vacation
with his wife's family.

2107
01:46:03,942 --> 01:46:05,110
They're in England.

2108
01:46:06,069 --> 01:46:07,070
What?

2109
01:46:14,786 --> 01:46:16,371
- Hello, Ben. Hey.
- Guys?

2110
01:46:16,455 --> 01:46:18,040
Yeah, we're here.
Can you hear us?

2111
01:46:18,123 --> 01:46:19,624
- Guys?
- Yeah, we got you.

2112
01:46:19,791 --> 01:46:22,627
Yeah. I hardly got
cell phone or Wi-Fi service.

2113
01:46:23,754 --> 01:46:26,339
I'm trying to sell $200 million
worth of securities.

2114
01:46:26,673 --> 01:46:29,009
In a pub. It smells like sheep.

2115
01:46:29,301 --> 01:46:30,302
You can do this.

2116
01:46:30,427 --> 01:46:31,612
I don't want
to pressure you, Ben

2117
01:46:31,636 --> 01:46:34,222
but if you don't pull this off,
we lose everything.

2118
01:46:34,473 --> 01:46:37,768
All right. Let's see what
Credit Suisse's appetite is.

2119
01:46:42,939 --> 01:46:44,107
This is Brownfield Fund.

2120
01:46:44,191 --> 01:46:46,109
I want to unload my credit default swaps.

2121
01:46:46,443 --> 01:46:47,986
All right. What you got?

2122
01:46:48,153 --> 01:46:49,821
Twenty AA tranches of A.B.S. CDOs.

2123
01:46:50,447 --> 01:46:52,824
A.B.S.? Are these...
These are pretty bad?

2124
01:46:52,991 --> 01:46:54,993
Absolutely. They're complete shit.

2125
01:46:55,285 --> 01:46:56,787
What's your notional value?

2126
01:46:56,870 --> 01:46:59,539
Face value is 205 million. Dollars.

2127
01:46:59,831 --> 01:47:02,417
All right, we could, we could go to forty.

2128
01:47:02,501 --> 01:47:03,821
No. We want at least 100 million.

2129
01:47:03,877 --> 01:47:07,547
100 million? Who are you,
a drug dealer or a banker?

2130
01:47:07,672 --> 01:47:10,175
'Cause if you're a banker,
you can fuck right off!

2131
01:47:10,258 --> 01:47:11,486
I don't know if we can make a market.

2132
01:47:11,510 --> 01:47:12,670
Just give me your best price?

2133
01:47:12,719 --> 01:47:15,263
Yeah. Chuck 100 million in for me, mate.

2134
01:47:15,347 --> 01:47:16,598
I think we're far apart.

2135
01:47:17,099 --> 01:47:19,518
Look, if you don't want the deal,
you can just hang up.

2136
01:47:21,978 --> 01:47:23,522
That's what I thought.

2137
01:47:24,314 --> 01:47:26,316
- 90 million.
- 70.

2138
01:47:27,317 --> 01:47:29,152
85.

2139
01:47:29,361 --> 01:47:31,321
- 78.
- 84.

2140
01:47:32,531 --> 01:47:34,533
- 78.
- 84.

2141
01:47:36,368 --> 01:47:37,661
It's Dr. Burry.

2142
01:47:38,245 --> 01:47:41,081
Looks like the collapse
of the financial sector is imminent.

2143
01:47:42,082 --> 01:47:44,042
Let's start to sell my position.

2144
01:47:44,417 --> 01:47:46,253
It's $1.3 billion.

2145
01:47:47,754 --> 01:47:49,589
Sure, I'll hold.

2146
01:48:13,405 --> 01:48:14,906
So, I was right.

2147
01:48:15,740 --> 01:48:18,243
I took a rash of shit for two years, but

2148
01:48:18,660 --> 01:48:20,579
I was right.

2149
01:48:20,912 --> 01:48:22,664
And everyone was wrong.

2150
01:48:23,582 --> 01:48:26,751
And, yeah,
I got a bonus check for it. Sue me.

2151
01:48:27,419 --> 01:48:28,503
You know?

2152
01:48:28,920 --> 01:48:32,549
It's a lot of money. I get it.
I can feel you judging me.

2153
01:48:32,632 --> 01:48:33,925
That's palpable.

2154
01:48:34,634 --> 01:48:38,638
But, hey, I never said
I was the hero of this story.

2155
01:48:39,264 --> 01:48:41,808
Hey, Ben. How are we looking?

2156
01:48:43,018 --> 01:48:44,352
Eight... on...

2157
01:48:45,103 --> 01:48:46,438
Sorry?

2158
01:48:46,813 --> 01:48:48,940
No. Eighty million.

2159
01:48:49,149 --> 01:48:50,835
$80 million, $80 million,
that's good, right?

2160
01:48:50,859 --> 01:48:52,003
- Eighty is great.
- Is that good?

2161
01:48:52,027 --> 01:48:53,227
- Eighty is great, Ben.
- Okay.

2162
01:48:53,278 --> 01:48:55,614
Thank you. Thank you so much.

2163
01:48:55,947 --> 01:48:57,824
Most of it went to UBS.

2164
01:48:57,949 --> 01:48:59,492
You're very lucky. The largest bank

2165
01:48:59,576 --> 01:49:02,787
in France froze customer's money
market accounts today.

2166
01:49:02,913 --> 01:49:04,456
This thing's hitting Europe.

2167
01:49:04,539 --> 01:49:06,374
Greece and Iceland are finished.

2168
01:49:06,458 --> 01:49:07,792
Spain is teetering.

2169
01:49:07,876 --> 01:49:09,461
Are you serious? Fuck.

2170
01:49:09,878 --> 01:49:11,713
Ben, call us when you get home.

2171
01:49:11,796 --> 01:49:13,089
But, hey, before you go,

2172
01:49:13,173 --> 01:49:15,217
uh, I'm just wondering...

2173
01:49:15,884 --> 01:49:17,135
Um...

2174
01:49:18,303 --> 01:49:20,347
Why did you do this with us?

2175
01:49:21,306 --> 01:49:23,308
You didn't have to. Uh...

2176
01:49:23,642 --> 01:49:27,312
Thank you. But, uh, why?

2177
01:49:28,230 --> 01:49:31,149
You guys said you wanted to get rich.
Now you're rich.

2178
01:49:31,691 --> 01:49:32,776
Goal!

2179
01:49:32,859 --> 01:49:34,539
Pamplona puts themselves
on the scoreboard.

2180
01:49:38,657 --> 01:49:41,201
As the housing markets
and banks continued to hemorrhage,

2181
01:49:41,284 --> 01:49:43,703
only one of the big shorts refused to sell.

2182
01:49:43,787 --> 01:49:44,996
Mark Baum.

2183
01:49:48,375 --> 01:49:50,418
So it was beyond perfect
when he was asked to speak

2184
01:49:50,502 --> 01:49:52,337
at a conference opposite Bruce Miller,

2185
01:49:52,420 --> 01:49:54,881
the famous bullish investor.

2186
01:49:55,257 --> 01:49:57,467
After he and Mark had their debate,
Alan Greenspan,

2187
01:49:57,550 --> 01:50:01,012
one of the architects of the whole crisis
was scheduled to speak.

2188
01:50:01,263 --> 01:50:03,848
Everyone in Mark's office showed up,
he even invited friends.

2189
01:50:05,350 --> 01:50:08,645
This was the Ali vs. Foreman
of the financial world.

2190
01:50:09,020 --> 01:50:11,022
The realist versus the fools.

2191
01:50:11,481 --> 01:50:15,068
And if it seems almost too perfect,
trust me, this happened.

2192
01:50:17,195 --> 01:50:23,368
Welcome, everyone.
Please give a generous welcome to

2193
01:50:23,702 --> 01:50:27,289
Mr. Bruce Miller and Mark Baum.

2194
01:50:44,472 --> 01:50:45,974
Strap yourself in.

2195
01:50:47,225 --> 01:50:49,394
So as some of you may know,
Bear Stearns

2196
01:50:49,477 --> 01:50:52,063
has just received a loan from JP Morgan.

2197
01:50:52,147 --> 01:50:54,983
Of course, we're gonna have to
wait and see how the markets react,

2198
01:50:55,066 --> 01:50:58,778
but that should lay to rest any
concerns about the bank's health.

2199
01:50:58,862 --> 01:51:03,575
Now, I take it you have no plans to sell
your $200 million in Bear stock?

2200
01:51:03,908 --> 01:51:05,594
No. As a matter of fact,
when we're done here,

2201
01:51:05,618 --> 01:51:07,412
I'll probably go out and buy some more.

2202
01:51:08,913 --> 01:51:12,417
For the opposing view, Mr. Baum.

2203
01:51:14,836 --> 01:51:16,921
I got to stand for this.

2204
01:51:19,674 --> 01:51:21,259
Okay, hi.

2205
01:51:21,676 --> 01:51:24,095
My firm's thesis is pretty simple.

2206
01:51:24,429 --> 01:51:26,264
Wall Street took a good idea,

2207
01:51:26,348 --> 01:51:27,849
Lewis Ranieri's mortgage bond,

2208
01:51:28,099 --> 01:51:30,352
and turned it into an atomic bomb

2209
01:51:30,435 --> 01:51:32,604
of fraud and stupidity

2210
01:51:32,937 --> 01:51:35,607
that's on its way to decimating
the world economy.

2211
01:51:35,690 --> 01:51:36,900
How do you really feel?

2212
01:51:38,360 --> 01:51:40,278
I'm glad you still
have a sense of humor.

2213
01:51:40,362 --> 01:51:42,405
I wouldn't if I were you.

2214
01:51:42,781 --> 01:51:46,826
Now, anyone who knows me knows that

2215
01:51:46,910 --> 01:51:49,371
I have no problem telling
someone they're wrong.

2216
01:51:49,454 --> 01:51:53,541
Bear Stearns
is denying rumors of liquidity problems.

2217
01:51:53,625 --> 01:51:55,919
Holy fuck, it's 39 now!

2218
01:51:58,088 --> 01:52:00,632
We live in an era of fraud in America.

2219
01:52:00,715 --> 01:52:03,093
Not just in banking, but in government,

2220
01:52:03,551 --> 01:52:06,513
education, religion, food,

2221
01:52:06,596 --> 01:52:08,264
even baseball.

2222
01:52:10,141 --> 01:52:11,351
What bothers me isn't that

2223
01:52:11,976 --> 01:52:15,814
fraud is not nice or that fraud is mean.

2224
01:52:16,106 --> 01:52:17,982
It's that for 15,000 years

2225
01:52:18,817 --> 01:52:20,360
fraud and short-sighted thinking

2226
01:52:20,443 --> 01:52:22,821
have never, ever worked.

2227
01:52:22,946 --> 01:52:25,865
- Jesus, Bear at 37...
- Not once.

2228
01:52:25,949 --> 01:52:29,202
Eventually, people get caught,
things go south.

2229
01:52:29,285 --> 01:52:30,725
It's fucking plummeting, man.

2230
01:52:30,829 --> 01:52:33,123
When the hell did we forget all that?

2231
01:52:37,293 --> 01:52:39,796
I thought we were
better than this. I really did.

2232
01:52:40,130 --> 01:52:42,173
And the fact that we're not

2233
01:52:42,298 --> 01:52:45,009
doesn't make me feel
all right and superior.

2234
01:52:45,093 --> 01:52:47,595
It makes me feel... Sad.

2235
01:52:48,012 --> 01:52:50,348
Every time I fucking hit
"refresh" it's dropping, man.

2236
01:52:52,016 --> 01:52:53,685
And as fun as it is to watch

2237
01:52:53,977 --> 01:52:56,271
pompous, dumb Wall Streeters
be wildly wrong,

2238
01:52:56,354 --> 01:52:58,648
and you are wrong, sir,

2239
01:52:59,482 --> 01:53:02,485
I just know, that at the end of the day

2240
01:53:03,153 --> 01:53:05,864
average people are going to be the ones

2241
01:53:05,989 --> 01:53:08,158
that are gonna have to pay for all this.

2242
01:53:08,825 --> 01:53:10,952
Because they always, always do.

2243
01:53:11,035 --> 01:53:12,078
It's 32.

2244
01:53:12,162 --> 01:53:13,538
It's fucking tanked, man.

2245
01:53:13,663 --> 01:53:15,665
That's my two cents. Thank you.

2246
01:53:17,000 --> 01:53:18,334
Let me drop a deuce at Deutsche.

2247
01:53:18,501 --> 01:53:20,503
Does our bull have a response?

2248
01:53:21,504 --> 01:53:25,008
Only that, in the entire history
of Wall Street,

2249
01:53:25,133 --> 01:53:27,427
no investment bank has ever failed

2250
01:53:27,510 --> 01:53:29,512
unless caught in criminal activities.

2251
01:53:30,013 --> 01:53:33,516
So, yes, I stand by
my Bear Stearns optimism.

2252
01:53:33,850 --> 01:53:35,852
Mr. Miller, I'm sorry.
Quick question.

2253
01:53:36,352 --> 01:53:38,021
From the time you guys started talking,

2254
01:53:38,188 --> 01:53:41,065
Bear Stearns stock has
fallen more than 38%.

2255
01:53:41,149 --> 01:53:42,525
Would you still buy more?

2256
01:53:42,734 --> 01:53:46,863
Yeah, sure, of course
I'd buy more. Why not?

2257
01:53:47,322 --> 01:53:48,323
Boom.

2258
01:53:51,576 --> 01:53:52,911
Jesus Christ!

2259
01:53:54,370 --> 01:53:57,540
That concludes
the first part of our presentation.

2260
01:53:58,541 --> 01:54:03,171
Up next, we have the legendary
former chairman of the Fed,

2261
01:54:03,254 --> 01:54:05,048
Alan Greenspan.

2262
01:54:05,131 --> 01:54:06,466
Folks?

2263
01:54:24,609 --> 01:54:26,045
Employees
of Lehman Brothers today,

2264
01:54:26,069 --> 01:54:29,405
as the Wall Street giant's stock
went to zero.

2265
01:54:29,739 --> 01:54:31,658
The collapse of the venerable
New York bank

2266
01:54:31,741 --> 01:54:35,370
follows a tumultuous few months
of market volatility

2267
01:54:35,453 --> 01:54:38,081
and fear in the world economy.

2268
01:54:38,414 --> 01:54:40,124
I got to see inside.

2269
01:54:40,917 --> 01:54:42,252
How?

2270
01:54:42,961 --> 01:54:43,962
Come on.

2271
01:54:44,796 --> 01:54:47,882
I left my phone in the office.
I threw my pass out already.

2272
01:54:47,966 --> 01:54:49,384
Do you mind if I take your pass?

2273
01:54:49,467 --> 01:54:52,053
I don't give a shit anymore.
You can do what you want.

2274
01:54:59,936 --> 01:55:01,646
Go directly to your transportation.

2275
01:55:01,729 --> 01:55:03,439
Do not talk to the press.

2276
01:55:03,606 --> 01:55:06,943
After 18 years, I just leave?
That's just fucking great!

2277
01:55:07,151 --> 01:55:10,029
I'll talk to whoever the hell I want!

2278
01:55:10,113 --> 01:55:12,448
Do not talk to the press.

2279
01:55:12,782 --> 01:55:14,742
Go directly to your transportation.

2280
01:55:14,826 --> 01:55:15,910
Do not talk to...

2281
01:55:18,496 --> 01:55:19,765
Hey, look,
you wanna get a bite tonight?

2282
01:55:19,789 --> 01:55:22,208
There's this, uh, new Cuban place

2283
01:55:22,292 --> 01:55:24,603
just opened on the Lower East Side.
It's supposed to be good.

2284
01:55:24,627 --> 01:55:26,296
- Oh, really?
- Yeah.

2285
01:55:26,796 --> 01:55:28,131
You and I?

2286
01:55:28,339 --> 01:55:29,924
Yeah, or other people.

2287
01:55:30,008 --> 01:55:31,808
- That sounds nice. I would like that.
- Yeah.

2288
01:55:31,843 --> 01:55:33,136
Finally.

2289
01:55:33,511 --> 01:55:34,846
Mark, hey.

2290
01:55:35,138 --> 01:55:36,458
It's a bloodbath up here.

2291
01:55:36,514 --> 01:55:38,016
Morgan stock has lost half its value.

2292
01:55:38,099 --> 01:55:40,393
It's down to 23. 10. It's in freefall.

2293
01:55:40,476 --> 01:55:43,479
Clients want to talk to you
about pulling their money.

2294
01:55:43,688 --> 01:55:47,191
It's now or never, Mark.
We got to sell.

2295
01:55:50,486 --> 01:55:51,654
Mark.

2296
01:55:53,031 --> 01:55:54,198
Mark, you hear me?

2297
01:55:54,532 --> 01:55:55,992
Mailbox one.

2298
01:55:56,159 --> 01:55:58,870
You have 15 messages.

2299
01:56:00,330 --> 01:56:01,956
Mike, I can't seem
to get ahold of you.

2300
01:56:02,040 --> 01:56:04,500
Will you please call me
at your earliest convenience.

2301
01:56:05,835 --> 01:56:08,671
It's Jack. You're buying stocks?

2302
01:56:08,880 --> 01:56:11,841
The market's at an all-time low.
This is crazy!

2303
01:56:12,091 --> 01:56:14,427
akumenang.com

2304
01:56:14,844 --> 01:56:16,179
My profile said,

2305
01:56:16,387 --> 01:56:18,723
"I am a medical student
with only one eye,

2306
01:56:18,806 --> 01:56:20,725
"an awkward social manner,

2307
01:56:20,808 --> 01:56:24,395
"and $145,000 in student loans."

2308
01:56:25,063 --> 01:56:26,522
She wrote back,

2309
01:56:26,814 --> 01:56:28,454
"You're just what I've been looking for."

2310
01:56:29,359 --> 01:56:31,027
She meant honest.

2311
01:56:31,235 --> 01:56:32,904
So let me be honest.

2312
01:56:33,071 --> 01:56:37,325
The housing crisis represents
the greatest financial opportunity of...

2313
01:56:37,408 --> 01:56:40,203
Making money is not
like I thought it would be.

2314
01:56:40,536 --> 01:56:45,124
This business kills
the part of life that is essential.

2315
01:56:45,208 --> 01:56:48,252
The part that has nothing
to do with business.

2316
01:56:50,546 --> 01:56:52,590
For the past two years, my insides...

2317
01:56:53,758 --> 01:56:56,135
have felt like
they're eating themselves.

2318
01:56:56,260 --> 01:56:58,554
All the people I respected

2319
01:56:59,055 --> 01:57:01,557
won't talk to me anymore

2320
01:57:01,808 --> 01:57:03,643
except through lawyers.

2321
01:57:07,397 --> 01:57:08,773
People

2322
01:57:09,565 --> 01:57:13,236
want an authority to tell them
how to value things...

2323
01:57:13,611 --> 01:57:18,700
but they choose this authority not
based on facts or results.

2324
01:57:19,158 --> 01:57:23,830
They choose it because it
seems authoritative and familiar.

2325
01:57:23,913 --> 01:57:26,374
And I am not

2326
01:57:26,457 --> 01:57:29,502
and never have been "familiar".

2327
01:57:31,462 --> 01:57:32,463
So...

2328
01:57:33,339 --> 01:57:36,467
So, I've come to the sullen realization

2329
01:57:36,551 --> 01:57:39,345
that I must close down the fund.

2330
01:57:39,429 --> 01:57:42,515
Sincerely, Michael J. Burry, M.D.

2331
01:58:42,241 --> 01:58:44,327
This isn't how I pictured it.

2332
01:58:46,329 --> 01:58:47,497
What did you think we'd find?

2333
01:58:47,580 --> 01:58:48,623
I don't know.

2334
01:58:50,500 --> 01:58:52,001
Grownups.

2335
01:58:55,922 --> 01:58:57,423
Mark, you there?

2336
01:59:00,092 --> 01:59:01,344
Mark?

2337
01:59:01,594 --> 01:59:04,514
Paulson and Bernanke
just left the White House.

2338
01:59:09,852 --> 01:59:12,021
There's going to be a bailout.

2339
01:59:13,606 --> 01:59:17,026
Well, they had to. Right?

2340
01:59:17,360 --> 01:59:18,587
Paper markets would've collapsed.

2341
01:59:18,611 --> 01:59:19,779
They knew.

2342
01:59:20,029 --> 01:59:21,590
Cash would've stopped
coming out of ATMs.

2343
01:59:21,614 --> 01:59:23,157
They had to backstop this.

2344
01:59:23,449 --> 01:59:25,785
They knew the taxpayers
would bail them out.

2345
01:59:25,868 --> 01:59:28,287
They weren't being stupid.
They just didn't care.

2346
01:59:28,454 --> 01:59:30,623
Yeah. 'Cause they're fucking crooks.

2347
01:59:32,542 --> 01:59:35,086
But at least we're going to
see some of them go to jail.

2348
01:59:36,295 --> 01:59:39,549
Right? I mean, they're gonna
have to break up the banks.

2349
01:59:40,633 --> 01:59:41,968
I mean, the party's over.

2350
01:59:42,051 --> 01:59:44,720
I don't know. I don't know, Vinnie.

2351
01:59:47,473 --> 01:59:48,975
I have a feeling

2352
01:59:49,058 --> 01:59:50,935
that in a few years
people are gonna be doing

2353
01:59:51,018 --> 01:59:54,021
what they always do
when the economy tanks.

2354
01:59:54,480 --> 01:59:57,692
They will be blaming
immigrants and poor people.

2355
01:59:57,984 --> 01:59:59,318
But Mark was wrong.

2356
02:00:00,444 --> 02:00:02,405
In the years that followed,
hundreds of bankers

2357
02:00:02,488 --> 02:00:05,116
and rating agencies executives
went to jail.

2358
02:00:05,283 --> 02:00:07,326
The SEC was completely overhauled.

2359
02:00:07,493 --> 02:00:10,204
And Congress had no choice
but to break up the big banks

2360
02:00:10,621 --> 02:00:13,082
and regulate the mortgage
and derivatives industries.

2361
02:00:17,879 --> 02:00:19,213
Just kidding.

2362
02:00:19,463 --> 02:00:21,674
The banks took the money
the American people gave them

2363
02:00:21,757 --> 02:00:24,051
and used it to pay themselves
huge bonuses

2364
02:00:24,135 --> 02:00:26,387
and lobby Congress to kill big reform.

2365
02:00:26,554 --> 02:00:28,806
And then they blamed
immigrants and poor people.

2366
02:00:28,890 --> 02:00:31,058
And this time, even teachers.

2367
02:00:32,435 --> 02:00:33,675
And when all was said and done,

2368
02:00:33,728 --> 02:00:35,479
only one single banker went to jail.

2369
02:00:36,397 --> 02:00:37,523
This poor schmuck.

2370
02:00:37,607 --> 02:00:40,067
Kareem Serageldin from Credit Suisse.

2371
02:00:40,401 --> 02:00:42,737
He hid a few billion
in mortgage bond losses,

2372
02:00:42,820 --> 02:00:46,073
something most of the big banks did
on a good day during the crisis.

2373
02:00:47,700 --> 02:00:49,702
Mark, can we sell now?

2374
02:00:51,495 --> 02:00:53,998
The fund will make almost $1 billion.

2375
02:00:54,081 --> 02:00:55,708
You'll clear $200 mil, Mark.

2376
02:00:56,876 --> 02:00:59,128
You know, once we sell,

2377
02:00:59,879 --> 02:01:01,756
we'll be just like the rest of them.

2378
02:01:01,839 --> 02:01:02,965
You know that.

2379
02:01:03,299 --> 02:01:04,943
No, we're not.
We're not the bad guys here.

2380
02:01:04,967 --> 02:01:08,471
We didn't defraud the American people
and prey on their dreams

2381
02:01:08,554 --> 02:01:10,139
of owning a home. All right?

2382
02:01:10,222 --> 02:01:11,432
They did.

2383
02:01:12,642 --> 02:01:14,477
And now we get to
kick them in the teeth.

2384
02:01:19,899 --> 02:01:21,901
A billion dollars.

2385
02:01:23,569 --> 02:01:24,820
That's right.

2386
02:01:24,904 --> 02:01:27,740
But we got to close out our position
or it could be zero.

2387
02:01:28,240 --> 02:01:31,077
I mean, it's now or never, Mark.

2388
02:01:40,252 --> 02:01:41,671
Okay.

2389
02:01:45,424 --> 02:01:46,842
Sell it all.