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1
00:01:20,956 --> 00:01:23,300
Hiya, Frank.
How are the wife and kids?
2
00:01:23,375 --> 00:01:25,503
You know, for you,
I'm considering treasury bonds
3
00:01:25,586 --> 00:01:28,385
and utility stocks. Smoke?
4
00:01:28,463 --> 00:01:30,557
In the late 70s,
banking wasn't a job
5
00:01:30,632 --> 00:01:33,135
you went into
to make large sums m' money.
6
00:01:34,052 --> 00:01:35,770
R was a fucking snooze.
7
00:01:35,846 --> 00:01:37,644
How about those Mets?
8
00:01:37,723 --> 00:01:40,397
Filled with losers.
Like selling insurance or
9
00:01:40,475 --> 00:01:41,818
accouniing.
10
00:01:41,893 --> 00:01:43,019
And if banking was boring,
11
00:01:43,145 --> 00:01:45,819
then the bond department at the
bank was straight-up comatose.
12
00:01:46,648 --> 00:01:48,025
We all know about bonds.
13
00:01:48,108 --> 00:01:50,202
You give them to your
snot-nosed kid when he turns 15.
14
00:01:50,277 --> 00:01:52,279
Maybe when he's 30
he makes a hundred bucks.
15
00:01:52,362 --> 00:01:53,659
Boring.
16
00:01:53,739 --> 00:01:55,537
That is, until Lewis Ranieri
came on the scene
17
00:01:55,616 --> 00:01:56,663
at Salomon Brothers.
18
00:02:02,623 --> 00:02:04,842
You might not know who he is,
but he changed your life
19
00:02:04,916 --> 00:02:08,637
more than Michael Jordan,
the iPod and YouTube put together.
20
00:02:10,547 --> 00:02:12,299
All right, gentlemen!
Let's get some money in here!
21
00:02:12,382 --> 00:02:14,055
Let's make some money!
What do you say?
22
00:02:15,969 --> 00:02:17,812
You see,
Lewis didn't know it yet,
23
00:02:17,888 --> 00:02:19,811
but he had already
changed banking forever
24
00:02:19,890 --> 00:02:21,107
with one simple idea.
25
00:02:21,892 --> 00:02:26,568
The mortgage-backed security.
Or private-label MBS.
26
00:02:27,397 --> 00:02:29,240
You've got your
average person's mortgage.
27
00:02:29,316 --> 00:02:30,738
Fixed rate, 30 years.
28
00:02:30,817 --> 00:02:34,162
Boring, safe, small payoff, right? But,
29
00:02:35,447 --> 00:02:38,166
when you have thousands
of them all bundled together,
30
00:02:38,241 --> 00:02:41,791
suddenly the yield goes up
but the risk is still small because,
31
00:02:41,870 --> 00:02:42,837
well, they're mortgages!
32
00:02:42,913 --> 00:02:44,335
And who the hell
doesn't pay their mortgage?
33
00:02:44,414 --> 00:02:46,792
What exactly is the credit
rating on this bond'?
34
00:02:46,875 --> 00:02:49,719
This bond, gentlemen, is AAA-rated.
35
00:02:50,253 --> 00:02:52,927
This is exactly what the Michigan state
pension fund has been looking for.
36
00:02:53,423 --> 00:02:54,925
I'll buy $20 million.
37
00:02:55,008 --> 00:02:56,180
Oh, come on, live a little.
38
00:02:56,301 --> 00:02:57,928
$25 million.
39
00:02:58,011 --> 00:03:00,981
JARED". The money came raining down,
40
00:03:01,056 --> 00:03:02,558
and for the first time,
41
00:03:02,641 --> 00:03:05,440
the banker went from the country club
to the strip club.
42
00:03:08,063 --> 00:03:11,283
Pretty soon, stocks and savings
were almost inconsequential.
43
00:03:11,441 --> 00:03:13,614
- They were doing $50, $100, $200 billion
- Whoo!
44
00:03:13,694 --> 00:03:16,322
In mortgage bonds and dozens of other
securities a year.
45
00:03:25,956 --> 00:03:28,254
And America barely noticed
as its number one industry
46
00:03:28,333 --> 00:03:30,427
became boring old banking.
47
00:03:34,089 --> 00:03:37,593
And then one day,
almost 30 years later, in 2008,
48
00:03:38,802 --> 00:03:40,554
it all came crashing down.
49
00:03:43,682 --> 00:03:46,435
March.
Bear Steams was in a death spiral
50
00:03:46,518 --> 00:03:47,940
and the Fed brokered Rs sale.
51
00:03:48,019 --> 00:03:51,068
It's been called the
worst financial crisis in modern limes.
52
00:03:51,398 --> 00:03:55,653
Certainly the largest financial disaster
in decades in this country,
53
00:03:55,736 --> 00:03:58,410
and perhaps the end of an era
in American business.
54
00:03:58,864 --> 00:04:01,117
In the end, Lewis RanieriS
mortgage-backed security
55
00:04:01,199 --> 00:04:02,872
mutated into a monstrosity that
56
00:04:02,993 --> 00:04:04,666
collapsed the whole world economy.
57
00:04:05,328 --> 00:04:07,296
And none of the experts
or leaders or talking heads
58
00:04:07,372 --> 00:04:08,669
had a clue it was coming.
59
00:04:10,167 --> 00:04:13,137
I'm guessing most of you
still don't really know what happened.
60
00:04:13,628 --> 00:04:16,427
Yeah, you got a soundbite you repeat
so you don't sound dumb, but come on.
61
00:04:16,506 --> 00:04:18,929
Our financial institutions are strong.
62
00:04:20,177 --> 00:04:22,600
But mere were some who saw it coming.
63
00:04:22,679 --> 00:04:24,773
While the whole world
was having a big old party,
64
00:04:24,848 --> 00:04:28,102
a few outsiders and weirdos
saw what no one else could.
65
00:04:28,185 --> 00:04:31,780
Not me. I'm not a weirdo.
I'm pretty fucking cool.
66
00:04:31,855 --> 00:04:33,857
But we'll meet again later.
67
00:04:34,357 --> 00:04:37,110
These outsiders saw the giant lie
at the heart of the economy.
68
00:04:37,194 --> 00:04:38,616
And they saw it by doing something
69
00:04:38,695 --> 00:04:41,494
the rest of the suckers
never thought to do.
70
00:04:42,407 --> 00:04:43,750
They looked.
71
00:04:56,546 --> 00:04:58,890
During the 1930s,
72
00:05:00,509 --> 00:05:05,185
the housing market collapsed nationwide
73
00:05:06,556 --> 00:05:08,684
by roughly so%.
74
00:05:08,767 --> 00:05:13,898
I mean, half of all mortgage debt
was in default.
75
00:05:13,980 --> 00:05:16,654
And, I mean, there were very
76
00:05:17,776 --> 00:05:21,280
specific identifiers,
extremely recognizable.
77
00:05:24,199 --> 00:05:25,246
I mean, for instance,
78
00:05:25,367 --> 00:05:28,587
one of
the hallmarks of mania
79
00:05:28,912 --> 00:05:30,255
is the rapid rise
80
00:05:30,372 --> 00:05:32,420
in complexity and the rates of fraud.
81
00:05:32,499 --> 00:05:35,924
And did you know that they're going up?
82
00:05:39,756 --> 00:05:40,757
Whoo!
83
00:05:55,438 --> 00:05:57,361
I've always been
84
00:05:57,440 --> 00:05:59,442
more comfortable alone.
85
00:06:06,741 --> 00:06:11,372
I believe maybe
it's because of my glass eye.
86
00:06:13,790 --> 00:06:16,589
I lost the eye in a childhood illness.
87
00:06:20,922 --> 00:06:23,266
It separates me from people.
88
00:06:27,304 --> 00:06:29,682
And did you know that they are going
89
00:06:29,764 --> 00:06:30,890
up')
90
00:06:30,974 --> 00:06:34,478
The highest fraud rates since the 1930s.
91
00:06:34,561 --> 00:06:36,905
Hey, hey, it's okay. It's okay.
92
00:06:36,980 --> 00:06:38,448
No, I didn't know that.
93
00:06:43,153 --> 00:06:47,329
In 1933, the fourth year
of the Great Depression.
94
00:06:47,490 --> 00:06:49,163
Let's wash it off and put it back in.
95
00:06:49,242 --> 00:06:51,210
You were
playing so great, son.
96
00:06:51,328 --> 00:06:53,330
I even heard the coach say it.
97
00:06:54,497 --> 00:06:56,750
Can we just go home?
98
00:06:56,833 --> 00:07:01,009
Most social interactions
are awkward for me and for the person.
99
00:07:01,087 --> 00:07:04,591
Even when I try to compliment someone,
100
00:07:04,674 --> 00:07:06,051
it comes out wrong.
101
00:07:06,968 --> 00:07:10,563
You have a very nice haircut.
Did you do it yourself?
102
00:07:10,972 --> 00:07:12,645
What?
103
00:07:12,724 --> 00:07:15,227
No. No, I...
104
00:07:23,860 --> 00:07:25,703
I'm sorry. I'm just...
105
00:07:31,409 --> 00:07:32,581
I'm going on and on.
106
00:07:32,702 --> 00:07:34,329
My wife told me I need to share more.
107
00:07:34,412 --> 00:07:35,413
Mmm.
108
00:07:36,373 --> 00:07:38,216
- That seems healthy.
-Yeah.
109
00:07:38,291 --> 00:07:39,292
Mmm-hmm.
110
00:07:48,802 --> 00:07:49,803
Uh...
111
00:07:51,012 --> 00:07:52,389
So do I get the job?
112
00:07:52,514 --> 00:07:54,858
I really think I could help your fund.
113
00:07:56,226 --> 00:07:57,603
Yeah.
114
00:07:57,686 --> 00:07:59,313
Yeah, sure. Go on.
115
00:08:02,023 --> 00:08:05,277
- You're...
-David. Great.
116
00:08:05,360 --> 00:08:07,203
I guess I'll go find a desk.
117
00:08:07,278 --> 00:08:09,872
Is there anything you want me
to work on for start...
118
00:08:10,365 --> 00:08:11,366
Uh...
119
00:08:12,909 --> 00:08:14,286
Yeah.
120
00:08:14,369 --> 00:08:16,087
You could let me know later.
I could come back.
121
00:08:18,790 --> 00:08:23,341
Did you think it was strange when, um,
122
00:08:23,420 --> 00:08:25,923
the tech bubble burst in 2001
123
00:08:26,006 --> 00:08:28,805
and the housing market in San Jose,
124
00:08:28,883 --> 00:08:31,102
the tech capital of the world,
125
00:08:32,595 --> 00:08:34,347
went up?
126
00:08:34,431 --> 00:08:35,478
Wasn't that strange?
127
00:08:35,557 --> 00:08:36,524
No.
128
00:08:36,599 --> 00:08:39,193
No, ifs housing.
Housing is always stable.
129
00:08:39,269 --> 00:08:40,316
Low risk. It's solid.
130
00:08:40,395 --> 00:08:42,363
That's the idea, yeah.
131
00:08:42,439 --> 00:08:44,191
I want you to get me
132
00:08:44,274 --> 00:08:47,494
the top 20 selling mortgage bonds.
133
00:08:47,569 --> 00:08:50,413
So you want to know what
the top 20 selling mortgage bonds are?
134
00:08:50,488 --> 00:08:54,834
No, no, no, I want to know
what mortgages are in each one.
135
00:08:56,244 --> 00:08:57,837
Okay, aren't those
mortgages made up of...
136
00:08:59,289 --> 00:09:00,757
Wait, aren't those bonds made up
137
00:09:00,832 --> 00:09:02,880
of thousands and thousands
of mortgages?
138
00:09:02,959 --> 00:09:04,427
Yeah.
139
00:09:08,465 --> 00:09:09,967
Right away, Dr. Burry.
140
00:09:29,027 --> 00:09:33,373
I am a nice guy all day long.
141
00:09:33,448 --> 00:09:36,122
Ask anyone, I'm a pleasure to work with.
142
00:09:38,036 --> 00:09:42,382
But the second my son screws up, lam...
143
00:09:43,041 --> 00:09:45,544
...yelling at him
just like my dad did to me.
144
00:09:48,588 --> 00:09:50,261
I hear the words that are
coming out of my mouth and...
145
00:09:51,674 --> 00:09:54,473
Sorry I'm late! No cabs.
146
00:09:55,178 --> 00:09:56,179
Oh...
147
00:09:56,638 --> 00:09:58,231
So, get this.
148
00:09:58,973 --> 00:10:01,476
I met with this retail banker yesterday.
149
00:10:01,726 --> 00:10:04,149
I'm supposed to be getting him
to invest in a fund,
150
00:10:04,229 --> 00:10:05,572
but instead
151
00:10:05,647 --> 00:10:08,526
I start grilling him about
overdraft penalties
152
00:10:08,608 --> 00:10:11,612
and how his bank will let
a customer write 10-12 checks
153
00:10:11,694 --> 00:10:12,946
before they tell them they're overdrawn.
154
00:10:13,029 --> 00:10:16,954
And this creep is making billions
off screwing over people this way.
155
00:10:17,033 --> 00:10:18,831
And I'm getting madder and madder.
156
00:10:18,910 --> 00:10:22,289
And I ask him,
I look him in the face and I say,
157
00:10:22,372 --> 00:10:24,215
"How can you sleep at night
158
00:10:24,707 --> 00:10:28,177
"knowing that you are
ripping off working people?"
159
00:10:28,253 --> 00:10:29,971
And you know what he did? He left.
160
00:10:30,046 --> 00:10:32,765
He just walks out of the lunch,
doesn't say a word.
161
00:10:32,841 --> 00:10:33,842
What the fuck is that?
162
00:10:33,925 --> 00:10:36,269
Who's fucked up in that scenario? Am I?
163
00:10:36,344 --> 00:10:38,813
Or is this douchebag,
who leaves me hanging?
164
00:10:38,888 --> 00:10:40,140
Is he the fucked up one?
165
00:10:40,223 --> 00:10:43,022
We have talked about this
numerous times.
166
00:10:43,101 --> 00:10:46,230
You can't come in late
and hijack the entire session.
167
00:10:46,312 --> 00:10:47,780
What do you mean?
I didn't hijack the meeting.
168
00:10:47,856 --> 00:10:48,948
Did I hijack the session?
169
00:10:49,065 --> 00:10:50,191
Yeah.
170
00:10:50,650 --> 00:10:51,822
What do you do?
171
00:10:51,943 --> 00:10:53,115
I'm in commodities.
172
00:10:53,194 --> 00:10:54,491
Good luck with that.
173
00:10:54,571 --> 00:10:58,166
Mark, I know
you suffered a terrible loss.
174
00:10:58,241 --> 00:10:59,618
Maybe you want to talk about that.
175
00:10:59,701 --> 00:11:00,793
I don't talk about that.
176
00:11:00,869 --> 00:11:02,291
Hold on.
177
00:11:02,370 --> 00:11:03,713
Hold on...
178
00:11:03,788 --> 00:11:06,632
Shit, I have 10 take this. Sorry. Sorry.
179
00:11:07,542 --> 00:11:09,670
No... I don't care, Porter.
180
00:11:09,752 --> 00:11:11,345
This guy's whole business
is built on ripping people off.
181
00:11:11,421 --> 00:11:13,014
How long can that last?
182
00:11:14,465 --> 00:11:15,637
Bye, everybody!
183
00:11:16,718 --> 00:11:18,391
95...
184
00:11:18,636 --> 00:11:20,764
That's 30 days late... Sixty days late...
185
00:11:23,224 --> 00:11:25,693
They pay on time...
186
00:11:28,605 --> 00:11:30,232
These FICO scores...
187
00:11:36,821 --> 00:11:38,949
Late. And they caught up
an their payments“...
188
00:11:39,032 --> 00:11:40,534
Another 30 days late...
189
00:11:40,617 --> 00:11:43,871
LTV, 95... LTV, 90...
They caught up on their payments-...
190
00:11:43,953 --> 00:11:45,500
Sixty clays late? Jesus!
191
00:11:45,580 --> 00:11:47,708
I TV, 110? I've never heard of that!
192
00:11:47,790 --> 00:11:49,133
Thirty days late, rate adjusts...
193
00:11:50,126 --> 00:11:51,378
In '07 rate adjusts...
194
00:11:51,461 --> 00:11:52,633
In '06 rate adjusts...
195
00:11:52,754 --> 00:11:55,052
95... 90... Jesus!
196
00:11:56,758 --> 00:11:58,385
He hasn't moved all day.
197
00:11:58,468 --> 00:12:00,812
He does this every few days.
198
00:12:00,887 --> 00:12:02,560
He hasn't spoken to me
since he hired me.
199
00:12:02,639 --> 00:12:04,061
Maybe the LTV's at... High-risk,
200
00:12:04,140 --> 00:12:06,393
interest-only... I never heani
of that mortgage history,
201
00:12:06,476 --> 00:12:09,229
I never heard of that... How?
202
00:12:09,312 --> 00:12:10,609
Michael, how are you, guy?
203
00:12:10,688 --> 00:12:13,737
Lawrence, I found
something really interesting.
204
00:12:13,816 --> 00:12:15,739
Great, Michael. Whenever you
find something interesting,
205
00:12:15,818 --> 00:12:17,035
we at! tend to make money.
206
00:12:17,111 --> 00:12:18,488
What stock are you valuing?
207
00:12:18,613 --> 00:12:19,956
No, no, no, no. No stocks.
208
00:12:20,031 --> 00:12:22,079
I want to short the housing market.
209
00:12:23,493 --> 00:12:26,167
Really? But the housing market
is rock solid.
210
00:12:26,663 --> 00:12:28,085
Greenspan just said
211
00:12:28,164 --> 00:12:30,713
bubbles are regional, defaults are rare.
212
00:12:30,833 --> 00:12:32,961
Tell them I'll be there in a minute.
213
00:12:33,044 --> 00:12:34,842
- Say again?
-Look, look...
214
00:12:34,921 --> 00:12:36,764
Greenspan's wrong.
215
00:12:36,839 --> 00:12:40,264
I don't think you mean to do this,
but sometimes you sound very
216
00:12:40,343 --> 00:12:42,641
dismissive and superior.
217
00:12:42,720 --> 00:12:43,892
It's a fact. Greenspan's wrong.
218
00:12:43,972 --> 00:12:46,316
I don't know
how else you want me to say...
219
00:12:46,391 --> 00:12:47,768
Look, Michael.
220
00:12:47,850 --> 00:12:49,477
Metro Capital backed you four years ago
221
00:12:49,560 --> 00:12:51,358
when you were a doctor with a
222
00:12:51,437 --> 00:12:53,781
dinky webpage
and some inheritance money.
223
00:12:53,856 --> 00:12:54,857
We've ah done very welt.
224
00:12:54,941 --> 00:12:56,067
Why don't you just stick with stocks?
225
00:12:56,150 --> 00:12:58,278
Look. You know me. I, I, I...
226
00:12:58,361 --> 00:13:02,116
I look for value wherever it can be found.
227
00:13:02,198 --> 00:13:03,290
And the fact is
228
00:13:03,366 --> 00:13:06,586
that these mortgage-backed
securities are filled
229
00:13:06,703 --> 00:13:10,128
with extremely risky
subprime adjustable-ram Scans.
230
00:13:10,206 --> 00:13:12,709
And when the majority
of the adjustable rates
231
00:13:12,792 --> 00:13:15,045
kick in, in '07,
232
00:13:15,211 --> 00:13:16,383
they will begin to fail.
233
00:13:16,462 --> 00:13:19,807
And if they fail above 15%,
the whole bond is worthless.
234
00:13:19,882 --> 00:13:22,055
Michael, just take a beat.
235
00:13:22,135 --> 00:13:23,352
We'll talk about this later, okay?
236
00:13:23,428 --> 00:13:26,477
Lawrence, please,
don't patronize me. Listen...
237
00:13:26,556 --> 00:13:28,024
Mortgage-backed securities.
238
00:13:28,099 --> 00:13:29,396
It, it, it...
239
00:13:29,517 --> 00:13:31,315
- Subprime Ioans. Trenches.
240
00:13:31,394 --> 00:13:33,067
It's pretty confusing, right?
241
00:13:33,146 --> 00:13:35,774
Does it make you feel bored?
Or stupid?
242
00:13:35,857 --> 00:13:38,155
Well, it's supposed to.
243
00:13:38,234 --> 00:13:39,827
Wall Street loves to use confusing terms
244
00:13:39,902 --> 00:13:42,576
to make you think only they
can do what they do.
245
00:13:42,905 --> 00:13:44,122
Or, even better,
246
00:13:44,198 --> 00:13:46,576
for you to just leave them {he fuck alone.
247
00:13:46,659 --> 00:13:48,627
So here's Margot Robbie
in a bubble bath to explain.
248
00:13:49,871 --> 00:13:52,875
Basically, Lewis Ranieri's
mortgage bonds
249
00:13:52,957 --> 00:13:55,255
were amazingly profitable
for the big banks.
250
00:13:55,335 --> 00:13:59,306
They made billions and billions
on their 2% fee
251
00:13:59,380 --> 00:14:01,599
they got for selling each of these bonds.
252
00:14:01,674 --> 00:14:03,472
But then they started
running out of mortgages
253
00:14:03,551 --> 00:14:05,098
to put in them.
254
00:14:05,178 --> 00:14:07,852
After all, there are only so many homes
255
00:14:07,930 --> 00:14:11,685
and so many people with
good enough jobs to buy them, right?
256
00:14:11,768 --> 00:14:13,862
So the banks started filling these bonds
257
00:14:13,936 --> 00:14:16,109
with riskier and riskier mortgages.
258
00:14:16,189 --> 00:14:17,361
Thank you, Benter.
259
00:14:17,440 --> 00:14:21,991
That way they can keep
that profit machine churning, right?
260
00:14:22,070 --> 00:14:26,450
By the way, these risky mortgages
are called subprime.
261
00:14:26,532 --> 00:14:28,910
So whenever you heaflsubprime", think
262
00:14:28,993 --> 00:14:30,461
"shit".
263
00:14:30,536 --> 00:14:34,086
Our friend Michael Burry found out
that these mortgage bonds
264
00:14:34,165 --> 00:14:37,385
that were supposedly 65% AAA
265
00:14:37,460 --> 00:14:40,213
were actually just mostly full of shit.
266
00:14:40,797 --> 00:14:43,550
So now he's going to "short" the bonds.
267
00:14:43,633 --> 00:14:45,635
Which means to "bet against".
268
00:14:46,469 --> 00:14:47,516
Got it?
269
00:14:48,221 --> 00:14:49,473
Good.
270
00:14:52,558 --> 00:14:53,855
Now fuck off.
271
00:14:53,935 --> 00:14:56,279
It's only a matter of time before
someone else sees this investment.
272
00:14:56,354 --> 00:14:58,072
We have to act now!
273
00:14:58,147 --> 00:15:00,400
How do you know
the bonds are worthless?
274
00:15:00,483 --> 00:15:02,702
Aren't they filled with fucking thousands
275
00:15:02,777 --> 00:15:03,903
of pages of mortgages?
276
00:15:03,986 --> 00:15:06,239
I read them.
277
00:15:06,322 --> 00:15:08,245
- You read them?
-I read... Yes.
278
00:15:08,324 --> 00:15:11,544
No one reads them. Only the lawyers
who put them together read them.
279
00:15:11,619 --> 00:15:16,341
Look, I don't think that they
even know what they've made.
280
00:15:16,457 --> 00:15:19,711
The housing market
is propped up on these
281
00:15:20,002 --> 00:15:22,676
bad loans, and I'm...
282
00:15:22,755 --> 00:15:24,803
It's a time bomb, and I want to short it.
283
00:15:24,882 --> 00:15:27,180
Through what instrument, Michael?
284
00:15:27,260 --> 00:15:30,264
There are no insurance contracts
or options for mortgage bonds.
285
00:15:30,346 --> 00:15:31,598
The bonds are too stable.
286
00:15:31,722 --> 00:15:33,019
Lawrence...
287
00:15:36,352 --> 00:15:40,198
This is what I'm gonna do.
lam gonna get a bank
288
00:15:40,523 --> 00:15:42,571
to make me one.
289
00:15:43,192 --> 00:15:44,865
And then
290
00:15:45,695 --> 00:15:47,413
I'm gonna buy it.
291
00:15:48,823 --> 00:15:50,575
I don't want that kind of business.
292
00:15:50,658 --> 00:15:53,332
Money is not money.
That's bad money.
293
00:15:53,995 --> 00:15:56,214
Hey! Excuse me!
294
00:15:57,582 --> 00:16:00,506
Let me ask you this.
What company treats its customers
295
00:16:00,585 --> 00:16:03,179
that shittily and succeeds?
296
00:16:04,046 --> 00:16:05,889
Fine. Okay, Goldman. You're right.
297
00:16:05,965 --> 00:16:07,308
Mark Baum had bum his career
298
00:16:07,383 --> 00:16:09,431
on never assuming anyone
or any company
299
00:16:09,510 --> 00:16:11,183
was legit without proving it.
300
00:16:11,262 --> 00:16:12,764
When he was a kid
he excelled at studying
301
00:16:12,847 --> 00:16:14,895
the Talmud in Yeshiva. Whatever.
302
00:16:14,974 --> 00:16:16,851
But one day his rabbi told his mom why.
303
00:16:18,060 --> 00:16:21,064
Paul is a fine boy,
and Mark is an excellent student
304
00:16:21,189 --> 00:16:23,783
of the Torah and the Talmud.
305
00:16:23,858 --> 00:16:25,826
Then what's the problem, rabbi?
306
00:16:25,902 --> 00:16:29,076
It's the reason Mark is studying so hard.
307
00:16:29,906 --> 00:16:33,080
He's looking for inconsistencies
in the word of God!
308
00:16:35,828 --> 00:16:38,001
So has he found any?
309
00:16:39,081 --> 00:16:42,335
Later, Baum started
his own fund on Wall Street.
310
00:16:42,418 --> 00:16:43,840
He had an amazing nose for bullshit.
311
00:16:43,920 --> 00:16:45,922
And he wasn't afraid to let
anyone know when and where
312
00:16:46,005 --> 00:16:48,633
the bull had gone number two.
313
00:16:48,716 --> 00:16:50,343
But men a tragedy happened to Mark,
314
00:16:50,426 --> 00:16:51,894
and it turned his world view dark
315
00:16:51,969 --> 00:16:54,313
and ready to believe
the whole system was a lie.
316
00:16:54,388 --> 00:16:55,935
Hold on.
317
00:16:56,015 --> 00:16:58,859
It's Cynthia.
I'll be in the office in 20 minutes.
318
00:16:59,769 --> 00:17:00,941
Hi, honey.
319
00:17:02,438 --> 00:17:06,113
The therapist called. You did it again.
320
00:17:06,526 --> 00:17:09,279
There were no cabs.
What was I supposed to do?
321
00:17:09,362 --> 00:17:11,035
I worry about you, Mark.
322
00:17:11,113 --> 00:17:12,456
At {east I went.
323
00:17:13,741 --> 00:17:15,709
You're running around
like you have to right
324
00:17:15,785 --> 00:17:17,628
-every wrong in the world.
-Okay.
325
00:17:17,745 --> 00:17:18,917
You're so angry.
326
00:17:18,996 --> 00:17:20,418
Fine. You know what?
327
00:17:20,498 --> 00:17:23,422
I'm a mean guy and I'm pissed oft
328
00:17:23,501 --> 00:17:25,424
But it is a shit storm out here, sweetie.
329
00:17:25,503 --> 00:17:28,803
You have no idea
the kind of crap people are pulling.
330
00:17:28,881 --> 00:17:31,555
And everyonds walking around like
they're in a goddamn Enya video.
331
00:17:33,261 --> 00:17:34,729
They're all getting screwed, you know.
332
00:17:34,804 --> 00:17:37,398
You know what they care about?
They care about the ballgame.
333
00:17:37,473 --> 00:17:40,352
Or they care about
what actress just went into rehab.
334
00:17:40,434 --> 00:17:42,482
I think you should try medication.
335
00:17:42,562 --> 00:17:45,736
No, no. We agreed.
If it interfered with work.
336
00:17:45,815 --> 00:17:47,658
You hate Wall Street.
Maybe it's time to quit.
337
00:17:48,150 --> 00:17:50,118
- I love my job.
-You hate your job.
338
00:17:50,194 --> 00:17:51,195
I love my job.
339
00:17:51,279 --> 00:17:52,246
You're miserable.
340
00:17:52,321 --> 00:17:54,323
I love my job. I love my job, honey.
341
00:17:55,283 --> 00:17:56,580
Mark...
342
00:17:57,785 --> 00:18:00,880
I am sad every day
about what happened.
343
00:18:00,955 --> 00:18:04,300
I know you must feel the same,
but you never show it,.
344
00:18:10,548 --> 00:18:13,051
I know how close you
were to your brother.
345
00:18:16,429 --> 00:18:17,521
Paul.
346
00:18:18,556 --> 00:18:20,183
Where'd you go, Paul'!?
347
00:18:25,438 --> 00:18:26,690
Paul!
348
00:18:32,361 --> 00:18:35,114
Every day I think you're
gonna talk about it, but you never do.
349
00:18:38,993 --> 00:18:42,748
Will you at least think about the idea
of making a change?
350
00:18:42,830 --> 00:18:45,674
Fine. Fine. Honey, you know what?
I will consider it.
351
00:18:45,750 --> 00:18:49,129
But, honestly, Cynthia.
I'm okay. I really am.
352
00:18:49,211 --> 00:18:51,179
Hey, hey, hey! No, no.
353
00:18:51,255 --> 00:18:54,634
My cab. That's my cab.
That's my cab. That is my cab.
354
00:18:54,717 --> 00:18:56,310
- Schmuck. Fuck you.
- Fuck you.
355
00:18:56,385 --> 00:18:57,887
- Fuck you.
- Fuck ya...
356
00:18:59,055 --> 00:19:00,557
I'll call you later.
357
00:19:07,938 --> 00:19:12,034
I want to buy swaps on mortgage bonds.
358
00:19:12,109 --> 00:19:14,453
A credit default swap that will pay off
359
00:19:15,488 --> 00:19:17,991
if the underlying bond fails.
360
00:19:18,824 --> 00:19:20,326
You want to bet against
the housing market?
361
00:19:20,409 --> 00:19:22,377
- Yes.
-Why?
362
00:19:22,453 --> 00:19:23,625
Those bonds only fail
363
00:19:23,704 --> 00:19:26,173
if millions ofAmericans
don't pay their mortgages.
364
00:19:26,248 --> 00:19:28,671
That's never happened in history.
365
00:19:28,751 --> 00:19:31,675
If you'll excuse me, Dr. Burry,
it seems like a foolish investment.
366
00:19:31,754 --> 00:19:34,507
Well, based on prevailing sentiment
367
00:19:34,590 --> 00:19:36,638
of the market and banks
in popular culture,
368
00:19:36,717 --> 00:19:39,015
yes, it's a foolish investment.
369
00:19:39,095 --> 00:19:41,598
But, uh... Everyone's wrong.
370
00:19:43,182 --> 00:19:44,684
That's a good one.
371
00:19:47,019 --> 00:19:48,692
This is Wall Street, Dr. Burry.
372
00:19:48,771 --> 00:19:50,739
If you offer us free money,
we are going to take it.
373
00:19:50,815 --> 00:19:55,446
My one concern is that
when the bonds fail,
374
00:19:56,570 --> 00:20:00,120
uh, I want to be certain, um, of payment
375
00:20:00,199 --> 00:20:02,952
um, in case of solvency issues
with your bank.
376
00:20:03,953 --> 00:20:06,331
I'm sorry, are you for real?
377
00:20:06,414 --> 00:20:08,041
You wanna bet against
the housing market
378
00:20:08,124 --> 00:20:09,467
and you're worried we won't pay you?
379
00:20:09,542 --> 00:20:11,135
Yes, that's correct.
380
00:20:22,471 --> 00:20:24,348
...unless the market crashes.
381
00:20:24,473 --> 00:20:26,692
The market
on housings never gonna crash
382
00:20:26,767 --> 00:20:29,566
because it's so solid right now.
383
00:20:29,645 --> 00:20:32,398
I mean, who doesn't
pay their mortgages?
384
00:20:36,318 --> 00:20:37,319
Mmm-hmm.
385
00:20:39,613 --> 00:20:40,660
Dr. Burry,
386
00:20:40,740 --> 00:20:43,084
we could workout
a pay-as-we-go structure
387
00:20:43,159 --> 00:20:45,161
that would pay out if the bonds fail.
388
00:20:45,244 --> 00:20:46,746
But it would also apply to your payments
389
00:20:46,829 --> 00:20:48,797
if the value of the mortgage bond
goes up.
390
00:20:48,873 --> 00:20:51,592
You'd have to pay us monthly premiums.
391
00:20:51,667 --> 00:20:54,386
Is that acceptable, Dr. Burry?
392
00:20:56,839 --> 00:20:58,182
Yes. Yes.
393
00:20:59,049 --> 00:21:01,598
Um, I have prospectuses on six
394
00:21:01,677 --> 00:21:04,556
mortgage-backed securities
I want to short.
395
00:21:09,018 --> 00:21:10,770
Majority of the mortgages...
396
00:21:22,072 --> 00:21:24,621
I don't see us
losing any money on these at all.
397
00:21:38,088 --> 00:21:40,762
Dr. Burry, these should be fine.
398
00:21:40,841 --> 00:21:42,764
Yeah. We're prepared
to sell you $5 million
399
00:21:42,843 --> 00:21:44,720
in credit default swaps
on these mortgage bonds.
400
00:21:45,930 --> 00:21:47,352
Can we make it $100 million?
401
00:21:50,226 --> 00:21:52,604
Uh, absolutely,
we can make it $100 million.
402
00:21:54,188 --> 00:21:57,408
We'll be in touch,
send some paperwork over.
403
00:21:58,234 --> 00:21:59,235
Urn...
404
00:22:00,361 --> 00:22:01,738
I like these cups.
405
00:22:01,821 --> 00:22:03,494
Can I take one for my son?
406
00:22:03,572 --> 00:22:05,324
Have... Yes. Yes.
407
00:22:05,407 --> 00:22:06,909
Thank you.
408
00:22:06,992 --> 00:22:08,369
Have two.
409
00:22:28,347 --> 00:22:31,351
ls there any way to do $200 million?
410
00:22:32,810 --> 00:22:35,438
I mean, we can. But are you sure?
411
00:22:36,355 --> 00:22:39,529
Absolutely. Absolutely, we can do that.
412
00:22:53,247 --> 00:22:56,626
We do different projects.
We do gardening.
413
00:22:56,709 --> 00:22:59,963
The bonds I'd like to bet against.
414
00:23:00,170 --> 00:23:01,672
It's not bad seeing yourself
on the big screen.
415
00:23:01,755 --> 00:23:02,756
It's very cool.
416
00:23:03,799 --> 00:23:07,474
I ordered the 24-ounce T-bone,
which was choice.
417
00:23:07,553 --> 00:23:09,021
- I went for volume...
- Yeah.
418
00:23:09,096 --> 00:23:10,723
"Jame: than prime.
419
00:23:10,806 --> 00:23:13,480
I went for subprime, and the gist was...
420
00:23:20,816 --> 00:23:23,319
Can I have like, lettuce,
tomato, no onions'?
421
00:23:23,944 --> 00:23:27,244
So, no onions.
Lettuce, tomato, Thousand Island okay?
422
00:23:27,323 --> 00:23:28,324
Yeah.
423
00:23:35,372 --> 00:23:37,090
Hey, Randall! What's with the Dom?
424
00:23:37,166 --> 00:23:39,043
Bonuses aren't for three months.
425
00:23:39,126 --> 00:23:43,097
We just sold $200 million
in credit swaps for mortgage bonds.
426
00:23:43,172 --> 00:23:45,345
Some fund manager from California.
427
00:23:45,466 --> 00:23:46,809
It's fucking crazy, right?
428
00:23:46,884 --> 00:23:47,976
A whole new way to make money, Doug.
429
00:23:48,052 --> 00:23:50,305
Wait, wait. I didn't know
there were swaps on mortgages.
430
00:23:50,387 --> 00:23:52,981
There are now.
We made it for him.
431
00:23:53,057 --> 00:23:54,730
He must have gone off
his Zoloft or something.
432
00:23:54,808 --> 00:23:56,151
I don't know.
433
00:23:56,226 --> 00:23:57,978
- Want to join? No?
-J ust a second.
434
00:23:58,062 --> 00:23:59,063
Oh...
435
00:23:59,229 --> 00:24:00,651
Hey, Jared.
436
00:24:00,731 --> 00:24:02,199
Did you hear about the deal
that Randall just did
437
00:24:02,274 --> 00:24:03,491
with some fund manager?
438
00:24:03,567 --> 00:24:05,365
JARED; Randall? Bullshit.
439
00:24:05,819 --> 00:24:07,662
He's a foot soldier.
I'm sure it's a shit deal.
440
00:24:07,738 --> 00:24:08,990
No, it's for real.
441
00:24:10,199 --> 00:24:11,621
I told you we'd meet later.
442
00:24:11,700 --> 00:24:14,123
Unfortunately, it's in a place like this
which I would never be.
443
00:24:14,203 --> 00:24:16,877
I never hung out with
these idiots after work, ever.
444
00:24:16,956 --> 00:24:18,754
I had fashion friends.
445
00:24:19,166 --> 00:24:22,511
Apparently, this guy wanted $200 mil
in credit default swaps.
446
00:24:22,586 --> 00:24:24,338
Randall made the sale.
Can you believe it?
447
00:24:24,421 --> 00:24:26,640
Somebody shorted $200 mil
on mortgage bonds?
448
00:24:26,715 --> 00:24:30,140
That was just with Deutsche.
Word is he hit half the town.
449
00:24:31,011 --> 00:24:32,137
How much in total?
450
00:24:32,221 --> 00:24:33,939
$1.3 billion.
451
00:24:34,014 --> 00:24:37,860
What? That's pretty much
all of Scion's liquidity.
452
00:24:37,935 --> 00:24:40,029
Michael, this is highly distressing.
453
00:24:40,104 --> 00:24:41,526
Lawrence' that is not
454
00:24:41,605 --> 00:24:44,154
all of our liquidity.
455
00:24:44,233 --> 00:24:45,450
And I'm not certain
456
00:24:45,526 --> 00:24:47,745
that you really understand this trade.
457
00:24:47,861 --> 00:24:48,908
This is a certainty.
458
00:24:48,988 --> 00:24:52,083
Mike, I consider myself a mentor to you.
459
00:24:52,157 --> 00:24:56,003
But our company is not comfortable
with this investment. Am I being clear?
460
00:24:56,078 --> 00:24:58,331
Lawrence, I have full autonomy
461
00:24:58,414 --> 00:25:01,338
when it comes to investment strategy.
462
00:25:01,417 --> 00:25:02,543
You can read our agreement.
463
00:25:02,626 --> 00:25:05,971
Do not throw our inception agreement
in my face, Michael.
464
00:25:06,046 --> 00:25:08,424
- We had an underlying understanding
{COMPUTER BEEPS)
465
00:25:08,590 --> 00:25:09,807
you wouldn't act like
a goddamn crazy man.
466
00:25:09,883 --> 00:25:11,476
This is not crazy.
467
00:25:11,552 --> 00:25:13,020
It's all very logical.
468
00:25:13,095 --> 00:25:15,314
So, now we pay up premiums
on these swaps
469
00:25:15,889 --> 00:25:18,642
against the housing market
until the mortgages fail?
470
00:25:18,726 --> 00:25:20,399
In other words, we lose millions
471
00:25:20,519 --> 00:25:23,193
until something that's
never happened before happens?
472
00:25:27,067 --> 00:25:28,068
That's correct.
473
00:26:01,602 --> 00:26:02,854
Hello, Mark Baum.
474
00:26:02,936 --> 00:26:05,030
Oh, hey, Kathy, you busted me.
475
00:26:05,105 --> 00:26:06,072
I had a personal thing this afternoon.
476
00:26:06,148 --> 00:26:07,149
I'm not your babysitter.
477
00:26:07,232 --> 00:26:09,860
If FrontPoint makes money
for Morgan Stanley, I'm happy.
478
00:26:09,943 --> 00:26:12,241
Okay. Hey, did I hear you're expecting?
479
00:26:12,321 --> 00:26:13,698
We're expecting to be expecting.
480
00:26:13,781 --> 00:26:15,454
IVFs are cleaning us out
but we're staying positive...
481
00:26:15,532 --> 00:26:17,034
That's exciting!
482
00:26:21,163 --> 00:26:24,167
...lump on my ball.
And I go in for a scan.
483
00:26:24,291 --> 00:26:25,292
Mmm-hmm.
484
00:26:25,375 --> 00:26:29,096
Turns out that I have a very large thing
called an epididymis.
485
00:26:29,171 --> 00:26:31,720
Which is a thing
that goes around the ball
486
00:26:31,799 --> 00:26:33,517
and is like a sac underneath.
487
00:26:33,592 --> 00:26:34,639
I have an extremely
488
00:26:34,718 --> 00:26:36,561
- pronounced epididymis.
- I'm riveted...
489
00:26:36,637 --> 00:26:38,685
I'm riveted by this.
Do you have any pictures?
490
00:26:38,764 --> 00:26:42,314
It's almost as large
as another testicle unto itself.
491
00:26:42,392 --> 00:26:44,486
So get this. Cynthia...
492
00:26:44,561 --> 00:26:47,610
Guys. Cynthia wants me to quit
and open a B&B in Vermont.
493
00:26:48,899 --> 00:26:52,278
That sounds great. I'd love to see
Mark Baum run a bed and breakfast.
494
00:26:52,361 --> 00:26:54,329
Like, "Here's your
steel-cut oatmeal, asshole."
495
00:26:54,404 --> 00:26:56,998
Mark refused to kiss the ring
of the people with the checkbooks,
496
00:26:57,074 --> 00:27:00,123
so he had to set up his fund
under Morgan Stanley's umbrella.
497
00:27:01,370 --> 00:27:03,919
His small team reflected
his distrust of the system.
498
00:27:03,997 --> 00:27:05,419
You guys are sick. You're sick.
499
00:27:05,541 --> 00:27:07,669
She says this job is making me unhappy.
500
00:27:07,751 --> 00:27:08,798
But you're happy
when you're unhappy.
501
00:27:08,877 --> 00:27:10,379
I am happy when I'm unhappy.
502
00:27:10,462 --> 00:27:11,463
Vinnie Daniel.
503
00:27:11,547 --> 00:27:12,673
You know how to make a muffin?
504
00:27:12,756 --> 00:27:14,474
- Mark's numbers guy.
- Do you even know how
505
00:27:14,550 --> 00:27:16,018
- 40 do laundry? Make a bed?
- Okay...
506
00:27:16,093 --> 00:27:18,721
Vinnie lost his father to a violent crime
when he was young.
507
00:27:18,804 --> 00:27:20,647
Just like Mark, he didn't talk about it.
508
00:27:20,722 --> 00:27:21,974
I don't talk about that.
509
00:27:22,057 --> 00:27:24,401
Cynthia's no joke. She could
actually make him move to Vermont.
510
00:27:24,476 --> 00:27:26,149
I mean, she made me
start wearing a seatbelt.
511
00:27:26,228 --> 00:27:27,946
- Hey, you want me to...
- Porter Collins.
512
00:27:28,063 --> 00:27:30,236
Former Olympic rowev
who went to Brown.
513
00:27:30,315 --> 00:27:31,988
He worked with Baum at a previous firm
514
00:27:32,067 --> 00:27:33,990
and couldn't figure out
why no one listened to Baum.
515
00:27:34,069 --> 00:27:36,163
The guy with all the good ideas.
516
00:27:36,238 --> 00:27:38,036
Sorry. I think you have
the wrong FrontPoint.
517
00:27:38,157 --> 00:27:40,910
'Cause there is another FrontPoint
in this same building that is bonds.
518
00:27:40,993 --> 00:27:43,746
And Danny Moses.
The optimist of the bunch.
519
00:27:44,663 --> 00:27:45,880
And a hell of a trader.
520
00:27:45,956 --> 00:27:49,085
Which is the only reason they put up
with his bullshit optimism.
521
00:27:49,168 --> 00:27:50,420
That was a weird call.
522
00:27:50,502 --> 00:27:53,802
You take longer with a wrong number
than anybody else.
523
00:27:53,881 --> 00:27:56,509
It was this guy from Deutsche
524
00:27:56,592 --> 00:27:59,186
who was talking about
shorting housing bonds.
525
00:28:00,554 --> 00:28:01,726
And then in the middle of the call
526
00:28:01,847 --> 00:28:03,019
I realized he had the wrong FrontPoint.
527
00:28:03,098 --> 00:28:05,442
And then... 'Cause he wanted
the one on the 8th floor.
528
00:28:06,101 --> 00:28:08,024
He wanted to short housing bonds?
529
00:28:08,103 --> 00:28:09,150
Uh-huh. That happens
like five times a day
530
00:28:09,229 --> 00:28:10,697
that somebody gets
the wrong FrontPoint.
531
00:28:10,772 --> 00:28:12,945
- We should change our name.
- Wait. Wait.
532
00:28:13,025 --> 00:28:14,993
He wanted to short housing bonds?
533
00:28:15,277 --> 00:28:17,075
Who bets against housing?
534
00:28:18,030 --> 00:28:19,247
What's the ABX at?
535
00:28:19,364 --> 00:28:20,536
What's ABX?
536
00:28:20,616 --> 00:28:23,460
It tracks subprime mortgage bond value.
Go back to sleep.
537
00:28:23,869 --> 00:28:26,167
The ABX is at, uh...
538
00:28:26,288 --> 00:28:29,542
Wow, it's down! It's down
three points since last year.
539
00:28:29,625 --> 00:28:31,878
That's weird. I haven't
heard a peep about that.
540
00:28:31,960 --> 00:28:33,007
What was this guy's name?
541
00:28:33,086 --> 00:28:35,214
AaredVennetLVennem.
542
00:28:35,297 --> 00:28:37,550
That's right.
These lucky sons of bitches
543
00:28:37,633 --> 00:28:40,386
caught wind of one of the best trades
in Wall Street history
544
00:28:40,469 --> 00:28:42,062
from a wrong number.
545
00:28:42,137 --> 00:28:44,390
They should have paid 10%
to my fuckstick assistant.
546
00:28:44,473 --> 00:28:46,817
His name was
Jared Vennett. Vennett.
547
00:28:46,892 --> 00:28:48,735
Jared Vennett from Deutsche.
Sounded very sketchy.
548
00:28:48,810 --> 00:28:49,811
Sounds like a douchebag.
549
00:28:50,646 --> 00:28:52,444
Do you smell that?
550
00:28:52,522 --> 00:28:53,865
Do you smell that?
551
00:28:53,982 --> 00:28:55,234
I smell money.
552
00:28:56,026 --> 00:28:57,448
This is your basic mortgage...
553
00:29:01,240 --> 00:29:03,413
Okay, hi. How are you?
554
00:29:03,951 --> 00:29:05,168
Have a seat.
555
00:29:05,244 --> 00:29:07,997
Okay, Mr. Vennefi
from Deutsche Bank. What do we have?
556
00:29:12,542 --> 00:29:14,135
There you go.
557
00:29:17,589 --> 00:29:20,138
So, how many people
have you talked to about this trade?
558
00:29:20,217 --> 00:29:22,970
A few. There's definitely some interest.
559
00:29:23,053 --> 00:29:24,475
- No!
-My boss would have my ass...
560
00:29:24,554 --> 00:29:25,976
- N.O.!
-You crazy, Jared?
561
00:29:26,056 --> 00:29:27,603
- Get lost.
-Fuck you.
562
00:29:28,350 --> 00:29:31,149
Which is why you're here talking to us,
a wrong number.
563
00:29:31,228 --> 00:29:32,650
Sounds like there's a lot of interest.
564
00:29:32,729 --> 00:29:35,073
All right. A few people have invited us in
565
00:29:35,148 --> 00:29:37,526
just to laugh at me on this deal.
Is that you?
566
00:29:37,609 --> 00:29:38,610
Is that what this is?
567
00:29:38,694 --> 00:29:39,741
That's not what this is.
568
00:29:39,820 --> 00:29:41,618
That's just how Mark is.
569
00:29:41,697 --> 00:29:42,994
- Let's see what you got.
-I'm sorry.
570
00:29:43,073 --> 00:29:44,746
You smell that? What is that?
571
00:29:44,866 --> 00:29:46,288
- What?
- What's that smell?
572
00:29:46,702 --> 00:29:47,703
Your cologne?
573
00:29:47,786 --> 00:29:48,833
JARED; No.
574
00:29:51,081 --> 00:29:52,378
Opportunity.
575
00:29:52,499 --> 00:29:53,796
No. Money.
576
00:29:53,875 --> 00:29:55,172
- Oh...
- Okay.
577
00:29:55,252 --> 00:29:56,799
- I smell money.
-Okay.
578
00:29:57,296 --> 00:29:59,970
- Chris, God damn it.
-Sorry.
579
00:30:03,176 --> 00:30:05,599
This is your
basic mortgage bond.
580
00:30:05,679 --> 00:30:07,932
All right? The originals were simple.
581
00:30:08,015 --> 00:30:11,690
They were just thousands
of AAA mortgages bundled together,
582
00:30:11,768 --> 00:30:13,520
guaranteed by the U.S. government.
583
00:30:13,603 --> 00:30:15,446
The modern ones are different.
584
00:30:15,522 --> 00:30:18,446
They're private. And they're
made up of layers of tranches.
585
00:30:23,697 --> 00:30:26,120
The highest level, AAA,
is getting paid first.
586
00:30:26,199 --> 00:30:29,373
The lowest rated, B, is getting paid last,
taking on defaults first.
587
00:30:29,453 --> 00:30:32,127
Now, obviously, if you're buying B's,
you could make more money.
588
00:30:32,205 --> 00:30:33,377
But they're a little risky.
589
00:30:33,457 --> 00:30:35,630
Someiimes they fail.
590
00:30:36,877 --> 00:30:38,220
Chris?
591
00:30:42,049 --> 00:30:44,302
Somewhere along the line,
these B's and BB's
592
00:30:44,384 --> 00:30:45,852
went from a little risky
593
00:30:45,927 --> 00:30:48,350
to dog shit. Where's the trash?
594
00:30:48,430 --> 00:30:49,431
H's right behind you.
595
00:30:49,806 --> 00:30:52,685
I'm talking rock-bottom FICO scores.
596
00:30:53,894 --> 00:30:55,396
No income verification.
597
00:30:56,605 --> 00:30:59,449
Adjustable rates. Dog shit!
598
00:31:00,901 --> 00:31:03,745
The default rates are already up
from 1% to 4%, fellas.
599
00:31:03,820 --> 00:31:06,039
And if they rise to 8%, and they will,
600
00:31:06,823 --> 00:31:09,076
a lot of these BBB's
are going to zero, too.
601
00:31:09,159 --> 00:31:10,581
And that... You're too close.
602
00:31:12,329 --> 00:31:13,330
...is an opportunity.
603
00:31:13,413 --> 00:31:14,380
Okay.
604
00:31:14,456 --> 00:31:18,086
You're saying that at 8% the bonds fail
and we are already at 4%?
605
00:31:18,168 --> 00:31:19,169
That's right.
606
00:31:19,252 --> 00:31:21,050
If they go to 8%, it's Armageddon?
607
00:31:21,129 --> 00:31:22,130
Yeah. That's right.
608
00:31:22,255 --> 00:31:23,973
How come nobody's talking about this?
609
00:31:24,091 --> 00:31:26,219
You're completely sure of the math?
610
00:31:26,301 --> 00:31:28,895
Look at him. That's my quant.
611
00:31:28,970 --> 00:31:30,017
Your what?
612
00:31:30,097 --> 00:31:31,895
My quantitative!
613
00:31:31,973 --> 00:31:34,647
My math specialist. Look at him.
614
00:31:34,768 --> 00:31:37,112
You notice anything different about him?
Look at his face.
615
00:31:37,187 --> 00:31:38,234
That's pretty racist.
616
00:31:38,313 --> 00:31:40,816
Look at his eyes!
I'll give you a hint.
617
00:31:40,899 --> 00:31:42,446
His name's Yang!
618
00:31:43,610 --> 00:31:46,910
He won a national
math competition in China!
619
00:31:46,988 --> 00:31:49,491
He doesn't even speak English!
620
00:31:49,574 --> 00:31:51,247
Yeah, I'm sure of the math.
621
00:31:52,953 --> 00:31:56,753
Actually, my name's Jiang
and I do speak English.
622
00:31:56,832 --> 00:31:58,300
Jared likes to say I don't
because he thinks
623
00:31:58,375 --> 00:32:00,218
it makes me seem more authentic.
624
00:32:00,293 --> 00:32:02,842
And I got second in that
national math competition.
625
00:32:03,422 --> 00:32:08,303
So you're offering us a chance
to short this pile of blocks? How?
626
00:32:08,385 --> 00:32:10,854
With something called
a credit default swap.
627
00:32:12,139 --> 00:32:14,642
It's like insurance on the bond,
and if it goes bust
628
00:32:14,724 --> 00:32:17,898
you can make 1040-1,
even 20-to-1 return.
629
00:32:17,978 --> 00:32:20,106
And it's already slowly going bust!
630
00:32:20,355 --> 00:32:22,449
10-10-1? 20-10-1? No way.
631
00:32:22,524 --> 00:32:24,492
And no one's paying attention.
632
00:32:24,985 --> 00:32:27,408
No one is paying attention!
633
00:32:27,487 --> 00:32:30,957
Because the banks are too busy
getting paid obscene fees
634
00:32:31,032 --> 00:32:32,329
to sell these bonds.
635
00:32:32,409 --> 00:32:35,162
But wait. You are the bank.
You work for the bank.
636
00:32:35,245 --> 00:32:37,293
I bet your margins are pretty nice and fat.
637
00:32:37,372 --> 00:32:39,670
Let's not talk about
my margins, by the way.
638
00:32:39,749 --> 00:32:41,797
Being nice and fat, that's a nice shin.
Do they make it for men?
639
00:32:43,170 --> 00:32:44,137
Aren't you the bank?
640
00:32:44,212 --> 00:32:47,136
I work for the bank.
I don't think like a bank.
641
00:32:47,215 --> 00:32:51,095
Big bank, small bank,
I like to make money. All right?
642
00:32:51,178 --> 00:32:53,897
Let me put it this way.
I'm standing in front of a burning house...
643
00:32:54,014 --> 00:32:56,767
And I'm offering you fire insurance on it.
644
00:32:56,850 --> 00:32:59,353
How can these underlying bonds
be as bad as you say?
645
00:32:59,478 --> 00:33:00,695
It wouldn't be legal.
646
00:33:00,770 --> 00:33:02,738
Nobody knows what's in them.
647
00:33:02,814 --> 00:33:04,316
Nobody knows what's in the bonds.
648
00:33:04,399 --> 00:33:07,494
I've seen some that are 65% AAA-rated
649
00:33:07,569 --> 00:33:10,539
that I know for a fact are filled with 95%
650
00:33:10,614 --> 00:33:13,413
subprime shit with FICOs below 550!
651
00:33:13,867 --> 00:33:14,993
Get the fuck out of here.
652
00:33:15,076 --> 00:33:16,453
You want me to really blow your mind?
653
00:33:16,536 --> 00:33:18,083
When the market deems
a bond too risky to buy,
654
00:33:18,163 --> 00:33:20,382
what do you think we do with it?
655
00:33:20,457 --> 00:33:21,583
Take a guess.
656
00:33:21,666 --> 00:33:23,088
I don't know. You tell me.
657
00:33:23,168 --> 00:33:27,093
All right. You think we just
warehouse it on the books? No.
658
00:33:27,172 --> 00:33:29,095
Wejust repackage it
with a bunch of other shit
659
00:33:29,174 --> 00:33:31,268
that didn't sell and put it into a CDO.
660
00:33:32,093 --> 00:33:34,141
A CDO?
JARED; Yes. A CDO.
661
00:33:34,930 --> 00:33:36,682
- What is that?
-This is where we take a bunch of B's,
662
00:33:36,765 --> 00:33:38,938
BB's and BBB's that haven't sold,
663
00:33:39,017 --> 00:33:40,690
and we put them in a pile.
664
00:33:42,229 --> 00:33:44,197
And when the pile
gets large enough,
665
00:33:44,314 --> 00:33:46,863
the whole thing is suddenly
considered diversified
666
00:33:46,942 --> 00:33:51,664
and the whores at the rating agency
give it a 92%-93% AAA rating,
667
00:33:51,738 --> 00:33:53,740
no questions asked.
668
00:33:55,408 --> 00:33:57,911
Hold it. What? Say that again.
669
00:33:58,203 --> 00:34:00,456
A collateralized debt obligation.
670
00:34:00,539 --> 00:34:02,041
It's important to understand
because it's what allowed
671
00:34:02,123 --> 00:34:06,253
a housing crisis to become
a nationwide economic disaster.
672
00:34:06,336 --> 00:34:09,556
Here's world-famous chef
Anthony Bourdain to explain.
673
00:34:14,135 --> 00:34:15,808
Okay, I'm a chef
on a Sunday afternoon
674
00:34:15,971 --> 00:34:17,644
setting the menu at a big restaurant.
675
00:34:17,806 --> 00:34:19,228
I ordered my fish on Friday,
676
00:34:19,307 --> 00:34:22,026
which is the mortgage bond
that Michael Burry shorted.
677
00:34:22,227 --> 00:34:24,229
But some of the fresh fish doesn't sell.
678
00:34:24,312 --> 00:34:25,939
I don't know why.
Maybe it just came out
679
00:34:26,064 --> 00:34:27,691
halibut has the intelligence of a dolphin.
680
00:34:27,774 --> 00:34:29,492
So, what am I going to do?
681
00:34:29,568 --> 00:34:33,072
Throw all this unsold fish,
which is the BBB level of the bond,
682
00:34:33,154 --> 00:34:35,623
in the garbage and take the loss?
683
00:34:36,575 --> 00:34:37,576
No way.
684
00:34:37,659 --> 00:34:40,082
Being the crafty
and morally onerous chef that I am,
685
00:34:40,161 --> 00:34:42,835
whatever crappy levels
of the bond I don't sell,
686
00:34:42,956 --> 00:34:44,924
I throw into a seafood stew.
687
00:34:45,000 --> 00:34:48,425
See, it's not old fish.
It's a whole new thing!
688
00:34:48,503 --> 00:34:52,224
And the best part is
they're eating 3-day-old halibut.
689
00:34:52,299 --> 00:34:53,972
That is a CDO.
690
00:34:54,092 --> 00:34:56,936
I just need to know,
how could these possibly be collated?
691
00:34:57,012 --> 00:34:59,435
Somehow you're like Dora the Explorer
692
00:34:59,514 --> 00:35:00,766
and you're the first person
693
00:35:00,849 --> 00:35:02,192
-who found this thing.
-Hold on. Hold on.
694
00:35:02,267 --> 00:35:04,144
So mortgage bonds are dog shit,
695
00:35:04,227 --> 00:35:06,446
CDOs are dog shit wrapped in cat shit.
696
00:35:07,981 --> 00:35:09,824
Yeah, that's right.
697
00:35:09,899 --> 00:35:13,403
Institutions treat these CDOs
like they're as solid as treasury bonds,
698
00:35:13,486 --> 00:35:14,738
and they're going to zero.
699
00:35:15,947 --> 00:35:18,166
No. That can't be right.
There were $500 billion
700
00:35:18,241 --> 00:35:20,585
in housing bonds sold last year alone.
701
00:35:20,869 --> 00:35:23,497
The rating agencies, the banks,
the fucking government,
702
00:35:23,580 --> 00:35:25,582
you're saying they're
all asleep at the wheel?
703
00:35:25,665 --> 00:35:29,135
Yeah. My whole department's
long on this stuff.
704
00:35:30,003 --> 00:35:33,883
They call me Chicken Little.
They call me Bubble Boy.
705
00:35:36,551 --> 00:35:39,976
A's, zero. B's, zero.
706
00:35:40,263 --> 00:35:43,517
BB's, zero. BBB's, zero.
707
00:35:45,935 --> 00:35:47,312
And then that happens.
708
00:35:47,395 --> 00:35:49,068
What is that?
709
00:35:50,940 --> 00:35:52,658
That's America's housing market.
710
00:35:55,612 --> 00:35:56,659
Thank you.
711
00:35:56,738 --> 00:35:57,739
Fuckin'A, Jared.
712
00:35:57,822 --> 00:35:59,824
Shut your fucking mouth.
713
00:35:59,908 --> 00:36:02,081
- ...hang outwith you.
- Good. Okay.
714
00:36:02,202 --> 00:36:04,330
Sack up, do the deal.
Let's be friends.
715
00:36:04,412 --> 00:36:05,629
We will see. Thank you.
716
00:36:05,705 --> 00:36:06,752
- Don't bullshit me.
- All right.
717
00:36:06,831 --> 00:36:07,923
You're gonna say no, aren't you?
718
00:36:08,041 --> 00:36:10,510
No. No, Pmjust
evaluating right now.
719
00:36:10,585 --> 00:36:12,303
Thank you. Thank you for coming in.
720
00:36:13,380 --> 00:36:14,723
Bye, Jared.
721
00:36:20,762 --> 00:36:22,184
I don't like it.
722
00:36:23,139 --> 00:36:24,812
He's playing us.
723
00:36:25,934 --> 00:36:27,777
He's playing us.
He's got too much skin in the game
724
00:36:27,852 --> 00:36:29,525
and he's dumping his position.
725
00:36:30,480 --> 00:36:31,982
What if he's right?
726
00:36:32,065 --> 00:36:33,157
You want him to be right.
727
00:36:33,233 --> 00:36:34,780
Yes, I do.
728
00:36:35,360 --> 00:36:38,455
The banks have given us
25% interest rates on credit cards.
729
00:36:38,530 --> 00:36:40,248
They have screwed us on student loans
730
00:36:40,323 --> 00:36:42,075
that we can never get out from under.
731
00:36:42,158 --> 00:36:45,378
Then this guy walks into
my office and says
732
00:36:45,453 --> 00:36:48,423
those same banks got greedy,
they lost track of the market,
733
00:36:48,498 --> 00:36:50,546
and I can profit off of their stupidity?
734
00:36:50,625 --> 00:36:52,878
Fuck, yeah, I want him 10 be right!
735
00:36:52,961 --> 00:36:54,213
How come you
don't hate this guy?
736
00:36:54,295 --> 00:36:55,968
He's everything
you taught us not to trust.
737
00:36:56,047 --> 00:36:57,765
I can't hate him.
He is so transparent
738
00:36:57,841 --> 00:37:00,219
in his self-interest
that I kind of respect him.
739
00:37:00,301 --> 00:37:03,396
Would I buy a car from him? No.
740
00:37:03,638 --> 00:37:04,890
Is he right about the mortgage market?
741
00:37:04,973 --> 00:37:07,192
- No.
-Let's find out. Let's find out.
742
00:37:08,768 --> 00:37:10,611
Look. It's two very simple questions.
743
00:37:10,687 --> 00:37:12,189
Is there a housing bubble?
744
00:37:12,272 --> 00:37:14,866
And if there is,
how exposed are the banks?
745
00:37:14,941 --> 00:37:15,988
Yeah. Okay.
746
00:37:16,067 --> 00:37:17,489
Let's get on this quickly too.
747
00:37:17,569 --> 00:37:18,946
Because if he's right,
748
00:37:19,028 --> 00:37:22,498
every loser with a couple million bucks
and a fund is gonna be jumping on this.
749
00:37:23,032 --> 00:37:24,033
Let's go.
750
00:37:26,327 --> 00:37:27,829
Just that morning...
751
00:37:32,000 --> 00:37:35,345
JPMorgan Chase. JPMorgan Chase.
752
00:37:37,172 --> 00:37:39,470
Okay. Stop saying
"JPMorgan Chase".
753
00:37:39,549 --> 00:37:40,971
I got a good feeling about this.
754
00:37:41,050 --> 00:37:42,142
It's just a meeting though' you know?
755
00:37:43,261 --> 00:37:44,763
It's just a meeting. It's something like...
756
00:37:44,846 --> 00:37:46,974
People have meetings
all the time. You know?
757
00:37:47,056 --> 00:37:48,683
People drink their coffee,
they have a meeting.
758
00:37:48,767 --> 00:37:50,110
- Brownfield Fund'?
- Yes!
759
00:37:50,185 --> 00:37:52,062
- Hey. Hello.
- Ted.
760
00:37:52,145 --> 00:37:53,488
Chris. I'm on Ted's desk.
761
00:37:53,605 --> 00:37:54,948
Chris. Okay.
762
00:37:55,023 --> 00:37:56,195
- I'm Charlie, Charlie Geller.
-Charlie.
763
00:37:56,274 --> 00:37:57,901
- Jamie Shipley. Hi.
-Jamie.
764
00:37:57,984 --> 00:38:00,954
We're so excited to get set up
on your trading platform.
765
00:38:01,029 --> 00:38:02,155
Cool.
766
00:38:02,238 --> 00:38:04,036
Here, have a seat a second.
767
00:38:04,783 --> 00:38:05,784
All right.
768
00:38:06,868 --> 00:38:09,792
So, I... Ted had asked me
to do some meeting prep.
769
00:38:09,871 --> 00:38:13,250
But I couldn't find
any marketing material on you guys.
770
00:38:13,333 --> 00:38:15,176
Wejust moved here from Boulder.
771
00:38:15,251 --> 00:38:16,753
- Yeah.
-Got it.
772
00:38:16,836 --> 00:38:19,214
Could we see some
of your offering documents?
773
00:38:19,297 --> 00:38:21,800
Well, Brownfield is its own money.
774
00:38:22,383 --> 00:38:24,101
-It's our money.
-Yeah.
775
00:38:24,177 --> 00:38:25,975
Can you tell us how much you manage?
776
00:38:26,054 --> 00:38:29,524
Of course. We're doing
$30 million right now.
777
00:38:29,599 --> 00:38:30,816
Um, but we started
778
00:38:30,892 --> 00:38:33,645
- four years ago with $110,000.
- Wow.
779
00:38:33,728 --> 00:38:38,359
So, as you can see,
that's pretty phenomenal returns.
780
00:38:38,441 --> 00:38:41,661
We want to get an ISDA agreement
with JPMorgan so we can
781
00:38:41,778 --> 00:38:44,281
deal in long-term options.
782
00:38:44,364 --> 00:38:45,707
- That's really cool.
-Yeah.
783
00:38:58,586 --> 00:39:00,384
That is so cool.
784
00:39:00,463 --> 00:39:01,555
Thank you.
785
00:39:01,631 --> 00:39:05,807
But you guys are under
the capital requirements for an ISDA.
786
00:39:05,927 --> 00:39:06,928
By how much?
787
00:39:07,595 --> 00:39:08,596
Uh...
788
00:39:08,805 --> 00:39:12,184
One billion four hundred
seventy million, so...
789
00:39:13,184 --> 00:39:14,731
...a lot.
790
00:39:15,979 --> 00:39:17,447
This makes us look bad, doesn't it,
791
00:39:17,522 --> 00:39:20,696
that we didn't know
what the capital requirements were?
792
00:39:20,775 --> 00:39:21,776
Uh...
793
00:39:22,360 --> 00:39:23,782
It's not great.
794
00:39:24,279 --> 00:39:25,576
But, uh,
795
00:39:25,655 --> 00:39:28,124
keep up those returns and give us a call
796
00:39:28,199 --> 00:39:29,997
way down the line. You know.
797
00:39:30,076 --> 00:39:31,077
Okay?
798
00:39:31,160 --> 00:39:32,457
- Okay.
-Thanks, Chris.
799
00:39:32,579 --> 00:39:33,546
Have a good one, guys.
800
00:39:33,621 --> 00:39:34,668
Thank you, Chris.
801
00:39:38,960 --> 00:39:39,961
Shit!
802
00:39:41,129 --> 00:39:42,381
Who the fuck schedules a meeting
803
00:39:42,463 --> 00:39:44,591
-at 4:50 in the afternoon?
-Oh, my, God.
804
00:39:44,674 --> 00:39:46,426
That was so painful.
805
00:39:46,509 --> 00:39:50,139
Dude, B of A and Bear
didn't even return our calls.
806
00:39:50,221 --> 00:39:52,394
And even fucking Wachovia
807
00:39:52,473 --> 00:39:54,146
-blew us off, man!
-I know.
808
00:39:54,309 --> 00:39:56,562
Here's the prospectuses
of all the other losers
809
00:39:56,644 --> 00:39:58,362
who didn't make it past the lobby.
810
00:39:58,438 --> 00:40:00,315
I don't think I can
do this anymore. You know.
811
00:40:00,398 --> 00:40:03,242
I'm young, yet.
I can still do something with my life.
812
00:40:03,318 --> 00:40:05,412
I miss Colorado anyway.
The weeds better.
813
00:40:06,362 --> 00:40:08,364
Gentlemen, I need you 10 leave.
814
00:40:08,489 --> 00:40:09,866
Yep, yep, we're going. Let's go.
815
00:40:09,991 --> 00:40:11,117
Look at this. Look at this.
816
00:40:11,200 --> 00:40:12,543
This 9U)'
817
00:40:12,619 --> 00:40:15,543
says that the housing market's
a giant bubble.
818
00:40:17,916 --> 00:40:20,089
Okay, so this pan
isn't totally accurate, you know.
819
00:40:20,168 --> 00:40:22,262
We didn't find Jared Vennetfs
housing bubble pitch
820
00:40:22,337 --> 00:40:24,260
in the lobby of a bank that rejected us.
821
00:40:24,339 --> 00:40:25,807
The truth is, um,
822
00:40:25,882 --> 00:40:28,761
a friend had told Charlie about it,
and I read about it
823
00:40:28,843 --> 00:40:30,265
in Grant's Interest Rate Observer.
824
00:40:30,345 --> 00:40:31,688
This is crazy.
825
00:40:31,763 --> 00:40:34,266
This is crazy stuff.
826
00:40:34,349 --> 00:40:37,023
Shit, he's saying
that there's 1040-1 returns
827
00:40:37,101 --> 00:40:40,731
on credit default swaps
for mortgage-backed securities?
828
00:40:40,855 --> 00:40:43,483
And the whole housing market
is about to collapse?
829
00:40:44,192 --> 00:40:45,944
For Jamie and Charlie,
the housing market
830
00:40:46,027 --> 00:40:48,450
doomsday prediction
was music to their ears.
831
00:40:56,079 --> 00:40:58,047
They had started working
out of Jamie's garage
832
00:40:58,122 --> 00:41:00,045
with $110,000 Jamie had saved
833
00:41:00,124 --> 00:41:02,218
taking sailboats up and down
the East Coast.
834
00:41:04,128 --> 00:41:05,926
Our investment strategy was simple.
835
00:41:06,005 --> 00:41:08,053
People hate to think about
bad things happening,
836
00:41:08,132 --> 00:41:10,476
so they always underestimate
their likelihood.
837
00:41:10,551 --> 00:41:13,054
Their strategy
was simple and brilliant.
838
00:41:13,596 --> 00:41:14,688
What he said.
839
00:41:14,764 --> 00:41:17,483
Jamie and Charlie found markets
will sell options vely cheaply
840
00:41:17,558 --> 00:41:19,777
on things they think wit! never happen.
841
00:41:19,852 --> 00:41:21,445
So when they were wrong,
they were wrong small,
842
00:41:21,521 --> 00:41:23,489
but when they were right,
they were right big.
843
00:41:30,321 --> 00:41:34,076
Within a few years they had
turned $110,000 into $30 million.
844
00:41:34,158 --> 00:41:35,831
But then it was time
to go to New York City.
845
00:41:35,910 --> 00:41:38,538
And so far, it wasn't going very well.
846
00:41:38,621 --> 00:41:40,373
So what if it does seem interesting. No...
847
00:41:40,456 --> 00:41:43,960
No bank will give us our ISDA.
We're dead in the water.
848
00:41:45,461 --> 00:41:47,884
These kind of trades
are totally out of the question.
849
00:41:47,964 --> 00:41:49,591
We got to call Ben.
850
00:41:51,801 --> 00:41:53,303
Let's call Ben!
851
00:41:54,178 --> 00:41:56,272
Ben Ricken was
a former trader in Singapore
852
00:41:56,347 --> 00:41:59,100
for Chase who quit
the whole game in disgust.
853
00:41:59,183 --> 00:42:01,527
He happened to be Jamie's neighbor
when they were in Colorado
854
00:42:01,602 --> 00:42:03,775
and they met walking dogs.
855
00:42:03,855 --> 00:42:05,323
But Ben was dark.
856
00:42:05,440 --> 00:42:07,488
He didn't just think
the whole system would fail.
857
00:42:07,567 --> 00:42:09,786
He thought the whole world
was going down.
858
00:42:11,821 --> 00:42:13,915
Every one of these vegetables
is fresh from my garden.
859
00:42:16,409 --> 00:42:17,706
You guys should
start your own garden.
860
00:42:17,785 --> 00:42:20,129
What you got to do is get
your soil off the petrochemicals.
861
00:42:20,204 --> 00:42:21,251
JAMIE; Hmm.
862
00:42:21,330 --> 00:42:23,549
I used wood ash and urine
to help restore the soil.
863
00:42:23,624 --> 00:42:25,217
It creates ammonium nitrate.
864
00:42:25,293 --> 00:42:27,045
Seeds are gonna be the new currency.
865
00:42:27,170 --> 00:42:29,172
And not those Franken-seeds
from Monsanto.
866
00:42:29,255 --> 00:42:31,849
I'm talking about good,
healthy, organic seeds.
867
00:42:31,924 --> 00:42:33,050
Make yourself a garden.
868
00:42:33,134 --> 00:42:34,602
- Learn to live off the land.
-You're a fucking lunatic.
869
00:42:34,677 --> 00:42:36,896
Ben had (ea!
experience in a big bank.
870
00:42:36,971 --> 00:42:40,646
Jamie and Charlie had never even
been in a Manhattan bank baihroom.
871
00:42:40,767 --> 00:42:42,440
But Ben was done
with the banking world.
872
00:42:42,518 --> 00:42:43,861
He was very clear.
873
00:42:43,936 --> 00:42:45,529
Al! right,
let's crunch some numbers
874
00:42:45,605 --> 00:42:47,983
and then maybe
we“ talk about calling Ben.
875
00:42:48,066 --> 00:42:49,113
We're always crunching numbers.
876
00:42:49,192 --> 00:42:50,239
When haven't we
crunched the numbers?
877
00:42:50,318 --> 00:42:51,365
We're gonna crunch
the numbers like harder...
878
00:42:51,486 --> 00:42:52,453
I need you out of here.
879
00:42:52,528 --> 00:42:53,575
Of course. One second.
880
00:42:53,654 --> 00:42:54,325
Yes, ma'am. We're going.
881
00:42:57,533 --> 00:42:59,831
0h, God. I hate this.
This is a total waste of time.
882
00:43:00,036 --> 00:43:02,380
Oh, come on. Would you relax?
883
00:43:03,122 --> 00:43:06,251
There's a housing development
45 minutes outside town.
884
00:43:06,334 --> 00:43:08,211
Mark wants us to check that out first.
885
00:43:08,294 --> 00:43:10,296
Well, I hope there are some
Cuban restaurants on the way there.
886
00:43:10,379 --> 00:43:13,007
Because I heard the Cuban food
is amazing in Miami.
887
00:43:13,091 --> 00:43:15,810
Please don't be chipper
in the face of me being miserable.
888
00:43:15,885 --> 00:43:17,558
It really makes me hate you.
889
00:43:17,637 --> 00:43:20,186
How is wanting to eat good food
being chipper?
890
00:43:21,891 --> 00:43:23,063
Hello?
891
00:43:24,477 --> 00:43:25,729
Hello?
892
00:43:26,521 --> 00:43:27,864
What do these go for'?
893
00:43:29,524 --> 00:43:31,242
$425,000 each?
894
00:43:53,089 --> 00:43:54,682
What's up, man?
What do you want?
895
00:43:54,757 --> 00:43:58,102
Hello. I'm surveying mortgage owners
who are over 90 days delinquent.
896
00:43:58,177 --> 00:44:00,726
I'm looking for a Harvey Humpsey.
897
00:44:00,805 --> 00:44:01,977
You want my landlord's dog?
898
00:44:04,142 --> 00:44:05,610
Your landlord filled out
his mortgage application
899
00:44:05,685 --> 00:44:08,154
using his dog's name?
900
00:44:08,229 --> 00:44:09,697
I guess so.
901
00:44:09,772 --> 00:44:12,275
Wait, has that asshole
not been paying his mortgage?
902
00:44:12,358 --> 00:44:13,701
'Cause I've been paying my rent.
903
00:44:13,776 --> 00:44:15,699
Well, yeah, he is over
90 days delinquent.
904
00:44:16,070 --> 00:44:17,663
Seriously, man,
905
00:44:17,738 --> 00:44:19,536
am I gonna have to leave?
906
00:44:22,076 --> 00:44:24,454
'Cause my kid just got
settled in school, man.
907
00:44:24,537 --> 00:44:26,710
Hey. How are ya?
908
00:44:27,373 --> 00:44:28,545
My name's Ken.
909
00:44:28,666 --> 00:44:29,883
You're Ken?
910
00:44:29,959 --> 00:44:31,757
Um, you should talk
to your landlord about that.
911
00:44:31,836 --> 00:44:33,338
I'm sorry, I don't have
any more information.
912
00:44:33,421 --> 00:44:34,798
But you, um...
913
00:44:35,464 --> 00:44:37,057
You have a great day.
See ya, Ken.
914
00:44:37,133 --> 00:44:38,555
There's books everywhere!
915
00:44:38,634 --> 00:44:40,887
Books everywhere?
916
00:44:40,970 --> 00:44:44,224
Seriously, man,
is everything gonna be okay?
917
00:44:44,307 --> 00:44:47,402
You should...
You should call him.
918
00:44:47,476 --> 00:44:48,523
You should give him a call.
919
00:44:48,603 --> 00:44:50,276
It's not my fault, dude.
I've been paying...
920
00:44:54,150 --> 00:44:55,242
Hello!
921
00:44:59,155 --> 00:45:01,283
Looks like the Mary Celeste.
922
00:45:01,365 --> 00:45:04,118
Look. All they took was the TV.
923
00:45:04,911 --> 00:45:06,879
DANNY; It's weird.
924
00:45:06,954 --> 00:45:09,298
They didn't even
clean out the cat litter.
925
00:45:17,840 --> 00:45:18,887
Oh, God.
926
00:45:30,519 --> 00:45:32,442
It's like Chernobyl.
927
00:45:32,521 --> 00:45:35,946
There's like a hundred houses.
There can't be four people living here.
928
00:45:37,985 --> 00:45:40,158
- Oh, fuck that!
-Shit!
929
00:45:55,044 --> 00:45:56,170
He's been in there for seven hours.
930
00:45:56,295 --> 00:45:57,888
Where does he go to the bathroom?
931
00:45:58,506 --> 00:45:59,598
I heard he had a breakdown.
932
00:45:59,674 --> 00:46:01,642
He's letting the fund tank.
933
00:46:01,717 --> 00:46:03,185
My buddy in Manhattan said...
934
00:46:03,302 --> 00:46:04,849
Dr. Bu rry's office.
935
00:46:05,179 --> 00:46:06,806
No, he actually prefers
that you email him.
936
00:46:06,889 --> 00:46:08,186
Excuse me.
937
00:46:08,516 --> 00:46:09,517
Mr. Fields, Mr...
938
00:46:13,646 --> 00:46:15,398
- Hi, Lawrence.
- Holy shit!
939
00:46:17,024 --> 00:46:20,574
We have no confidence
in your ability to identify
940
00:46:20,653 --> 00:46:22,246
macroeconomic trends.
941
00:46:24,573 --> 00:46:27,122
You flew here
to tell me that? Why?
942
00:46:27,201 --> 00:46:30,626
Anyone can see
that there is a real estate bubble.
943
00:46:30,705 --> 00:46:32,548
Actually, no one can see a bubble.
944
00:46:32,623 --> 00:46:33,840
That's what makes it a bubble.
945
00:46:33,916 --> 00:46:36,214
That's dumb, Lawrence.
946
00:46:36,294 --> 00:46:37,887
There's always markers.
947
00:46:38,629 --> 00:46:41,098
Mortgage fraud has
948
00:46:41,173 --> 00:46:42,925
quintupled since 2000
949
00:46:43,050 --> 00:46:45,894
and the average take-home pay is flat,
950
00:46:45,970 --> 00:46:47,438
but home prices are soaring.
951
00:46:47,513 --> 00:46:49,607
That means the homes
are debt, not assets.
952
00:46:49,682 --> 00:46:51,901
So Mike Burry of San Jose, a guy who
953
00:46:52,893 --> 00:46:56,272
gets his hair cut at Supercuts
and doesn't wear shoes,
954
00:46:56,397 --> 00:46:59,241
knows more than Alan Greenspan
and Hank Paulson.
955
00:46:59,400 --> 00:47:00,401
Well...
956
00:47:01,110 --> 00:47:03,738
Dr. Mike Burry,
yes, he does.
957
00:47:04,947 --> 00:47:06,745
That's cute. That's cute.
958
00:47:06,824 --> 00:47:09,168
Are you being sarcastic with us, Mike?
959
00:47:12,288 --> 00:47:13,710
Lawrence,
960
00:47:13,789 --> 00:47:16,292
I don't know how to be sarcastic.
961
00:47:16,959 --> 00:47:19,758
I don't know how to be funny.
I don't know how to
962
00:47:20,421 --> 00:47:21,889
work people.
963
00:47:21,964 --> 00:47:23,136
L...
964
00:47:23,215 --> 00:47:25,559
I just know how to read numbers.
965
00:47:25,634 --> 00:47:28,137
How big is your short position right now?
966
00:47:28,512 --> 00:47:29,559
Um...
967
00:47:29,638 --> 00:47:31,231
Just $1.3 billion.
968
00:47:31,807 --> 00:47:33,184
And the premiums?
969
00:47:33,309 --> 00:47:34,652
Well, we pay, uh,
970
00:47:35,102 --> 00:47:38,447
roughly $80 to 90 million
971
00:47:38,564 --> 00:47:40,032
each year, which is high,
972
00:47:40,107 --> 00:47:42,201
but I was the first to do this trade.
973
00:47:42,276 --> 00:47:45,746
Watch. It will pay. I may have
been early, but I'm not wrong.
974
00:47:45,821 --> 00:47:48,165
It's the same thing.
It's the same thing, Mike!
975
00:47:48,991 --> 00:47:53,121
You're managing a fund of,
what, $555 million?
976
00:47:53,662 --> 00:47:57,166
In six years, it'll all be gone.
977
00:47:57,958 --> 00:47:59,380
On one bet.
978
00:47:59,460 --> 00:48:02,634
No, the second quarter of '07 is
when the adjustable rates kick in.
979
00:48:02,755 --> 00:48:04,257
The defaults will skyrocket.
980
00:48:04,340 --> 00:48:06,058
Yeah. Says you.
981
00:48:06,133 --> 00:48:08,602
How much is eligible
for withdrawal before they do?
982
00:48:08,677 --> 00:48:10,600
Say, in the next two quarters.
983
00:48:11,305 --> 00:48:13,307
If your investors panic.
984
00:48:16,852 --> 00:48:17,899
$302 million?
985
00:48:17,978 --> 00:48:18,979
L...
986
00:48:19,855 --> 00:48:21,482
My God, Mike.
987
00:48:26,320 --> 00:48:28,243
No one will pull out.
That would be suicide.
988
00:48:28,322 --> 00:48:30,745
I mean, I'm down 17% for the year.
989
00:48:30,866 --> 00:48:33,164
But if they trust me,
and they trust me, because...
990
00:48:33,244 --> 00:48:35,872
No one trusts you! No one!
991
00:48:35,955 --> 00:48:38,378
I sent several emails to my investors
992
00:48:38,499 --> 00:48:40,547
letting them know that the...
993
00:48:42,169 --> 00:48:44,592
...the second quarter of '07 is when our
994
00:48:44,713 --> 00:48:47,182
housing positions show returns and...
995
00:48:48,551 --> 00:48:49,803
I've been very clear.
996
00:48:50,594 --> 00:48:53,438
People will withdraw their money.
997
00:48:54,014 --> 00:48:57,484
Lawrence, that would be so stupid.
I mean, the...
998
00:48:57,560 --> 00:49:01,064
If the fund's capitals
drop too much,
999
00:49:01,522 --> 00:49:04,617
then the swaps contracts are voided.
1000
00:49:04,692 --> 00:49:07,946
And then the banks get to
keep all of the collateral.
1001
00:49:08,028 --> 00:49:10,247
- Wait a minute. Wait.
- All of it'
1002
00:49:10,364 --> 00:49:12,492
The contracts are voided?
1003
00:49:12,575 --> 00:49:14,373
The contracts are voided?
1004
00:49:15,077 --> 00:49:16,750
Holy shit!
1005
00:49:17,204 --> 00:49:18,205
Oh, motherfucker!
1006
00:49:18,873 --> 00:49:20,375
Michael?
1007
00:49:20,749 --> 00:49:22,422
Give me my money back.
1008
00:49:25,838 --> 00:49:29,217
Michael, do you hear me?
I want my money back.
1009
00:49:31,719 --> 00:49:34,063
Give me my fucking money back...
1010
00:49:35,097 --> 00:49:36,519
...you motherfucker.
1011
00:49:37,433 --> 00:49:40,562
The market's in an itsy-bitsy
little gully right now.
1012
00:49:40,686 --> 00:49:42,939
It's like everybody said,
"Okay, that was crazy.
1013
00:49:43,022 --> 00:49:44,899
"Lefsjust all calm down."
1014
00:49:46,734 --> 00:49:49,954
I sold that house for $350,000
the year it was built.
1015
00:49:50,613 --> 00:49:52,786
Two years later, $480,000.
1016
00:49:52,907 --> 00:49:56,081
Then $585,000 maybe 18 months ago.
1017
00:49:56,202 --> 00:49:58,751
This couple bought it
for $650,000 last year.
1018
00:49:59,246 --> 00:50:01,089
He'd let it go for that.
1019
00:50:01,165 --> 00:50:02,838
Hi, John.
1020
00:50:02,917 --> 00:50:03,964
No, no, no.
1021
00:50:04,585 --> 00:50:05,962
It will break his heart, but he'll let it go.
1022
00:50:06,086 --> 00:50:07,838
Why is he selling?
1023
00:50:07,922 --> 00:50:09,765
Neither one's
working right now.
1024
00:50:10,758 --> 00:50:13,386
Marlene, you'd say
they're motivated, right?
1025
00:50:13,469 --> 00:50:16,473
As motivated as one can be
in this neighborhood.
1026
00:50:16,555 --> 00:50:19,104
This house on the left,
I would say they're probably motivated.
1027
00:50:19,183 --> 00:50:21,151
Wow, a lot of people
seem very motivated.
1028
00:50:21,227 --> 00:50:22,319
Oh, ifsjust the gully.
1029
00:50:22,603 --> 00:50:24,355
That's all. Just...
1030
00:50:24,438 --> 00:50:25,860
Just nerves.
1031
00:50:25,940 --> 00:50:27,658
So where do we stand?
1032
00:50:28,817 --> 00:50:31,320
I need 10 talk to my wife. Um...
1033
00:50:31,403 --> 00:50:32,700
This market won't last.
1034
00:50:32,780 --> 00:50:34,578
Actually, could I talk
to a mortgage broker?
1035
00:50:34,657 --> 00:50:36,500
Anybody you recommend?
Anybody you like.
1036
00:50:36,575 --> 00:50:38,577
Yes, yes, I have
someone. Absolutely.
1037
00:50:38,661 --> 00:50:39,913
Yeah, bitch better like me.
1038
00:50:39,995 --> 00:50:41,247
Sent her ass to Cabo.
1039
00:50:42,873 --> 00:50:45,467
So is Morgan Stanley
recruiting us'? Is that it?
1040
00:50:45,751 --> 00:50:48,721
Oh' nu. Ne.
The bank owns our hedge fund,
1041
00:50:48,796 --> 00:50:49,843
but we're not really part of it.
1042
00:50:49,964 --> 00:50:52,433
We invest in financial service companies
1043
00:50:52,508 --> 00:50:55,478
and we're trying to understand
the residential mortgage business.
1044
00:50:55,553 --> 00:50:58,477
How many loans
do you write each month?
1045
00:50:58,597 --> 00:51:00,144
- About 60.
- Yeah.
1046
00:51:00,224 --> 00:51:01,692
What was it four years ago?
1047
00:51:02,643 --> 00:51:03,986
Ten...
1048
00:51:04,061 --> 00:51:05,313
Maybe 15.
1049
00:51:05,396 --> 00:51:07,694
Yeah, I was a bartender.
Now I own a boat.
1050
00:51:07,773 --> 00:51:08,740
You own a...
1051
00:51:08,816 --> 00:51:12,070
So how many of these are
adjustable-rate mortgages?
1052
00:51:12,152 --> 00:51:13,825
- Well, most.
- Oh, yeah.
1053
00:51:13,904 --> 00:51:15,872
Yeah, I'd say about 90%.
1054
00:51:15,948 --> 00:51:19,077
The bonuses on those
skyrocketed a few years ago.
1055
00:51:19,159 --> 00:51:20,456
Adjustable's our bread and honey.
1056
00:51:20,536 --> 00:51:23,085
So do applicants ever get rejected?
1057
00:51:27,418 --> 00:51:28,635
Seriously?
1058
00:51:29,503 --> 00:51:31,597
Look, if they get rejected,
I suck at my job.
1059
00:51:31,672 --> 00:51:33,174
Even if they have no money?
1060
00:51:33,257 --> 00:51:36,136
Well, my firm offers NINJA loans.
1061
00:51:36,218 --> 00:51:38,687
- Okay.
- "No Income, No Job."
1062
00:51:39,013 --> 00:51:41,232
I just leave the income section
blank if I want.
1063
00:51:41,307 --> 00:51:42,559
Corporate doesn't care.
1064
00:51:42,641 --> 00:51:45,941
These people just want homes.
And they go with the flow.
1065
00:51:46,020 --> 00:51:47,021
Good for you.
1066
00:51:47,104 --> 00:51:48,151
Your companies don't verify?
1067
00:51:51,859 --> 00:51:53,861
If I write a loan on Friday afternoon,
1068
00:51:54,737 --> 00:51:56,739
a big bank will buy it by Monday lunch.
1069
00:51:57,281 --> 00:51:58,624
Yeah. Same here.
1070
00:52:00,409 --> 00:52:01,786
Could you hold on a second?
1071
00:52:01,910 --> 00:52:03,287
Yeah.
1072
00:52:08,959 --> 00:52:11,633
I don't get it.
Why are they confessing?
1073
00:52:11,712 --> 00:52:13,680
They're not confessing.
1074
00:52:13,797 --> 00:52:15,470
They're bragging.
1075
00:52:24,224 --> 00:52:28,229
Do people have any idea
what they are buying?
1076
00:52:29,188 --> 00:52:31,441
I focus on
the immigrants, you know.
1077
00:52:31,523 --> 00:52:32,945
Once they find out
they're getting a home,
1078
00:52:33,025 --> 00:52:34,618
they sign where you tell them to sign.
1079
00:52:34,693 --> 00:52:36,821
Don't ask questions.
Don't understand the rates.
1080
00:52:36,904 --> 00:52:38,372
- Fucking idiots.
-Yeah.
1081
00:52:38,447 --> 00:52:39,869
And you target immigrants, too?
1082
00:52:39,948 --> 00:52:42,792
Well, their credit actually
isn't bad enough for him.
1083
00:52:44,703 --> 00:52:46,376
Look, I'm a yield guy.
1084
00:52:46,872 --> 00:52:47,919
Okay...
1085
00:52:48,999 --> 00:52:52,424
I make $2,000
on a fixed-rate prime loan, right?
1086
00:52:52,503 --> 00:52:56,133
But I can make $10,000
on a subprime adjustable.
1087
00:52:56,215 --> 00:52:59,185
Trust me, I'm not driving a 7 Series
without strippers.
1088
00:52:59,259 --> 00:53:02,559
No one on the pole has good credit
and they're all cash rich.
1089
00:53:02,638 --> 00:53:04,982
I think I read Warren Buffett
say something like that.
1090
00:53:05,474 --> 00:53:07,727
What? Who's Warren Buffett?
1091
00:53:08,268 --> 00:53:10,987
Okay, so strippers.
Like exotic dancers?
1092
00:53:11,063 --> 00:53:12,280
Yeah, yeah, yeah.
1093
00:53:12,356 --> 00:53:14,324
Nude, you know, topless.
1094
00:53:14,400 --> 00:53:16,243
Strippers.
-Yeah.
1095
00:53:19,822 --> 00:53:21,039
Can you introduce us?
1096
00:53:21,115 --> 00:53:23,538
Yes! Yes.
1097
00:53:25,619 --> 00:53:28,543
I always get option-pay adjustables.
I'm a private contractor.
1098
00:53:28,622 --> 00:53:30,295
What? I can't hear you. I'm sorry.
1099
00:53:30,374 --> 00:53:32,217
I always get option-pay adjustables.
1100
00:53:32,292 --> 00:53:34,545
I'm a private contractor.
I need flexibility.
1101
00:53:34,628 --> 00:53:37,222
And you tell the mortgage company
what you do?
1102
00:53:37,297 --> 00:53:39,299
I write "therapist".
1103
00:53:39,383 --> 00:53:40,851
- You can touch me.
-Always?
1104
00:53:41,468 --> 00:53:42,515
Only in V.l.P.
1105
00:53:42,594 --> 00:53:45,222
No, no, no, you say
you always do adjustables.
1106
00:53:45,305 --> 00:53:47,103
And you have more than
one loan on a property?
1107
00:53:47,182 --> 00:53:49,401
Everybody does.
At least down here.
1108
00:53:49,476 --> 00:53:50,477
I'm sorry, what?
1109
00:53:50,561 --> 00:53:53,155
Everybody does.
At least down here.
1110
00:53:53,230 --> 00:53:55,403
That way you only put down, like, 5%.
1111
00:53:55,482 --> 00:53:57,280
Prices have leveled off, though, right?
1112
00:53:57,359 --> 00:53:59,202
Yeah. There's a gully.
1113
00:53:59,278 --> 00:54:02,999
Would you mind not moving anymore?
I'll still pay you.
1114
00:54:06,785 --> 00:54:09,504
Sorry. We're not alone.
1115
00:54:09,580 --> 00:54:12,208
Okay, look. If home prices don't go up,
1116
00:54:12,291 --> 00:54:14,589
you are not going to be able 10 refinance.
1117
00:54:14,668 --> 00:54:17,797
And you'll be stuck paying
whatever your monthly payment is
1118
00:54:17,880 --> 00:54:20,599
once itjumps up
after your teaser rate expires.
1119
00:54:21,008 --> 00:54:23,056
Your monthlies could go up 200%-300%.
1120
00:54:23,469 --> 00:54:25,517
James says I can always refinance.
1121
00:54:25,596 --> 00:54:27,394
Well, he's a liar.
1122
00:54:27,473 --> 00:54:30,602
Actually, in this particular case,
James probably is wrong.
1123
00:54:30,684 --> 00:54:33,984
200 percent? On all my loans?
1124
00:54:34,062 --> 00:54:35,439
What do you mean "all" your loans?
1125
00:54:35,522 --> 00:54:37,945
We're talking about two loans
on one house, right?
1126
00:54:38,776 --> 00:54:40,744
I have five houses.
1127
00:54:40,861 --> 00:54:42,829
And a condo.
1128
00:54:44,698 --> 00:54:46,200
Hey, there's a bubble.
1129
00:54:46,283 --> 00:54:47,284
How do you know?
1130
00:54:47,367 --> 00:54:50,792
Trust me. Call Vennefl,
buy $50 million in swaps on the MBS.
1131
00:54:50,871 --> 00:54:53,795
What do we goi'? Garibaldi IV, BBB.
1132
00:54:53,874 --> 00:54:55,376
Mark, are you sure?
1133
00:54:55,459 --> 00:54:57,302
Yeah. Yeah, it's time to call bullshit.
1134
00:54:57,377 --> 00:55:00,051
- Bullshit on what?
-Every fucking thing.
1135
00:55:24,238 --> 00:55:25,911
FrontPoint! FrontPoint!
1136
00:55:27,741 --> 00:55:29,539
Is this America's angriest hedge fund?
1137
00:55:29,618 --> 00:55:31,746
All right, listen.
I got one last question for you.
1138
00:55:32,913 --> 00:55:34,756
How are you fucking us?
1139
00:55:36,583 --> 00:55:38,130
There's a nicer way to say that, Vinnie.
1140
00:55:38,210 --> 00:55:39,757
I'm serious.
1141
00:55:39,837 --> 00:55:42,932
We'll buy your swaps,
but only if you say how you're fucking us.
1142
00:55:43,006 --> 00:55:45,509
I'm not fucking you, Vinnie.
I'm kissing you.
1143
00:55:45,592 --> 00:55:48,345
I'm looking deep into your eyes
as I make love to you, Vinnie.
1144
00:55:48,428 --> 00:55:51,773
I'm handing you the deal of the century
on a fucking platter.
1145
00:55:51,849 --> 00:55:54,227
What do I get out of it? Easy.
1146
00:55:54,309 --> 00:55:56,732
I got a $20-million-a-month
negative carry.
1147
00:55:56,812 --> 00:55:58,189
I got bosses trying to pull the plug
1148
00:55:58,272 --> 00:56:00,695
because they think
I'm out of my fucking mind.
1149
00:56:00,774 --> 00:56:01,775
All right?
1150
00:56:01,859 --> 00:56:02,951
We make this trade,
1151
00:56:03,026 --> 00:56:05,370
those problems aren't so big anymore.
1152
00:56:05,445 --> 00:56:09,200
And sure, swaps are a dark market,
so I set the price.
1153
00:56:09,283 --> 00:56:10,785
Whatever price I want.
1154
00:56:10,868 --> 00:56:12,290
And when you come for the payday,
1155
00:56:12,411 --> 00:56:14,630
I'm gonna rip your eyes out,
I'm gonna make a fortune.
1156
00:56:15,747 --> 00:56:17,249
But the good news is, Vinnie,
you're not gonna care
1157
00:56:17,332 --> 00:56:19,551
because you're gonna make
so much fucking money.
1158
00:56:19,626 --> 00:56:20,923
That's what I get out of it.
1159
00:56:21,003 --> 00:56:22,300
Want to know what you get out of it?
1160
00:56:22,379 --> 00:56:25,883
You get the ice cream, the hot fudge,
the banana, and the nuts.
1161
00:56:25,966 --> 00:56:27,718
Right now, I get the sprinkles, and, yeah,
1162
00:56:27,801 --> 00:56:30,429
if this goes through, I get the cherry.
1163
00:56:30,512 --> 00:56:32,731
But you get the sundae, Vinnie.
1164
00:56:32,806 --> 00:56:34,479
You get the sundae.
1165
00:56:36,935 --> 00:56:39,734
All right, I buy that Thank you.
1166
00:56:39,813 --> 00:56:41,986
So what do you say?
1167
00:56:42,065 --> 00:56:43,942
- You want me to make you a market?
- Yeah.
1168
00:56:44,026 --> 00:56:47,530
We'll take $50 million, Garibaldi IV, BBB.
1169
00:56:48,989 --> 00:56:51,037
Sharpen your pencils.
I'll get the paperwork ready.
1170
00:56:53,744 --> 00:56:55,246
Fuck you, too.
1171
00:56:57,205 --> 00:56:58,707
Yes!
1172
00:57:00,667 --> 00:57:01,668
That's right.
1173
00:57:03,795 --> 00:57:05,718
Oh, man.
1174
00:57:05,797 --> 00:57:10,018
He has so many numbers,
and I always forget
1175
00:57:10,135 --> 00:57:11,762
which one he prefers,
because he's very specific.
1176
00:57:11,845 --> 00:57:13,062
Start with the first one.
1177
00:57:13,138 --> 00:57:14,355
I don't know if ifs the first one.
1178
00:57:14,473 --> 00:57:15,770
Just try it.
1179
00:57:15,849 --> 00:57:17,396
Okay. I... Okay.
1180
00:57:35,035 --> 00:57:37,788
- Ben Rickert.
- Hey, Ben. It's Jamie.
1181
00:57:39,331 --> 00:57:41,208
Jamie, you know you're
not supposed to use this line.
1182
00:57:43,669 --> 00:57:44,921
Told you.
1183
00:57:46,296 --> 00:57:48,970
Okay, let's try number two out of 14.
1184
00:58:00,560 --> 00:58:01,561
Ben Rickert.
1185
00:58:01,645 --> 00:58:03,647
Ben, why do you do that, man? I mean...
1186
00:58:03,730 --> 00:58:06,153
You're a retired trader, okay'?
No one is listening to your calls.
1187
00:58:06,233 --> 00:58:07,951
The NSA has a $52 billion budget
and the ability
1188
00:58:08,026 --> 00:58:09,403
to monitor tens of millions
of calls a second.
1189
00:58:09,486 --> 00:58:11,830
You think they're not using it?
1190
00:58:11,905 --> 00:58:14,749
Hey, I promise I will refrain from saying
1191
00:58:14,825 --> 00:58:16,998
"Ben Rickert" and "dirty bomb"
in the same sent...
1192
00:58:18,870 --> 00:58:20,543
- Jesus fucking Christ.
-I'm sorry, dude.
1193
00:58:22,165 --> 00:58:23,257
Ben Rickert.
1194
00:58:23,375 --> 00:58:25,753
Did you get a chance to look
at what we sent you, Ben?
1195
00:58:25,836 --> 00:58:28,009
It's Charlie. I'm here, too.
1196
00:58:28,755 --> 00:58:31,099
Hi, Charlie. Yeah, I did. Hold on.
1197
00:58:37,097 --> 00:58:38,189
Ben, you still there?
1198
00:58:38,306 --> 00:58:39,432
Yeah.
1199
00:58:40,183 --> 00:58:42,231
I'll be honest, gentlemen.
1200
00:58:42,310 --> 00:58:44,233
It scared the shit out of me.
1201
00:58:44,354 --> 00:58:45,731
But that's a good thing, right?
1202
00:58:45,814 --> 00:58:48,613
That means this Vennett guy's
not wrong.
1203
00:58:49,317 --> 00:58:50,409
No, he's not.
1204
00:58:53,113 --> 00:58:54,114
Cool.
1205
00:58:54,197 --> 00:58:55,790
Tell me more about these CDOs.
1206
00:58:55,866 --> 00:58:59,621
Yeah, yeah. Okay, so, you know,
Vennett mentions the CDOs,
1207
00:58:59,745 --> 00:59:01,292
but actually, we took a look
1208
00:59:01,371 --> 00:59:02,998
and they're way worse
than even he realizes.
1209
00:59:03,123 --> 00:59:04,545
These things don't make any sense!
1210
00:59:04,624 --> 00:59:05,876
We can't even model them.
1211
00:59:05,959 --> 00:59:08,678
These axe M) “mes time!
man me MES.
1212
00:59:08,754 --> 00:59:10,347
And 90% AAA-rated.
1213
00:59:10,422 --> 00:59:12,174
- Yes! Exactly!
-Over 90%.
1214
00:59:12,299 --> 00:59:13,391
Ifs incredible.
1215
00:59:13,467 --> 00:59:16,641
I took a good hard look
at the CDOs you want to short.
1216
00:59:17,387 --> 00:59:19,810
They're brilliant. Worthless. Total crap.
1217
00:59:20,474 --> 00:59:22,647
Jamie. Very good.
1218
00:59:22,726 --> 00:59:26,230
What can I say?
I'm good at finding shit.
1219
00:59:26,313 --> 00:59:29,066
So, Ben, we shorted
the BB 's and the BBB's,
1220
00:59:29,149 --> 00:59:31,243
and the risk is relatively low.
1221
00:59:31,318 --> 00:59:33,992
- Payoff is, like, 2540-1.
-Yeah.
1222
00:59:36,323 --> 00:59:38,417
Okay, so, why are you calling me?
I don't do this anymore.
1223
00:59:38,492 --> 00:59:39,664
Look, Ben'?
1224
00:59:40,994 --> 00:59:44,749
We need you to help us get the ISDA.
1225
00:59:44,831 --> 00:59:47,926
If we get a hunting license,
we can short this crap.
1226
00:59:48,001 --> 00:59:49,173
And we know you hate Wall Street.
1227
00:59:49,294 --> 00:59:50,466
We're nut asking you to do the trading;.
1228
00:59:50,545 --> 00:59:54,516
We're simply asking you
to help us get a seat
1229
00:59:54,591 --> 00:59:57,765
at the fucking table.
1230
00:59:57,844 --> 00:59:59,767
It's a pretty ugly table, guys.
1231
00:59:59,846 --> 01:00:04,852
Look, Ben, the system fucked up
in a big, big way here, okay?
1232
01:00:04,935 --> 01:00:07,029
And somehow, uh,
1233
01:00:07,354 --> 01:00:10,028
we know before anyone else.
1234
01:00:10,357 --> 01:00:13,281
You know?
This is a once-in-a-lifetime deal.
1235
01:00:15,862 --> 01:00:16,863
I'm thinking.
1236
01:00:21,952 --> 01:00:23,875
Okay. I'll call Deutsche Bank.
1237
01:00:23,954 --> 01:00:26,207
Thank you, Ben. Thank you.
1238
01:00:26,289 --> 01:00:29,884
And Bear. What about Bear?
They have some reprehensible product.
1239
01:00:30,210 --> 01:00:32,554
Okay Bear wit! trade with anybody.
1240
01:01:20,677 --> 01:01:23,430
All right.
I'll see if I can push it through.
1241
01:01:23,513 --> 01:01:25,356
Thank you, Noah.
And thank Jared for us.
1242
01:01:27,309 --> 01:01:28,526
Couldn't we go inside?
1243
01:01:28,643 --> 01:01:29,860
Yeah, me, too.
1244
01:02:13,980 --> 01:02:16,324
Hi. It's Mark. I need to
talk to Vinnie right now.
1245
01:02:16,399 --> 01:02:19,824
We're just asking you 10 explain to us
1246
01:02:19,986 --> 01:02:22,455
just how it is that you are fucking us,
1247
01:02:22,530 --> 01:02:23,782
because what we are seeing...
1248
01:02:26,660 --> 01:02:28,003
Morgan Stanley building, fast.
1249
01:02:28,954 --> 01:02:31,423
Are we hooked up
to the same computer screen?
1250
01:02:31,498 --> 01:02:33,171
It doesn't make any sense.
1251
01:02:36,002 --> 01:02:37,470
MARK Vinnie, you mere?
1252
01:02:37,879 --> 01:02:38,880
Mark, you there?
1253
01:02:38,964 --> 01:02:39,931
Yeah, did you hear?
1254
01:02:40,006 --> 01:02:41,758
Mortgage defaults have
gone through the roof.
1255
01:02:41,841 --> 01:02:43,309
Is anybody jumping off of buildings yet?
1256
01:02:43,385 --> 01:02:45,604
Why would they?
Subprime mortgage bond prices are up.
1257
01:02:45,679 --> 01:02:46,726
What?
1258
01:02:46,805 --> 01:02:50,105
Vennefl wants $1.9 million more
in collateral by close.
1259
01:02:50,183 --> 01:02:51,480
Vennetfs asking us to post collateral.
1260
01:02:51,559 --> 01:02:52,981
What the hell is going on?
1261
01:02:53,061 --> 01:02:55,029
We don't know, but Deutsche's
on the phone demanding payment.
1262
01:02:55,105 --> 01:02:56,948
Call Vennett. Call that little shit.
1263
01:02:57,023 --> 01:02:58,991
Call Vennett.
Tell him to get his ass down here.
1264
01:02:59,067 --> 01:03:00,865
So subprime loans go bad,
1265
01:03:00,944 --> 01:03:04,164
but subprime bonds, which are made up
of subprime loans, are more valuable?
1266
01:03:04,239 --> 01:03:06,708
I know. They want another
$1.9 million by market close.
1267
01:03:06,825 --> 01:03:08,953
What about the ratings agencies?
Moody's, S&P...
1268
01:03:09,035 --> 01:03:11,458
Are they downgrading the CDOs
and mortgage bonds?
1269
01:03:11,538 --> 01:03:12,630
Where are the ratings agencies at?
1270
01:03:12,706 --> 01:03:14,208
They're the fucking same.
1271
01:03:14,332 --> 01:03:15,800
No, they're all still AAA.
1272
01:03:15,875 --> 01:03:18,378
What the hell?
Are you fucking kidding me?
1273
01:03:18,461 --> 01:03:20,555
Those fuckers! Those motherfuckers!
1274
01:03:20,630 --> 01:03:23,600
They go public, and all they care about
is their bottom line and their shit.
1275
01:03:23,675 --> 01:03:25,427
Hey, Mark, that's not all.
1276
01:03:25,510 --> 01:03:26,807
The Morgan Stanley risk guys are here.
1277
01:03:26,886 --> 01:03:28,263
They called in Kathy Tao.
1278
01:03:28,346 --> 01:03:30,474
They're trying to convince her
to make us sell our swaps.
1279
01:03:30,557 --> 01:03:32,810
Apparently, tying up six years
of insurance payments
1280
01:03:32,892 --> 01:03:34,644
in hopes of a housing Armageddon
1281
01:03:34,728 --> 01:03:35,980
is not prudent investing.
1282
01:03:36,104 --> 01:03:37,356
What did Kathy say?
1283
01:03:37,439 --> 01:03:40,158
Nothing yet. She keeps asking
if this is one of your crusades.
1284
01:03:40,233 --> 01:03:42,156
Okay, I want you to walk back in there
1285
01:03:42,235 --> 01:03:43,908
and very calmly, very politely,
1286
01:03:43,987 --> 01:03:46,661
tell the risk assessors to fuck off.
1287
01:03:46,781 --> 01:03:48,408
And then meet me over
at Standard & Poor's.
1288
01:03:48,533 --> 01:03:50,035
We're gonna talk to Georgia.
1289
01:03:50,118 --> 01:03:51,165
Al! right. Okay.
1290
01:03:51,244 --> 01:03:53,167
Get that fuck Jared Vennett in this office.
1291
01:03:53,246 --> 01:03:55,044
I'm gonna bash his fucking head in.
1292
01:04:00,045 --> 01:04:01,638
Uh, gentlemen?
1293
01:04:01,713 --> 01:04:04,762
I spoke with Mark Baum.
He says to fuck off.
1294
01:04:18,563 --> 01:04:20,907
I can't see a damn thing.
1295
01:04:22,275 --> 01:04:24,778
My eye doctors always busy.
1296
01:04:24,861 --> 01:04:26,659
I end up taking
any appointment they'll give me,
1297
01:04:26,738 --> 01:04:29,082
and then the whole morning
gets shot to hell!
1298
01:04:30,241 --> 01:04:31,743
So...
1299
01:04:32,243 --> 01:04:33,745
All righfy»
1300
01:04:34,120 --> 01:04:36,623
FrontPoint Partners,
1301
01:04:37,165 --> 01:04:39,543
how can Standard & Pours help you?
1302
01:04:39,626 --> 01:04:40,878
Well, we don't understand why
1303
01:04:40,960 --> 01:04:43,588
the ratings agencies haven't
downgraded subprime bonds
1304
01:04:43,671 --> 01:04:46,720
since the underlying loans
are clearly deteriorating.
1305
01:04:46,800 --> 01:04:49,223
Well, the delinquency rates
do have people worried,
1306
01:04:49,302 --> 01:04:51,100
but they're actually within our models.
1307
01:04:51,179 --> 01:04:53,147
- So...
- Says you.
1308
01:04:54,307 --> 01:04:56,730
...you're convinced
the underlying mortgages
1309
01:04:56,810 --> 01:04:59,233
in these bonds are solid loans.
1310
01:04:59,354 --> 01:05:01,231
Thai is our opinion, yes.
1311
01:05:01,314 --> 01:05:03,408
Have you looked at the loan-level data?
1312
01:05:03,483 --> 01:05:05,235
I mean, they're giving these loans
1313
01:05:05,318 --> 01:05:06,570
to anybody with a credit score
and a pulse.
1314
01:05:06,653 --> 01:05:09,247
Excuse me, sir. What do you think
we do here all day?
1315
01:05:09,322 --> 01:05:10,369
We're not sure.
That's why we're here.
1316
01:05:10,448 --> 01:05:11,574
Here's what I don't understand...
1317
01:05:11,658 --> 01:05:13,376
We check, recheck, recheck again.
1318
01:05:13,493 --> 01:05:14,790
If these mortgage bonds
are so stable...
1319
01:05:14,869 --> 01:05:16,587
Perhaps you could check your friend.
1320
01:05:16,663 --> 01:05:18,665
...have you ever refused to rate...
1321
01:05:18,748 --> 01:05:20,091
Ma'am, that's delusional.
1322
01:05:20,166 --> 01:05:21,292
We stand behind them.
1323
01:05:21,376 --> 01:05:22,969
Georgia,
have you ever refused to rate
1324
01:05:23,044 --> 01:05:26,344
any of these bonds upper tranches AAA?
1325
01:05:26,423 --> 01:05:28,016
Can we see the paperwork
on those deals?
1326
01:05:28,091 --> 01:05:30,093
I am under no obligation
to share that information
1327
01:05:30,176 --> 01:05:31,268
with you, whoever you might be.
1328
01:05:31,344 --> 01:05:33,062
Just answer the question, Georgia.
1329
01:05:33,179 --> 01:05:35,147
Can you name onetime in the past year
1330
01:05:35,223 --> 01:05:36,566
where you checked the tape
1331
01:05:36,641 --> 01:05:40,862
and you didn't give the banks
the AAA percentage they wanted?
1332
01:05:43,106 --> 01:05:44,278
If we don't give them the ratings,
1333
01:05:44,357 --> 01:05:46,280
they'll go to Moody's,
right down the block.
1334
01:05:47,193 --> 01:05:50,538
If we don't work with them,
they will go to our competitors.
1335
01:05:51,197 --> 01:05:54,371
Not our fault.
Simply the way the world works.
1336
01:05:58,705 --> 01:06:01,208
- Holy shit.
- Yes, now you see.
1337
01:06:02,250 --> 01:06:04,298
And I never said that.
1338
01:06:04,377 --> 01:06:06,800
They're selling ratings for fees.
1339
01:06:06,880 --> 01:06:07,847
A ratings shop.
1340
01:06:07,922 --> 01:06:10,766
You can afford to make less. Make less.
1341
01:06:10,842 --> 01:06:12,719
Nobody said that.
1342
01:06:12,802 --> 01:06:14,975
And it is not my decision.
I have a boss.
1343
01:06:15,054 --> 01:06:16,397
Are you kidding me?
1344
01:06:16,556 --> 01:06:17,853
No, lam not "kidding you".
1345
01:06:17,932 --> 01:06:20,230
How'd your boss do on the IPO?
1346
01:06:20,310 --> 01:06:21,527
Is that the angle you're taking?
1347
01:06:21,603 --> 01:06:25,153
So, now, anyone who has a boss
can't be held responsible
1348
01:06:25,231 --> 01:06:26,653
for doing shitty and illegal things.
1349
01:06:26,733 --> 01:06:28,326
What are you, four'?
1350
01:06:28,401 --> 01:06:32,702
No, lam not four, Mr. Baum.
lam not, no.
1351
01:06:32,780 --> 01:06:36,159
And I wonder what
your incentives might be.
1352
01:06:36,284 --> 01:06:37,831
Is it maybe in your best interest
1353
01:06:37,911 --> 01:06:40,915
to have the ratings change?
Is it, perhaps?
1354
01:06:42,707 --> 01:06:45,256
How many credit default swaps
do you own? Hmm?
1355
01:06:47,295 --> 01:06:49,172
It doesn't make me wrong.
1356
01:06:49,255 --> 01:06:50,381
No.
1357
01:06:50,465 --> 01:06:52,593
It just makes you a hypocrite.
1358
01:07:33,216 --> 01:07:35,218
Fuck!
1359
01:07:35,301 --> 01:07:36,427
Mortgage delinquencies went up
1360
01:07:36,511 --> 01:07:38,559
and the CDOs got more valuable.
Unbelievable.
1361
01:07:38,638 --> 01:07:40,891
Unbelievable.
- We know. It's completely backwards.
1362
01:07:40,974 --> 01:07:42,567
I just called an old friend at Bear.
1363
01:07:42,642 --> 01:07:44,315
He didn't even know what a CDO is.
1364
01:07:44,394 --> 01:07:48,740
Yeah, I just had to wire
Bear and Deutsche $70,000.
1365
01:07:48,815 --> 01:07:51,159
It's like two plus two equals
1366
01:07:51,651 --> 01:07:52,823
fish.
1367
01:07:52,902 --> 01:07:55,576
It's rigged.
We bought into a rigged game.
1368
01:07:55,655 --> 01:07:57,453
We're gonna lose everything.
1369
01:07:57,532 --> 01:08:00,001
I'm gonna have to move
back in with my mom.
1370
01:08:00,535 --> 01:08:01,912
Can't do that.
1371
01:08:01,995 --> 01:08:04,168
All right.
Well, I got a colonic appointment.
1372
01:08:04,247 --> 01:08:05,920
Wait a minute. Hold on, Ben.
1373
01:08:05,999 --> 01:08:07,342
Ben, look.
1374
01:08:07,417 --> 01:08:09,795
Either the banks are clueless
1375
01:08:09,877 --> 01:08:12,175
and they don't know
how to value these CDOs,
1376
01:08:12,255 --> 01:08:17,261
or they're such crooks
that the CDOs are worth shit
1377
01:08:17,427 --> 01:08:19,020
and they're hiding it.
1378
01:08:21,347 --> 01:08:22,815
I think we should buy more swaps.
1379
01:08:23,349 --> 01:08:24,396
What?
1380
01:08:24,475 --> 01:08:26,477
Suck it up and pay up, fellas.
We made a deal.
1381
01:08:26,561 --> 01:08:28,609
No way! No!
1382
01:08:28,688 --> 01:08:30,110
Are you fucking kidding me?
1383
01:08:30,189 --> 01:08:32,533
Are you serious?
You think this is a game?
1384
01:08:32,609 --> 01:08:33,861
No. No. No. No. No.
1385
01:08:34,027 --> 01:08:35,279
Yeah. Yeah.
1386
01:08:41,826 --> 01:08:43,499
No! No! No!
1387
01:08:43,620 --> 01:08:45,293
No, seriously,
a colonic once a year.
1388
01:08:45,371 --> 01:08:46,372
Ass!
1389
01:08:46,456 --> 01:08:48,800
And you got a matching
little butler boy, you buttfuck!
1390
01:08:53,129 --> 01:08:54,972
- Are you done?
- I think so, yeah.
1391
01:08:55,048 --> 01:08:57,801
God! I pulled a muscle
in my back from yelling.
1392
01:08:58,718 --> 01:08:59,719
Ow!
1393
01:09:00,386 --> 01:09:03,731
Mortgage defaults
have done nothing but go up.
1394
01:09:04,057 --> 01:09:07,231
Yet you quote us
a higher price on the bonds.
1395
01:09:08,102 --> 01:09:10,230
Please explain that to me.
There's no way that makes sense.
1396
01:09:10,313 --> 01:09:13,317
There's no way you're marking
these swaps appropriately.
1397
01:09:13,983 --> 01:09:15,906
Why shouldn't we back out
of this trade right now?
1398
01:09:18,404 --> 01:09:20,077
Didn't I say when
we made this deal
1399
01:09:20,198 --> 01:09:21,825
that the ratings agencies, the SEC
1400
01:09:21,908 --> 01:09:24,411
and the big banks were clueless?
Didn't I say that?
1401
01:09:24,494 --> 01:09:25,791
- Yes.
- Didn't I say it?
1402
01:09:25,870 --> 01:09:27,713
Yes, you did. You did.
1403
01:09:27,830 --> 01:09:29,298
Shut up.
1404
01:09:29,374 --> 01:09:30,717
Now their foot's on fire, they think
1405
01:09:30,792 --> 01:09:32,339
their steak is done,
and you're surprised?
1406
01:09:32,418 --> 01:09:35,217
That's not stupidity. That's fraud.
1407
01:09:35,296 --> 01:09:37,014
Tell me the difference
between stupid and illegal,
1408
01:09:37,090 --> 01:09:39,092
and I'll have my wife's brother arrested.
1409
01:09:40,968 --> 01:09:41,969
That was funny.
1410
01:09:42,095 --> 01:09:45,770
I guess you just don't realize
how clueless the system really is.
1411
01:09:45,848 --> 01:09:48,192
Yes, there's some
shady shit going down,
1412
01:09:48,267 --> 01:09:51,612
but trust me, it's fueled by stupidity!
1413
01:09:52,814 --> 01:09:54,157
Look at yourselves.
1414
01:09:54,941 --> 01:09:58,411
You know,
you pass yourself off as cynical people
1415
01:09:58,486 --> 01:10:00,864
but you still have some faith
in the system, don't you?
1416
01:10:00,947 --> 01:10:02,244
I don't.
1417
01:10:02,323 --> 01:10:05,202
Well, except for Vinnie.
And who gives a shit?
1418
01:10:05,284 --> 01:10:07,036
- No way!
- Look...
1419
01:10:07,120 --> 01:10:10,294
Either we're right or we're wrong
in a giant, giant way.
1420
01:10:10,373 --> 01:10:12,250
And if we're wrong,
then we got to find someone
1421
01:10:12,333 --> 01:10:13,960
to help us get out of this trade.
1422
01:10:14,043 --> 01:10:16,796
I'm not feeling remotely confident
that we're right.
1423
01:10:16,879 --> 01:10:20,304
And if we're wrong,
who's gonna tell us?
1424
01:10:20,383 --> 01:10:23,808
Who understands this stuff?
It makes no sense!
1425
01:10:26,264 --> 01:10:28,062
I think we need to go to Vegas.
1426
01:10:28,141 --> 01:10:30,314
- What's in Vegas?
-Vegas?
1427
01:10:30,393 --> 01:10:32,270
What the hell's in Las Vegas?
1428
01:10:33,354 --> 01:10:36,574
The American Securiiization Forum
is there next week.
1429
01:10:36,649 --> 01:10:39,072
Every bond and CDO salesman,
subprime lender
1430
01:10:39,152 --> 01:10:41,246
and swap trader is gonna be there.
1431
01:10:41,320 --> 01:10:44,073
I'm telling you,
your bet is against dumb money.
1432
01:10:44,157 --> 01:10:47,001
It's about time you find out
just how dumb that money really is.
1433
01:10:47,076 --> 01:10:48,202
God, I hate Vegas.
1434
01:10:48,327 --> 01:10:49,749
I hear the food has gotten
really good in Vegas.
1435
01:10:49,829 --> 01:10:51,331
They have a Nobu now.
1436
01:10:51,414 --> 01:10:52,791
Would you fucking stop it?
1437
01:11:39,378 --> 01:11:40,379
Any sense?
1438
01:11:40,546 --> 01:11:42,048
And if a bond is "rich" it is...
1439
01:11:42,381 --> 01:11:45,476
- I don't know, loaded with assets?
-"Rich" just means overpriced.
1440
01:11:45,551 --> 01:11:47,519
I can't sleep on planes,
so I did my homework.
1441
01:11:47,595 --> 01:11:50,018
Okay, let's focus. What's our goal?
1442
01:11:50,097 --> 01:11:52,441
To figure out if this is a deal of a lifetime
1443
01:11:52,517 --> 01:11:54,315
or if everyone here
knows something we don't
1444
01:11:54,393 --> 01:11:56,236
and we're gonna get royally screwed.
1445
01:11:56,312 --> 01:11:59,065
Right. Remember that
when you meet with the guys from Bear.
1446
01:11:59,232 --> 01:12:00,984
I set you up with a face-to-face.
1447
01:12:01,067 --> 01:12:02,364
- Awesome.
-Where is that?
1448
01:12:02,443 --> 01:12:06,789
Holy shit. Five years ago,
Securitization was a loser convention.
1449
01:12:06,864 --> 01:12:08,958
100, maybe 200 people would show.
1450
01:12:09,075 --> 01:12:11,203
$500 billion a year later, you gel this.
1451
01:12:11,285 --> 01:12:12,958
There's a lot of
smug-looking people in here, huh?
1452
01:12:13,037 --> 01:12:16,507
It's like someone hit a pifiata
filled with white people who suck at golf.
1453
01:12:16,582 --> 01:12:18,084
I mean, who are all these clowns'?
1454
01:12:18,167 --> 01:12:19,544
0h, come on.
I think it looks fun.
1455
01:12:19,627 --> 01:12:23,097
Certainly. Vennett says these
are the people we're betting against.
1456
01:12:23,172 --> 01:12:25,049
- Yeah, here we go. Here we go.
- There he is.
1457
01:12:25,132 --> 01:12:26,884
Chris, on my left. Chris, on my left.
1458
01:12:27,343 --> 01:12:28,469
Gentlemen.
1459
01:12:28,553 --> 01:12:32,148
When do we get a chance to face time
with some of these lovely folks?
1460
01:12:32,223 --> 01:12:33,645
Chris, give him the keycards.
1461
01:12:33,766 --> 01:12:34,983
Do you even know which keycards
you're giving out?
1462
01:12:35,059 --> 01:12:36,060
- You're just giving them out?
-Thank you.
1463
01:12:36,143 --> 01:12:38,862
First of all, how was your travel?
How are you? Uneventful?
1464
01:12:38,938 --> 01:12:40,155
- U neventful.
-Okay.
1465
01:12:40,231 --> 01:12:41,949
I've been here for six hours.
I've already been to the gym,
1466
01:12:42,024 --> 01:12:43,367
I had two poached eggs
1467
01:12:43,442 --> 01:12:45,069
and I played blackjack
with Harry Dean Stanton.
1468
01:12:45,152 --> 01:12:46,620
Thank you for your diary.
1469
01:12:47,071 --> 01:12:48,698
Face time. I'd like some face time.
1470
01:12:48,781 --> 01:12:50,249
Just remember.
We're here to gather information.
1471
01:12:50,324 --> 01:12:51,746
We're gathering information, okay?
1472
01:12:51,826 --> 01:12:54,204
We're not advertising
our short position. All right?
1473
01:12:54,287 --> 01:12:55,914
We don't want to spook everybody.
Can you do that?
1474
01:12:55,997 --> 01:12:57,544
I know you got a big mouth,
you like to run it.
1475
01:12:57,623 --> 01:12:59,375
Can you just keep it shui for a few days?
1476
01:12:59,458 --> 01:13:00,584
Okay. Okay.
1477
01:13:00,668 --> 01:13:02,511
Yeah, don't worry. We'll play nice.
1478
01:13:02,628 --> 01:13:03,925
Ladies and gentlemen.
1479
01:13:04,005 --> 01:13:06,224
Business is good.
1480
01:13:06,299 --> 01:13:07,721
Profits are strong
1481
01:13:07,800 --> 01:13:10,724
and the mortgage continues
to be the bedrock
1482
01:13:10,803 --> 01:13:13,147
on which this economy is built.
1483
01:13:17,810 --> 01:13:19,403
And, yes, we had to take some losses
1484
01:13:19,478 --> 01:13:22,778
in our subprime department last year,
but those losses
1485
01:13:22,857 --> 01:13:25,485
will be contained at only 5%.
1486
01:13:25,651 --> 01:13:27,779
Now, in our residential sector...
1487
01:13:27,862 --> 01:13:29,034
Mark, it's not a Q and A.
1488
01:13:29,155 --> 01:13:30,828
...our rollout of those
variable rate packages
1489
01:13:30,907 --> 01:13:32,534
were gobbled up by the consumers!
1490
01:13:32,658 --> 01:13:34,706
I have a question, please.
1491
01:13:36,495 --> 01:13:37,496
Uh...
1492
01:13:37,663 --> 01:13:39,757
Sir, the Q and A is after my statements.
1493
01:13:39,832 --> 01:13:42,255
But you know what? You seem anxious.
How can I help you?
1494
01:13:42,335 --> 01:13:44,258
- Thank you. How are you?
-Fine, thank you.
1495
01:13:44,337 --> 01:13:47,466
Would you say that it is a possibility
1496
01:13:47,548 --> 01:13:52,179
or a probability that
subprime losses stop at 5%?
1497
01:13:52,386 --> 01:13:53,478
Thank you.
1498
01:13:53,554 --> 01:13:58,355
I would say it is a very
strong probability, indeed.
1499
01:13:58,851 --> 01:14:01,400
So back to the residential sector.
1500
01:14:01,520 --> 01:14:03,614
When we rolled out the new
variable rates package...
1501
01:14:03,689 --> 01:14:06,192
- Excuse me.
- Um...
1502
01:14:07,693 --> 01:14:08,785
Yes, sir.
1503
01:14:08,861 --> 01:14:12,240
Zero! Zero!
1504
01:14:12,365 --> 01:14:15,118
There is a 0% chance
1505
01:14:15,201 --> 01:14:19,001
that your subprime losses
will stop at 5%.
1506
01:14:19,080 --> 01:14:20,172
Zero.
1507
01:14:20,247 --> 01:14:21,794
Excuse me.
1508
01:14:21,874 --> 01:14:22,921
I have to take this.
1509
01:14:23,000 --> 01:14:24,968
He must be from Bank of America.
1510
01:14:26,671 --> 01:14:29,345
- Our subprime department is fine.
- No, I'm not doing anything right now.
1511
01:14:29,423 --> 01:14:30,970
As I was saying,
our residential department...
1512
01:14:31,050 --> 01:14:32,222
How are the kids?
1513
01:14:32,343 --> 01:14:34,721
...consumers
reacted to our packages...
1514
01:14:34,804 --> 01:14:36,477
Mark Baum really did that.
1515
01:14:36,555 --> 01:14:37,807
When we were in Vegas, he did that.
1516
01:14:37,890 --> 01:14:40,063
He said that, he took the call.
1517
01:14:40,518 --> 01:14:42,236
Now you see what I had to deal with?
1518
01:14:55,908 --> 01:14:58,036
Yeah, the Beretta... Meh.
1519
01:14:58,119 --> 01:15:00,338
But this Uzi is fucking awesome!
1520
01:15:00,413 --> 01:15:03,007
I need this CDO machine
to run for another two years.
1521
01:15:03,082 --> 01:15:06,336
And then I'm rich as fuck
and I got my house in Aspen.
1522
01:15:06,419 --> 01:15:09,639
But do you have any concerns
about the performance
1523
01:15:09,714 --> 01:15:11,307
of the underlying securitizations?
1524
01:15:11,382 --> 01:15:13,180
It's easy to see that delinquencies
1525
01:15:13,259 --> 01:15:16,138
and default rates
are on the rise right now.
1526
01:15:16,220 --> 01:15:18,393
Could you please stop
being such a buzzkill, dude?
1527
01:15:18,764 --> 01:15:21,313
We didn't bring you out here
to talk about work, bro.
1528
01:15:21,392 --> 01:15:22,860
Why did you bring us out here?
1529
01:15:22,935 --> 01:15:26,155
Because we need to be able
to expense the ammo to a client.
1530
01:15:26,230 --> 01:15:29,234
I'm gonna go shoot some terrorists.
Watch how it's done, boys!
1531
01:15:29,442 --> 01:15:30,694
These guys are morons.
1532
01:15:30,818 --> 01:15:32,445
- Fucking tool.
- Whoo!
1533
01:15:32,778 --> 01:15:33,825
These guys are morons.
1534
01:15:34,947 --> 01:15:36,119
Fuck, yes! Boom!
1535
01:15:36,282 --> 01:15:37,408
Yeah, man!
1536
01:15:37,491 --> 01:15:39,869
We need to be buying up every swap
we can get our hands on here.
1537
01:15:39,952 --> 01:15:42,250
Just hold on, okay? Hold on.
1538
01:15:42,329 --> 01:15:44,627
My brother's ex-girlfriend
works for the SEC.
1539
01:15:44,749 --> 01:15:46,592
She just told me she's in town, okay?
1540
01:15:46,667 --> 01:15:48,795
So, if we're missing something,
maybe she can tell me.
1541
01:15:48,919 --> 01:15:50,546
You know, give me some insight.
1542
01:15:50,629 --> 01:15:52,381
In the meantime, you go to the main floor
1543
01:15:52,465 --> 01:15:54,183
and price some swaps.
1544
01:15:54,633 --> 01:15:56,055
Well, actually, we're
1545
01:15:56,135 --> 01:15:58,638
about to invest in housing bonds, and...
1546
01:15:58,721 --> 01:16:01,395
I was wondering if the SEC
is worried about them at all.
1547
01:16:01,474 --> 01:16:04,227
I know you're not allowed
to tell me specifics, but just generally.
1548
01:16:04,310 --> 01:16:06,529
0h, we don't
investigate mortgage bonds.
1549
01:16:06,604 --> 01:16:09,949
Truth is, since we got our budget cut,
we don't investigate much.
1550
01:16:11,984 --> 01:16:14,954
- Then why are you here? I thought...
-I'm not here for the SEC.
1551
01:16:15,029 --> 01:16:16,702
I'm here on my own dime.
1552
01:16:17,656 --> 01:16:20,876
I'm floating my resume
to some big banks.
1553
01:16:20,951 --> 01:16:22,544
How's your brother, by the way?
1554
01:16:22,620 --> 01:16:24,497
How are you floating
your resume to big banks?
1555
01:16:24,580 --> 01:16:25,957
I mean, you're supposed to be the ones,
1556
01:16:26,082 --> 01:16:27,425
you know, policing the big banks.
1557
01:16:27,500 --> 01:16:28,922
Grow up, Jamie.
1558
01:16:29,001 --> 01:16:32,756
There must be some kind of law against
working for a financial institution
1559
01:16:32,838 --> 01:16:36,058
right after you've been working
in financial regulation, right?
1560
01:16:36,133 --> 01:16:38,227
No. No.
1561
01:16:39,303 --> 01:16:41,852
Hey! Dougie!
1562
01:16:42,681 --> 01:16:45,651
Hey! Come over here.
What are you doing at Caesars?
1563
01:16:45,726 --> 01:16:47,228
He's at Goldman.
1564
01:16:47,853 --> 01:16:48,900
See you.
1565
01:16:48,979 --> 01:16:54,031
We can do BBB-level swaps
at 500 basis points. Maybe.
1566
01:16:54,110 --> 01:16:57,910
You're pricing the swaps
like the bond is gonna collapse
1567
01:16:57,988 --> 01:17:00,366
even though the bond value's
going up? Really?
1568
01:17:00,908 --> 01:17:02,000
Sign of the times.
1569
01:17:02,076 --> 01:17:03,077
What the hell
is going on?
1570
01:18:01,969 --> 01:18:05,769
Lewis, can you come in
early tomorrow, please?
1571
01:18:05,848 --> 01:18:08,146
I need 10 unload the AIG
and Countrywide
1572
01:18:08,225 --> 01:18:09,693
and Freddie Mac positions
1573
01:18:09,768 --> 01:18:12,271
so that we can afford
the premiums on the...
1574
01:18:13,522 --> 01:18:16,446
...core mortgage shorts on the swaps.
1575
01:18:16,901 --> 01:18:18,403
No problem, Dr. Burry.
1576
01:18:20,446 --> 01:18:21,618
"DI. Bump
“Hmm?
1577
01:18:25,201 --> 01:18:26,248
If the investors withdraw,
1578
01:18:26,327 --> 01:18:29,080
what's going to happen here?
Are we done?
1579
01:18:29,205 --> 01:18:31,128
Honestly, I don't know.
1580
01:18:38,797 --> 01:18:41,050
The bonds aren't going down.
1581
01:18:42,301 --> 01:18:44,975
They won't move. It's possible
1582
01:18:45,387 --> 01:18:49,984
that we are in a completely
fraudulent system.
1583
01:18:51,393 --> 01:18:54,067
Or... You're wrong.
1584
01:18:58,817 --> 01:18:59,909
Sure.
1585
01:19:00,653 --> 01:19:04,658
It's possible I'm wrong.
I just don't know how.
1586
01:19:09,370 --> 01:19:13,546
I guess when someones wrong,
they never...
1587
01:19:13,916 --> 01:19:16,169
They never know how.
1588
01:19:20,464 --> 01:19:21,511
See you in the morning.
1589
01:19:21,632 --> 01:19:22,679
Yeah.
1590
01:19:24,468 --> 01:19:26,470
Even Bear upped their prices.
1591
01:19:27,054 --> 01:19:29,557
And they keep calling us Brownhole.
1592
01:19:29,640 --> 01:19:31,267
You just don't have the money
or the reputation.
1593
01:19:31,350 --> 01:19:32,693
Don't take it personally.
1594
01:19:32,810 --> 01:19:34,107
I don't think I have
the strip club in me tonight.
1595
01:19:34,186 --> 01:19:37,861
I'm just gonna get some ginger ale
and watch some pay-per-view.
1596
01:19:37,940 --> 01:19:40,318
I'll book us some flights out
for the morning.
1597
01:19:41,735 --> 01:19:44,363
A deal.
We need a deal, right? A deal.
1598
01:19:44,446 --> 01:19:46,244
We need a deal we can afford.
1599
01:19:46,365 --> 01:19:48,663
We need a deal
that they're not gonna refuse.
1600
01:19:48,742 --> 01:19:52,087
So... What can we do? We can...
1601
01:19:53,372 --> 01:19:56,296
The AA tranches. What if we
bet against the AA trenches?
1602
01:19:56,375 --> 01:19:57,718
Who's not gonna take that bet?
1603
01:19:58,419 --> 01:20:01,343
We know they say
they're 95% AAA-rated,
1604
01:20:01,422 --> 01:20:03,424
but in reality they're more like 25%.
1605
01:20:03,507 --> 01:20:05,930
Some of them are 0%!
1606
01:20:06,010 --> 01:20:08,638
We also know that if
the bottom tranches fail at over 8%,
1607
01:20:08,721 --> 01:20:09,893
the upper tranches are affected.
1608
01:20:09,972 --> 01:20:11,189
They go to zero.
1609
01:20:11,432 --> 01:20:14,402
I'll bet you right now
that those AA's are actually like B's.
1610
01:20:14,852 --> 01:20:17,947
I rarely ever say these words,
but I think Charlie's right.
1611
01:20:18,272 --> 01:20:19,945
Look, Ben.
1612
01:20:21,608 --> 01:20:23,030
The payoff
1613
01:20:23,527 --> 01:20:24,949
is 200 to 1.
1614
01:20:25,029 --> 01:20:27,077
But they're all taking
the ratings at face value.
1615
01:20:27,197 --> 01:20:30,576
So they're charging pennies
on the dollar a bet against the AA's.
1616
01:20:32,202 --> 01:20:35,046
Just when I start thinking
you guys are clowns...
1617
01:20:35,122 --> 01:20:37,625
No one on the planet's
betting against AA's.
1618
01:20:37,708 --> 01:20:40,632
The banks will think we're either high
or having a stroke.
1619
01:20:40,711 --> 01:20:43,055
They'll take every dime we have to offer.
1620
01:20:45,632 --> 01:20:46,975
Kinda brilliant.
1621
01:20:48,761 --> 01:20:50,855
This is what we did
that no one else thought of.
1622
01:20:50,929 --> 01:20:53,853
Not even Baum or Burry
thought to short the AA's.
1623
01:20:53,932 --> 01:20:55,309
But we did.
1624
01:20:55,392 --> 01:20:56,939
Little Brownhole Capital.
1625
01:20:57,269 --> 01:21:02,196
We're interested in shorting
some of the AA tranche of CDOs.
1626
01:21:02,274 --> 01:21:04,072
Come on, guys, what's the angle?
1627
01:21:04,151 --> 01:21:06,449
Oh, got no angle.
We're new to this. We're just excited.
1628
01:21:06,570 --> 01:21:10,291
We want to do $15 million
in swaps on the AA tranche.
1629
01:21:10,741 --> 01:21:11,833
I don't understand.
1630
01:21:11,909 --> 01:21:14,537
You can buy as much
AA tranche as you want.
1631
01:21:16,747 --> 01:21:18,875
$40 million against the AA.
1632
01:21:18,957 --> 01:21:21,176
Brother, I will sell you
as much as you want.
1633
01:21:21,460 --> 01:21:23,679
You understand perfectly, Bob.
You want the deal?
1634
01:21:25,839 --> 01:21:27,841
That's cool. That's all right with me.
1635
01:21:30,052 --> 01:21:31,269
Pleasure.
1636
01:21:36,100 --> 01:21:37,977
On!
1637
01:21:39,478 --> 01:21:41,401
Don't do that. Stop. Stop.
1638
01:21:42,106 --> 01:21:43,323
- Stop that.
-Charlie.
1639
01:21:44,024 --> 01:21:45,492
Stop it! Stop.
1640
01:21:47,903 --> 01:21:48,995
What?
1641
01:21:50,406 --> 01:21:51,783
Do you have any idea what you just did?
1642
01:21:52,199 --> 01:21:53,872
Come on. We just made
the deal of our lifetimes!
1643
01:21:53,951 --> 01:21:55,123
We should celebrate.
1644
01:21:55,202 --> 01:21:57,125
You just bet against
the American economy.
1645
01:21:57,204 --> 01:21:58,706
Fuck, yeah, we did!
1646
01:21:58,789 --> 01:22:00,757
- Fuck, yeah!
-Which means...
1647
01:22:00,833 --> 01:22:03,507
Which means if we're right...
1648
01:22:04,545 --> 01:22:07,924
If we're right, people lose homes.
People lose jobs.
1649
01:22:08,006 --> 01:22:11,180
People lose retirement savings.
People lose pensions.
1650
01:22:11,301 --> 01:22:12,473
You know what I hate
about fucking banking?
1651
01:22:12,553 --> 01:22:14,100
It reduces people to numbers.
Here's a number.
1652
01:22:14,179 --> 01:22:17,023
Every 1% unemployment goes up,
40,000 people die. Did you know that?
1653
01:22:17,099 --> 01:22:18,601
- No.
-Did you know that?
1654
01:22:18,684 --> 01:22:20,277
No, I didn't know that.
1655
01:22:21,728 --> 01:22:23,401
We were just excited.
1656
01:22:25,816 --> 01:22:27,818
Just don't fucking dance.
1657
01:22:28,485 --> 01:22:30,328
- All right.
- Where are you going?
1658
01:22:34,700 --> 01:22:36,873
Whoa, I just got really scared.
1659
01:22:38,412 --> 01:22:40,335
First of all, great show today.
1660
01:22:40,414 --> 01:22:41,882
- You were terrific.
-Thank you.
1661
01:22:41,957 --> 01:22:43,584
Your big mouth was a revelation.
1662
01:22:43,667 --> 01:22:45,385
I appreciate that.
1663
01:22:45,502 --> 01:22:47,254
You worried you and your swaps
are getting played?
1664
01:22:47,337 --> 01:22:50,466
Well, this is an opportunity for you
to meet who you're betting against.
1665
01:22:50,549 --> 01:22:52,347
Try not to get too righteous
and listen a little.
1666
01:22:52,426 --> 01:22:53,803
Okay, fine. Who is this guy?
1667
01:22:53,927 --> 01:22:55,600
A real solid-gold asshole.
1668
01:22:55,762 --> 01:22:56,854
I'm a CDO manager.
1669
01:22:56,972 --> 01:22:58,019
A "CDO manager“?
1670
01:22:58,098 --> 01:22:59,520
Yeah, at Harding Advisers.
1671
01:23:00,100 --> 01:23:03,229
I didn't realize that there was
anything to manage with CDOs.
1672
01:23:04,188 --> 01:23:05,189
MR. CHAUI Oh.
1673
01:23:05,939 --> 01:23:08,488
We select the securities
that go into the CDO portfolio
1674
01:23:08,567 --> 01:23:09,944
and monitor the assets.
1675
01:23:10,027 --> 01:23:11,825
I do most of Merrill Lynch's CDOs.
1676
01:23:11,904 --> 01:23:14,874
Do you represent the investors
or Merrill Lynch?
1677
01:23:14,948 --> 01:23:15,995
The investors.
1678
01:23:16,074 --> 01:23:17,121
You do.
1679
01:23:17,201 --> 01:23:18,544
- Yeah.
-But...
1680
01:23:18,744 --> 01:23:20,621
Merrill Lynch isn't gonna
send you any customers
1681
01:23:20,704 --> 01:23:24,254
unless you put Merrill Lynch's bonds
in your CDO.
1682
01:23:25,375 --> 01:23:28,094
Good question. Let's just say
Merrill and I have, um---...
1683
01:23:28,712 --> 01:23:30,806
We have a good relationship.
1684
01:23:30,923 --> 01:23:33,142
You have a good relationship
with Merrill Lynch.
1685
01:23:33,217 --> 01:23:34,890
We've been doing business
together for a long time.
1686
01:23:34,968 --> 01:23:37,437
And so the CDOs that you create
1687
01:23:37,554 --> 01:23:41,479
are of the highest quality
and the highest value.
1688
01:23:41,558 --> 01:23:43,481
Absolutely. Yep.
Absolutely.
1689
01:23:43,560 --> 01:23:47,110
Are you at all concerned
about the rising default rates?
1690
01:23:49,066 --> 01:23:52,240
I assume no risk for these
products myself, Mark.
1691
01:23:54,905 --> 01:23:56,077
0Y3'!-
1692
01:23:57,658 --> 01:24:00,832
So let me get this straight.
The bank calls you up.
1693
01:24:01,411 --> 01:24:02,958
They give you the bonds
they want to sell.
1694
01:24:03,038 --> 01:24:04,381
They give you clients,
1695
01:24:04,456 --> 01:24:06,834
they give you money
to run your business.
1696
01:24:06,917 --> 01:24:08,635
Give you fat fees for doing so.
1697
01:24:08,710 --> 01:24:10,712
But you represent the investors?
1698
01:24:12,256 --> 01:24:13,303
Is that right?
1699
01:24:13,423 --> 01:24:14,470
Yeah.
1700
01:24:14,550 --> 01:24:16,018
But we're not
in the Merrill Lynch building.
1701
01:24:16,093 --> 01:24:17,686
- Okay. Where are you'?
-We're in New Jersey.
1702
01:24:17,761 --> 01:24:19,855
You're 20 minutes away.
1703
01:24:19,930 --> 01:24:21,853
Well, five if you use a helicopter.
1704
01:24:23,725 --> 01:24:24,851
That's funny, huh?
1705
01:24:24,977 --> 01:24:26,149
That's hilarious.
1706
01:24:29,356 --> 01:24:30,403
Oh, boy.
1707
01:24:30,774 --> 01:24:32,993
Your boss is about to explode.
1708
01:24:33,068 --> 01:24:34,695
No, he's too curious to explode.
1709
01:24:34,778 --> 01:24:36,246
Hold on. Say that again.
1710
01:24:36,321 --> 01:24:38,449
CDO "A" has pans of CDO
1711
01:24:38,532 --> 01:24:40,455
And CDO "B" has parts of CDO
1712
01:24:40,534 --> 01:24:42,787
But then they both
get put inside CDO
1713
01:24:42,869 --> 01:24:44,621
Yeah, that one's called CDO squared.
1714
01:24:44,705 --> 01:24:46,799
A CDO of a CDO.
1715
01:24:47,207 --> 01:24:48,208
All right?
1716
01:24:48,375 --> 01:24:50,343
And then there's CDOs
made up of the opposite side
1717
01:24:50,419 --> 01:24:51,966
of the bet you made with your swaps.
1718
01:24:52,212 --> 01:24:54,510
We call them synthetic CDOs.
1719
01:24:54,631 --> 01:24:56,804
What did you say? Synthetic CDOs.
1720
01:24:56,883 --> 01:24:58,601
That is fucking crazy.
1721
01:24:58,719 --> 01:25:00,392
It's not. It's awesome.
1722
01:25:01,805 --> 01:25:05,309
His face is starting to boil.
He looks like the bad guy from Dune.
1723
01:25:09,396 --> 01:25:11,319
All right, let's say
1724
01:25:11,815 --> 01:25:15,160
you have a pool of $50 million
in subprime loans.
1725
01:25:15,485 --> 01:25:18,079
How much money could be
out there betting on it,
1726
01:25:18,155 --> 01:25:20,954
in your synthetic CDOs and swaps
1727
01:25:21,033 --> 01:25:22,626
right now, tonight?
1728
01:25:22,701 --> 01:25:25,329
Let's see, $50 million... Hmm...
1729
01:25:26,330 --> 01:25:27,297
A billion dollars.
1730
01:25:27,372 --> 01:25:28,373
What?
1731
01:25:29,499 --> 01:25:31,422
If the mortgage bonds
that Michael Burry discovered
1732
01:25:31,501 --> 01:25:32,844
were the match...
1733
01:25:34,254 --> 01:25:36,677
How much bigger is the market
for insuring mortgage bonds
1734
01:25:36,757 --> 01:25:38,225
than actual mortgages?
1735
01:25:39,384 --> 01:25:40,556
About 20 times.
1736
01:25:40,719 --> 01:25:42,813
If the mortgage bonds
were the match
1737
01:25:42,888 --> 01:25:45,607
and the CDOs were
the kerosene-soaked rags,
1738
01:25:45,682 --> 01:25:47,730
then the synthetic CDO
was the atomic bomb
1739
01:25:47,809 --> 01:25:50,779
with the drunk President
holding his finger over the button.
1740
01:25:50,854 --> 01:25:53,107
It was at that moment
in that dumb restaurant
1741
01:25:53,190 --> 01:25:56,364
with that stupid look on his face
that Mark Baum realized
1742
01:25:56,443 --> 01:25:58,866
that the whole world economy
might collapse.
1743
01:26:02,491 --> 01:26:04,414
And I know what you're thinking.
1744
01:26:04,493 --> 01:26:06,837
"What the fuck is a synthetic CDO?"
1745
01:26:09,206 --> 01:26:12,836
Well, here's Dr. Richard Thaler,
father of behavioral economics
1746
01:26:12,918 --> 01:26:15,546
and Selena Gomez to explain.
1747
01:26:15,879 --> 01:26:19,053
Okay. So here's how
a synthetic CDO works.
1748
01:26:19,132 --> 01:26:22,011
Let's say I bet $10 million
on a blackjack hand.
1749
01:26:22,094 --> 01:26:24,597
$10 million because this hand
is meant to represent
1750
01:26:24,971 --> 01:26:27,224
a single mortgage bond.
1751
01:26:30,185 --> 01:26:33,610
Okay, Selena has a pretty good
hand here, showing 184
1752
01:26:33,730 --> 01:26:34,731
Dealer showing seven.
1753
01:26:34,815 --> 01:26:36,863
That's a really good hand for Selena.
1754
01:26:36,942 --> 01:26:38,364
Good odds. In fact,
her chances of winning
1755
01:26:38,443 --> 01:26:40,821
this hand are 87%.
1756
01:26:40,904 --> 01:26:44,283
So, my odds are good.
I'm on a winning streak.
1757
01:26:44,366 --> 01:26:47,040
Everybody in this place
wants to get in on the action.
1758
01:26:47,119 --> 01:26:48,496
How could I lose, right?
1759
01:26:48,578 --> 01:26:50,080
Now, this is a classic error.
1760
01:26:50,163 --> 01:26:53,133
In basketball it's called
the Hot Hand Fallacy.
1761
01:26:53,208 --> 01:26:55,757
A player makes a bunch
of shots in a row.
1762
01:26:55,836 --> 01:26:58,134
People are sure they're
gonna make the next one.
1763
01:26:58,213 --> 01:27:00,181
People think that whateverk
happening now
1764
01:27:00,257 --> 01:27:03,010
is gonna continue to
happen into the future.
1765
01:27:03,093 --> 01:27:06,438
During the real estate boom,
markets were going up and up
1766
01:27:06,513 --> 01:27:08,186
and people thought
they would never go down.
1767
01:27:08,265 --> 01:27:10,814
So people who are watching
and think that I won't lose
1768
01:27:10,892 --> 01:27:12,360
will make a side bet.
1769
01:27:12,436 --> 01:27:14,689
Now, this is the first synthetic CDO.
1770
01:27:14,771 --> 01:27:16,364
I love Selena Gomez.
1771
01:27:16,440 --> 01:27:17,942
I bet you $50 million she wins.
1772
01:27:18,024 --> 01:27:20,118
And I'll give you 3-to-1 odds.
1773
01:27:20,193 --> 01:27:24,039
340-1 odds? Okay, I'll take that bet.
1774
01:27:24,114 --> 01:27:27,459
Now, somebody else
is gonna want to make a bet
1775
01:27:27,534 --> 01:27:28,660
on the outcome of their bet.
1776
01:27:28,827 --> 01:27:29,953
Bet you 50 million she wins.
1777
01:27:30,036 --> 01:27:33,006
That will lead lo synthetic
CDO number two.
1778
01:27:33,081 --> 01:27:36,255
Hey, I bet you $200 million
that lady in the glasses
1779
01:27:36,418 --> 01:27:37,920
wins that bet.
1780
01:27:38,086 --> 01:27:41,181
She probably will win.
So I want a great payoff.
1781
01:27:41,339 --> 01:27:42,431
How about 2040-1?
1782
01:27:42,549 --> 01:27:43,675
Deal.
1783
01:27:44,009 --> 01:27:48,310
And this will go on and on with more
and more synthetic CDOs.
1784
01:27:48,388 --> 01:27:52,438
And we can transform an original
$10 million investment
1785
01:27:52,601 --> 01:27:54,524
into billions of dollars.
1786
01:27:55,437 --> 01:27:56,780
You okay?
1787
01:27:58,190 --> 01:27:59,191
No.
1788
01:28:00,567 --> 01:28:02,410
I actually feel pretty sick.
1789
01:28:07,616 --> 01:28:09,539
So I'm going to leave.
1790
01:28:11,119 --> 01:28:13,372
You think I'm a parasite,
don't you, Mr. Baum?
1791
01:28:14,080 --> 01:28:18,005
But, apparently,
society values me very much.
1792
01:28:19,044 --> 01:28:20,796
In fact, let's do this.
1793
01:28:22,839 --> 01:28:25,843
I'll tell you how much I'm worth.
1794
01:28:26,384 --> 01:28:27,886
You tell me how much you're worth.
1795
01:28:29,095 --> 01:28:34,192
God, you are an incredibly
big piece of shit.
1796
01:28:39,940 --> 01:28:41,817
Short everything that guy has touched.
1797
01:28:41,900 --> 01:28:43,527
I want half a billion more in swaps.
1798
01:28:44,069 --> 01:28:46,288
You sure about that?
The collateral calls could bankrupt you.
1799
01:28:46,363 --> 01:28:47,330
Yeah. Yeah.
1800
01:28:47,405 --> 01:28:48,406
Where are you going?
1801
01:28:48,490 --> 01:28:51,494
I am going to try to find
moral redemption
1802
01:28:51,576 --> 01:28:53,419
at the roulette table.
1803
01:29:57,601 --> 01:29:58,978
Hey, hey, hey!
1804
01:30:03,064 --> 01:30:04,532
Things are worse than I thought.
1805
01:30:06,651 --> 01:30:08,574
I honestly think
the economy might collapse.
1806
01:30:08,987 --> 01:30:10,113
But you've been saying
1807
01:30:10,196 --> 01:30:13,291
that the system's broken
for years, Mark. So...
1808
01:30:13,742 --> 01:30:15,665
Why are you so shocked?
1809
01:30:18,163 --> 01:30:21,588
It's more twisted
than I could have imagined.
1810
01:30:21,666 --> 01:30:23,543
You love to be the virtuous one.
1811
01:30:24,002 --> 01:30:25,595
I'm a banker. I'm a pan of it.
1812
01:30:25,670 --> 01:30:27,968
You always have, Mark.
Like you're untainted.
1813
01:30:28,048 --> 01:30:31,518
It changed me.
It changed me into a person
1814
01:30:32,093 --> 01:30:33,936
who is not able to
reach out to someone...
1815
01:30:34,012 --> 01:30:35,935
He was in pain.
My brother was in real pain.
1816
01:30:36,514 --> 01:30:38,858
There's no perfect way to help.
1817
01:30:41,853 --> 01:30:44,322
It's sad. It's scary.
1818
01:30:44,439 --> 01:30:47,613
So stop trying to fix the world.
1819
01:30:47,692 --> 01:30:48,784
He told me...
1820
01:30:48,860 --> 01:30:50,203
You're not a saint.
1821
01:30:50,278 --> 01:30:52,030
Saints don't live on Park Avenue.
1822
01:30:52,238 --> 01:30:53,865
...that he was having bad thoughts.
1823
01:30:53,949 --> 01:30:56,748
Just feel the feelings
like the rest of us.
1824
01:30:57,077 --> 01:31:01,253
My first response
was to offer him some money.
1825
01:31:01,581 --> 01:31:04,084
I offered him fucking money!
1826
01:31:09,756 --> 01:31:12,384
His face was so smashed.
1827
01:31:31,444 --> 01:31:32,787
That's right.
1828
01:32:39,471 --> 01:32:40,814
MIKE'S WIFEI Michael?
1829
01:32:40,889 --> 01:32:42,232
Michael?
-Yes. Yes.
1830
01:32:42,307 --> 01:32:44,401
-Is everything okay?
-Yes, honey.
1831
01:32:44,476 --> 01:32:46,604
- You sure?
-Yeah, baby.
1832
01:32:48,396 --> 01:32:49,693
I'm fine.
1833
01:32:58,656 --> 01:33:00,329
To all investors.
1834
01:33:00,408 --> 01:33:01,500
As you may know,
1835
01:33:02,494 --> 01:33:06,089
our agreement allows me
to take extraordinary measures
1836
01:33:06,539 --> 01:33:09,463
when markets
aren't functioning properly.
1837
01:33:09,542 --> 01:33:13,263
I currently have reason to
believe the mortgage bond market
1838
01:33:13,922 --> 01:33:15,674
is fraudulent.
1839
01:33:17,842 --> 01:33:22,598
So, in order to protect investors
from this fraudulent market,
1840
01:33:22,680 --> 01:33:25,934
I've decided to restrict
investors' withdrawals
1841
01:33:26,017 --> 01:33:27,690
until further notice.
1842
01:33:28,019 --> 01:33:31,694
Sincerely, Dr. Michael J. Burry.
1843
01:34:39,257 --> 01:34:40,850
I never would have guessed my life
1844
01:34:40,925 --> 01:34:43,428
could change as much
as it has since I moved to LA.
1845
01:34:43,511 --> 01:34:45,889
It's not just, like,
that easy to, like, not see you.
1846
01:34:45,972 --> 01:34:49,067
He lashed out at rumors
he used performance enhancing drugs.
1847
01:34:49,267 --> 01:34:50,689
This record is not tainted.
1848
01:34:50,768 --> 01:34:51,940
Oh, my God, dude.
1849
01:34:52,020 --> 01:34:53,738
Will you please stop
changing the channels?
1850
01:34:53,813 --> 01:34:55,440
- You're driving me crazy.
-All right.
1851
01:34:55,523 --> 01:34:57,491
- Fine.
-Just put the business news on.
1852
01:34:58,443 --> 01:34:59,615
...and the S&P
picked up three points.
1853
01:34:59,694 --> 01:35:00,695
Jesus!
1854
01:35:00,778 --> 01:35:02,530
Mortgage meltdown continued today.
1855
01:35:02,614 --> 01:35:05,333
Subprime mortgage lender
New Century Financial,
1856
01:35:05,450 --> 01:35:08,078
once the industry leader, by the way,
filed for bankruptcy.
1857
01:35:08,161 --> 01:35:09,253
- The company immediately...
-Whoa, whoa, whoa.
1858
01:35:10,705 --> 01:35:11,877
Good time for my voice to go...
1859
01:35:11,956 --> 01:35:14,209
Fired 3,200 workers.
1860
01:35:14,292 --> 01:35:16,636
The manufacturing index also
fell in the month of March...
1861
01:35:16,711 --> 01:35:17,803
It's starting.
1862
01:35:17,879 --> 01:35:19,472
...a warning that
economic growth could slow.
1863
01:35:19,547 --> 01:35:21,015
The Institute of Supply Management
1864
01:35:21,132 --> 01:35:22,554
also reported a rise in prices...
1865
01:35:22,634 --> 01:35:24,261
I'm gonna call my mom.
1866
01:35:26,512 --> 01:35:29,391
The principal source
of the slowdown in economic growth...
1867
01:35:29,474 --> 01:35:31,522
Time and time and time again,
1868
01:35:31,643 --> 01:35:33,771
I have gone to bat for you, Mark!
1869
01:35:33,853 --> 01:35:35,150
We've known each other
for seven years...
1870
01:35:35,230 --> 01:35:37,574
She's got some lungs on her.
I'm impressed.
1871
01:35:38,733 --> 01:35:40,576
I can't help but enjoy it.
1872
01:35:41,486 --> 01:35:43,113
There's no fucking way.
There's no fucking way
1873
01:35:43,196 --> 01:35:44,664
that the big banks are that stupid.
1874
01:35:45,657 --> 01:35:47,500
Bye, Kathy!
1875
01:35:52,163 --> 01:35:53,164
Well?
1876
01:35:54,374 --> 01:35:56,376
Kathy thinks
that it would be a good idea
1877
01:35:56,459 --> 01:35:58,006
if we sold our shorts.
1878
01:35:58,086 --> 01:35:59,087
What else is new?
1879
01:35:59,170 --> 01:36:01,047
And she said that
Morgan Stanley will buy them.
1880
01:36:01,130 --> 01:36:02,131
DANNY; Holy shit!
1881
01:36:02,840 --> 01:36:04,092
What did you say?
1882
01:36:04,175 --> 01:36:05,848
I told her we're not selling shit.
1883
01:36:12,016 --> 01:36:15,862
Uh, if you need the files for 2005...
1884
01:36:16,020 --> 01:36:19,024
Mr. Fields' suit is very specific
to files from the past year.
1885
01:36:19,774 --> 01:36:22,527
Good. Then get out.
Say hi to Lawrence for me.
1886
01:36:22,610 --> 01:36:23,782
Will do.
1887
01:36:26,823 --> 01:36:28,496
You can't call me back for a week?
1888
01:36:28,574 --> 01:36:30,417
I am so sorry, Mike.
1889
01:36:30,785 --> 01:36:33,959
Goldman had a systems faikure.
! lost a ton of messages.
1890
01:36:34,038 --> 01:36:36,086
Yeah, B of A said
they had a power outage,
1891
01:36:36,207 --> 01:36:39,381
and Morgan Stanley
said their server crashed.
1892
01:36:39,502 --> 01:36:40,628
Huh. That's weird.
1893
01:36:40,712 --> 01:36:43,261
Well, I would call it improbable.
1894
01:36:43,339 --> 01:36:46,889
So where do you have
our position marked?
1895
01:36:47,719 --> 01:36:49,471
I think ifs the same, Mike.
1896
01:36:49,554 --> 01:36:51,431
What? Can you explain
that to me, please,
1897
01:36:51,514 --> 01:36:54,814
because how can the value
of an insurance contract
1898
01:36:54,892 --> 01:36:59,113
not be affected by the demise
of the very thing it insures?
1899
01:36:59,188 --> 01:37:01,987
They're independent markets.
They're not always correlated.
1900
01:37:02,066 --> 01:37:03,067
I know it sounds odd,
1901
01:37:03,151 --> 01:37:05,620
but these are very complicated products.
1902
01:37:06,446 --> 01:37:08,323
They are correlated.
1903
01:37:08,406 --> 01:37:10,408
They're gonna lose their houses,
they're gonna lose their jobs,
1904
01:37:10,491 --> 01:37:11,492
they're gonna lose their...
1905
01:37:14,370 --> 01:37:16,213
Will you listen to me?
1906
01:37:16,414 --> 01:37:19,042
This is like the end of capitalism.
1907
01:37:19,167 --> 01:37:22,512
This is like the Dark Ages all over again.
1908
01:37:23,546 --> 01:37:24,672
I don't want to talk to Dad.
1909
01:37:24,756 --> 01:37:27,305
Okay, I love you, too.
Save your money.
1910
01:37:28,009 --> 01:37:32,014
She says I need to be on Xanax
and double my dose of Zoloft.
1911
01:37:32,180 --> 01:37:34,148
I asked Bear Stearns to price our shorts.
1912
01:37:34,223 --> 01:37:35,816
They tell me the CDOs
still haven't moved.
1913
01:37:35,892 --> 01:37:37,690
This is fucking insane!
1914
01:37:37,769 --> 01:37:39,271
You realize that'?
These people are crooks
1915
01:37:39,354 --> 01:37:41,402
and they should be in prison.
1916
01:37:41,564 --> 01:37:42,690
Look at the TABX.
1917
01:37:42,774 --> 01:37:44,617
You can see that the CDOs
are worth zero!
1918
01:37:44,692 --> 01:37:45,693
So you know what they're doing, huh?
1919
01:37:45,818 --> 01:37:46,865
You know what they're doing, right?
1920
01:37:46,986 --> 01:37:48,659
Yeah. They're unloading them.
1921
01:37:48,738 --> 01:37:52,038
They're selling their dog shit CDOs,
then they go to another bank
1922
01:37:52,116 --> 01:37:54,164
and short the shit they just fucking sold!
1923
01:37:54,327 --> 01:37:55,920
Let's go to the press, man!
1924
01:37:55,995 --> 01:37:59,295
This is a massive story.
Who wouldn't publish it?
1925
01:38:00,249 --> 01:38:01,592
Robert Redford!
1926
01:38:02,001 --> 01:38:03,469
No, you don't understand!
1927
01:38:03,544 --> 01:38:05,091
I got it, guys. I got it.
1928
01:38:06,839 --> 01:38:08,432
What am I supposed to do?
1929
01:38:08,508 --> 01:38:10,181
Do you want me to write a piece called
"We're All Fucked"?
1930
01:38:10,301 --> 01:38:12,178
Yes! That's a perfect title!
1931
01:38:12,261 --> 01:38:16,437
Casey, right now every bank in town
is unloading these shit bonds
1932
01:38:16,599 --> 01:38:18,317
onto unsuspecting customers.
1933
01:38:18,393 --> 01:38:21,397
And they won't devalue them
until they get them off their books.
1934
01:38:21,479 --> 01:38:23,948
This level of criminality
is unprecedented,
1935
01:38:24,023 --> 01:38:26,276
even on fucking Wall Street.
1936
01:38:27,402 --> 01:38:30,246
Jamie... And this is me
being honest here, okay?
1937
01:38:30,530 --> 01:38:33,079
It took me years to build
my relationships on Wall Street.
1938
01:38:33,157 --> 01:38:37,333
No bank or ratings agency is going
to confirm a story like this
1939
01:38:37,412 --> 01:38:39,915
just because it comes
from two guys in a...
1940
01:38:40,039 --> 01:38:43,293
Sorry, garage band hedge fund
that thinks it's the apocalypse.
1941
01:38:44,961 --> 01:38:45,962
Wow.
1942
01:38:46,129 --> 01:38:47,381
I thought you were for real, Casey.
1943
01:38:47,505 --> 01:38:48,802
You know, I'll have to say I really did.
1944
01:38:49,048 --> 01:38:50,049
Really?
1945
01:38:50,299 --> 01:38:52,393
Yeah, Jamie, you try being for real
with a three-year-old
1946
01:38:52,468 --> 01:38:54,311
and a wife getting her masters degree.
1947
01:38:54,554 --> 01:38:57,899
I'm not gonna burn my reputation
on your wild hunch.
1948
01:38:58,724 --> 01:38:59,896
Wow.
1949
01:39:00,059 --> 01:39:01,231
Wow.
1950
01:39:01,394 --> 01:39:02,441
Thanks for coming, guys.
1951
01:39:02,520 --> 01:39:03,692
Totally fucking awesome to see you.
1952
01:39:03,771 --> 01:39:05,773
Yeah, Casey. I've always hated you,
1953
01:39:05,898 --> 01:39:07,900
because you were a prick in college
1954
01:39:07,984 --> 01:39:10,328
and you are a prick today!
1955
01:39:10,778 --> 01:39:13,281
Thanks, Charlie.
Still living with your mom?
1956
01:39:13,823 --> 01:39:15,291
Charlie, come on!
1957
01:39:15,366 --> 01:39:17,289
Mark Baum again. Call me.
1958
01:39:17,869 --> 01:39:19,496
Subprime bonds fell off a cliff.
1959
01:39:19,579 --> 01:39:21,547
Rumor has it
the default numbers are huge.
1960
01:39:21,622 --> 01:39:24,421
Who got the remittance data early?
I bet it's Goldman.
1961
01:39:24,500 --> 01:39:25,843
Yeah, fuck you very much.
1962
01:39:25,918 --> 01:39:28,762
Jared, it's chaos down here.
Where are we?
1963
01:39:29,172 --> 01:39:32,392
"And Caesar wept, for there
were no more worlds to conquer."
1964
01:39:33,968 --> 01:39:35,220
Shane?
1965
01:39:35,595 --> 01:39:36,847
Shane?
1966
01:39:38,431 --> 01:39:41,150
Well, nobody's buying CDO
or mortgage bonds anymore
1967
01:39:41,225 --> 01:39:42,522
and everybody wants swaps.
1968
01:39:42,852 --> 01:39:45,196
Swaps are now the most
popular product on the street.
1969
01:39:45,271 --> 01:39:47,114
- That's good for us.
-Yes and no.
1970
01:39:47,190 --> 01:39:48,612
I heard from somebody
who heard from somebody...
1971
01:39:48,691 --> 01:39:51,410
No, Alex, no. Sorry.
1972
01:39:54,572 --> 01:39:56,415
Bennie Cleager
over at Morgan is taking on
1973
01:39:56,491 --> 01:39:58,084
some heavy losses
in the bond department.
1974
01:39:59,577 --> 01:40:01,124
Your ship might be taking on water.
1975
01:40:01,621 --> 01:40:03,965
R might be time to get
our iifejacket and get out.
1976
01:40:04,707 --> 01:40:06,209
Fm jacked.
1977
01:40:06,751 --> 01:40:09,254
I'm jacked! I'm jacked to the tits!
1978
01:40:09,879 --> 01:40:10,926
Good.
1979
01:40:11,005 --> 01:40:13,099
- Do you feel it?
- No.
1980
01:40:19,263 --> 01:40:20,731
Wham you hem , Tommy'?
1981
01:40:22,892 --> 01:40:23,893
It's happening.
1982
01:40:23,976 --> 01:40:25,819
Everybody wants our swaps.
1983
01:40:26,020 --> 01:40:28,022
Kathy's office is looking for you.
1984
01:40:28,356 --> 01:40:30,779
They're singing
a different tune now, aren't they?
1985
01:40:32,109 --> 01:40:33,611
That's not good.
1986
01:40:38,449 --> 01:40:39,826
Maybe later. Not now.
1987
01:40:39,909 --> 01:40:42,287
This is a joke. Never.
1988
01:40:45,790 --> 01:40:46,882
Listening.
1989
01:40:47,291 --> 01:40:48,884
- Dr. Burry?
- Yeah.
1990
01:40:48,960 --> 01:40:50,382
Deeb Winston, Goldman Sachs.
1991
01:40:50,461 --> 01:40:51,963
Listen, I've been reviewing your position.
1992
01:40:52,046 --> 01:40:54,299
I wanted to discuss your marks
and make sure they're fair.
1993
01:40:54,382 --> 01:40:57,226
Yeah,
I think you mean that you've
1994
01:40:57,301 --> 01:41:00,054
secured a net short position yourselves.
1995
01:41:00,221 --> 01:41:02,974
So you're free to mark my swaps
accurately for once
1996
01:41:03,140 --> 01:41:05,814
because ifs now
in your interest to do so.
1997
01:41:07,979 --> 01:41:10,073
I'm not sure what you want me to say.
1998
01:41:10,231 --> 01:41:11,733
I think that...
1999
01:41:13,234 --> 01:41:15,328
I think that you've already said it.
2000
01:41:23,160 --> 01:41:25,288
You tell Jeff at Goldman
that I'm not transferring funds.
2001
01:41:25,371 --> 01:41:26,998
This is bullshit!
2002
01:41:34,171 --> 01:41:35,923
Okay, we'll talk later.
2003
01:41:36,424 --> 01:41:37,846
Thank you.
2004
01:41:40,344 --> 01:41:42,221
Thanks for coming so quickly, Mark.
2005
01:41:42,305 --> 01:41:43,648
- Yeah.
-Um...
2006
01:41:43,931 --> 01:41:45,183
I know you've been hearing rumblings
2007
01:41:45,266 --> 01:41:46,768
about some losses Morgan has suffered.
2008
01:41:46,851 --> 01:41:48,819
- Congratulations.
-On what?
2009
01:41:49,437 --> 01:41:50,484
Oh.
2010
01:41:51,188 --> 01:41:52,690
Thanks. Um...
2011
01:41:52,773 --> 01:41:54,116
Having fun?
2012
01:41:55,151 --> 01:41:56,494
Yes.
2013
01:41:57,695 --> 01:41:59,038
Tons. Um...
2014
01:41:59,530 --> 01:42:01,874
I just wanted you to know that, um...
2015
01:42:02,450 --> 01:42:04,123
That, yes,
Morgan has suffered some losses,
2016
01:42:04,201 --> 01:42:08,001
but our liquidity is strong
and there's no cause for concern.
2017
01:42:08,205 --> 01:42:11,049
Would Bennie Cleager be concerned?
2018
01:42:11,375 --> 01:42:12,718
Because word on the street
2019
01:42:12,793 --> 01:42:15,637
is that he took some pretty heavy losses.
2020
01:42:16,964 --> 01:42:18,762
Kathy, come on.
We know each other.
2021
01:42:18,841 --> 01:42:21,060
What's going on?
2022
01:42:21,469 --> 01:42:22,971
How bad is this?
2023
01:42:23,137 --> 01:42:24,309
0Y3'!-
2024
01:42:25,097 --> 01:42:28,146
Two years ago, Bennie Cleager
in Morgan's bond department
2025
01:42:28,225 --> 01:42:31,775
also stained shorting subprime housing,
$2 billion in BBBs.
2026
01:42:31,854 --> 01:42:33,106
Bennie is smarter than I thought.
2027
01:42:33,189 --> 01:42:34,611
No, he's not smart at all.
2028
01:42:34,690 --> 01:42:37,068
The premiums on the swap
ate into his desk's profit.
2029
01:42:37,151 --> 01:42:39,119
To cover his BBB shorts,
2030
01:42:39,195 --> 01:42:41,698
he sold a lot ofA and AA swaps
as protection.
2031
01:42:41,781 --> 01:42:42,782
A lot.
2032
01:42:43,491 --> 01:42:46,665
He believed that there was no way
that they could be affected.
2033
01:42:47,244 --> 01:42:50,589
Tell me Morgan Stanley doesn't hold
the contracts on these swaps.
2034
01:42:53,918 --> 01:42:55,420
Holy shit.
2035
01:42:56,087 --> 01:42:59,512
All this time I've been trying to figure
out who I'm betting against,
2036
01:42:59,757 --> 01:43:01,600
and it's Morgan Stanley.
2037
01:43:02,551 --> 01:43:03,894
Which is me.
2038
01:43:05,596 --> 01:43:07,940
What's your exposure? $3 billion?
2039
01:43:08,849 --> 01:43:10,692
Please, don't tell me it's more than four.
2040
01:43:10,851 --> 01:43:12,478
I can't answer that.
I can't answer that.
2041
01:43:12,561 --> 01:43:15,735
Yes, you can answer that,
because I walk in here
2042
01:43:15,815 --> 01:43:18,910
and people are crying in your hallway.
2043
01:43:19,276 --> 01:43:20,448
Kathy,
2044
01:43:20,945 --> 01:43:22,993
you bring me in to tell me
every1hing's fine,
2045
01:43:23,072 --> 01:43:24,289
and everything's not fine.
2046
01:43:24,949 --> 01:43:26,826
What, what is happening?
2047
01:43:29,036 --> 01:43:31,209
The long exposure is...
2048
01:43:33,124 --> 01:43:34,626
...$15 billion.
2049
01:43:40,589 --> 01:43:41,715
Jesus!
2050
01:43:41,799 --> 01:43:44,177
He kept saying defaults
over 8% were impossible.
2051
01:43:44,260 --> 01:43:45,261
Oh, my God.
2052
01:43:45,344 --> 01:43:46,561
That there would be a million homeless!
2053
01:43:48,013 --> 01:43:50,266
Yeah, but we have nothing
to do with Morgan Stanley.
2054
01:43:53,185 --> 01:43:54,311
Yeah...
2055
01:43:54,645 --> 01:43:56,488
Tell the bankruptcy court.
2056
01:43:56,731 --> 01:43:59,860
Morgan fails, all our accounts
go on their balance sheet.
2057
01:44:00,484 --> 01:44:02,111
It's just crazy.
2058
01:44:02,319 --> 01:44:03,662
Morgan makes the suckers bet
2059
01:44:03,738 --> 01:44:06,082
and we pay their fucking gambling debt?
2060
01:44:06,574 --> 01:44:09,077
Short the bank stocks. Then we wait.
2061
01:44:12,997 --> 01:44:14,999
Or we sell our swaps
when the market opens.
2062
01:44:16,751 --> 01:44:19,800
We get our bonuses,
our investors get their profits, we get...
2063
01:44:19,879 --> 01:44:22,382
What, 30 cents on the dollar?
It's not bad.
2064
01:44:22,673 --> 01:44:24,175
We're three times that.
2065
01:44:24,258 --> 01:44:25,976
Not if there's
no market left to sell them in.
2066
01:44:26,051 --> 01:44:27,974
Forget it.
We're not giving out any lifeboats.
2067
01:44:28,053 --> 01:44:30,431
If Morgan goes under,
we end up with nothing.
2068
01:44:30,514 --> 01:44:31,515
Vinnie.
2069
01:44:33,267 --> 01:44:36,441
Jesus, come on.
I say when we sell.
2070
01:44:40,566 --> 01:44:42,944
Look, I get that this is personal for you,
2071
01:44:43,027 --> 01:44:45,325
but we have a fiduciary responsibility.
2072
01:44:45,404 --> 01:44:46,906
No. No, we don't.
2073
01:44:47,198 --> 01:44:49,371
Nobody's acting responsible.
2074
01:44:49,533 --> 01:44:52,286
Fuck responsibility. Are you kidding me?
2075
01:44:52,787 --> 01:44:54,881
The assholes at the big banks will lake...
2076
01:44:54,955 --> 01:44:56,002
You boys want any appetizers?
2077
01:44:56,081 --> 01:44:57,833
We're talking, please!
2078
01:44:58,584 --> 01:45:00,086
- Excuse us.
-Sorry.
2079
01:45:02,213 --> 01:45:05,012
We are going to wait,
and we are going to wait,
2080
01:45:05,132 --> 01:45:06,634
and we are going to wait
2081
01:45:06,801 --> 01:45:10,556
until they feel the pain,
until they start to bleed.
2082
01:45:10,888 --> 01:45:13,016
- That is what I want.
-But what about our clients
2083
01:45:13,098 --> 01:45:14,395
who've entrusted us with their savings...
2084
01:45:14,475 --> 01:45:15,647
I say when we sell.
2085
01:45:15,726 --> 01:45:16,773
This isn't about you.
2086
01:45:16,852 --> 01:45:18,104
This isn't about you
and your Upper East Side
2087
01:45:18,187 --> 01:45:19,234
mahogany soapbox.
-Hey! Hey!
2088
01:45:19,396 --> 01:45:20,739
I say when we sell!
2089
01:45:22,316 --> 01:45:24,068
Whatever you say, Mark.
2090
01:45:30,783 --> 01:45:32,581
Dude, did you hear the news?
2091
01:45:34,411 --> 01:45:36,755
Okay. So, not only do
two mortgage hedge funds
2092
01:45:36,831 --> 01:45:38,629
backed by Bear Steams go beiiy up,
2093
01:45:38,707 --> 01:45:41,836
but now there's
a class-action lawsuit against Bear.
2094
01:45:41,919 --> 01:45:43,091
Holy shit!
2095
01:45:43,170 --> 01:45:45,673
Let's go! Push! Push!
2096
01:45:45,756 --> 01:45:47,178
So, what?
Bear could really collapse here.
2097
01:45:47,258 --> 01:45:49,056
- This is a risk we really shouldn't take.
- Then what?
2098
01:45:49,134 --> 01:45:51,136
We bought 80%
of our swaps at Bear.
2099
01:45:51,220 --> 01:45:52,813
- We'd lose everything.
-So what'?
2100
01:45:52,888 --> 01:45:54,310
- Hey, sir'?
-One second!
2101
01:45:54,431 --> 01:45:55,398
That's my opinion.
2102
01:45:55,474 --> 01:45:56,691
We bought these fucking things.
2103
01:45:56,767 --> 01:45:57,939
We have no clue how to sell them.
2104
01:45:58,018 --> 01:45:59,440
I know. We have to get Ben to do it.
2105
01:45:59,520 --> 01:46:01,522
I've been trying to call him
and he won't get back to me.
2106
01:46:01,605 --> 01:46:03,858
No. He's on vacation
with his wife's family.
2107
01:46:03,941 --> 01:46:05,113
They're in England.
2108
01:46:06,068 --> 01:46:07,069
What?
2109
01:46:14,785 --> 01:46:16,378
- Hello, Ben. Hey.
- Guys'?
2110
01:46:16,453 --> 01:46:18,046
Yeah, were here.
Can you hear us?
2111
01:46:18,122 --> 01:46:19,624
- Guys?
- Yeah, we got you.
2112
01:46:19,790 --> 01:46:22,634
Yeah. I hardly got
cell phone or Wi-Fi service.
2113
01:46:23,752 --> 01:46:26,346
I'm trying lo sell $200 million
worth of securities.
2114
01:46:26,672 --> 01:46:29,016
In a pub. It smells like sheep.
2115
01:46:29,300 --> 01:46:30,301
You can do this.
2116
01:46:30,426 --> 01:46:31,552
I don't wan!
to pressure you, Ben
2117
01:46:31,635 --> 01:46:34,229
but if you don't pull this off,
we lose everything.
2118
01:46:34,471 --> 01:46:37,771
All right. Let's see what
Credit Suisse's appetite is.
2119
01:46:42,938 --> 01:46:44,110
This is Brownfield Fund.
2120
01:46:44,189 --> 01:46:46,112
I want to unload my credit default swaps.
2121
01:46:46,442 --> 01:46:47,989
All right. What you got?
2122
01:46:48,152 --> 01:46:49,825
Twenty AA tranches of A.B.S. CDOs.
2123
01:46:50,446 --> 01:46:52,824
A.B. S.
2124
01:46:52,990 --> 01:46:54,992
Absolutely. They're complete shit.
2125
01:46:55,284 --> 01:46:56,786
What's your notional value?
2126
01:46:56,869 --> 01:46:59,543
Face value is 205 million. Dollars.
2127
01:46:59,830 --> 01:47:02,424
All right, we could, we could go to forty.
2128
01:47:02,499 --> 01:47:03,796
No. We want at least 100 million.
2129
01:47:03,876 --> 01:47:07,551
100 million? Who are you,
a drug dealer or a banker?
2130
01:47:07,671 --> 01:47:10,174
'Cause if you're a banker,
you can fuck right off!
2131
01:47:10,257 --> 01:47:11,429
I don't know if we can make a market.
2132
01:47:11,508 --> 01:47:12,634
Just give me your best price?
2133
01:47:12,718 --> 01:47:15,267
Yeah. Chuck 100 million in for me, mate.
2134
01:47:15,346 --> 01:47:16,598
I think we're far apart.
2135
01:47:17,097 --> 01:47:19,520
Look, if you don't want the deal,
you can just hang up.
2136
01:47:21,977 --> 01:47:23,524
That's what I thought.
2137
01:47:24,313 --> 01:47:26,315
-90 million.
-70.
2138
01:47:27,316 --> 01:47:29,159
Swans} ea.
2139
01:47:29,360 --> 01:47:31,328
-a4.
2140
01:47:32,529 --> 01:47:34,531
- BENI .84.
2141
01:47:36,367 --> 01:47:37,664
It's Dr. Burry.
2142
01:47:38,243 --> 01:47:41,087
Looks like the collapse
of the financial sector is imminent.
2143
01:47:42,081 --> 01:47:44,049
Let's start to sell my position.
2144
01:47:44,416 --> 01:47:46,259
It's $1.3 billion.
2145
01:47:47,753 --> 01:47:49,596
Sure, I'll hold.
2146
01:48:13,404 --> 01:48:14,906
So, I was right.
2147
01:48:15,739 --> 01:48:18,242
I took a rash of shit for two years, but
2148
01:48:18,659 --> 01:48:20,582
I was right.
2149
01:48:20,911 --> 01:48:22,663
And everyone was wrong.
2150
01:48:23,580 --> 01:48:26,754
And, yeah'
I got a bonus check for it. Sue me.
2151
01:48:27,418 --> 01:48:28,510
You know?
2152
01:48:28,919 --> 01:48:32,549
It's a lot of money. I get it.
I can feel you judging me.
2153
01:48:32,631 --> 01:48:33,928
That's palpable.
2154
01:48:34,633 --> 01:48:38,638
But, hey, I never said
I was the hero of this story.
2155
01:48:39,263 --> 01:48:41,812
Hey, Ben. How are we looking?
2156
01:48:43,017 --> 01:48:44,360
BENZ EighLon...
2157
01:48:45,102 --> 01:48:46,445
Sorry?
2158
01:48:46,812 --> 01:48:48,940
No. Eighty million.
2159
01:48:49,148 --> 01:48:50,775
$80 million, $80 million,
that's good, right?
2160
01:48:50,858 --> 01:48:51,950
- Eighty is great.
-Is that good?
2161
01:48:52,026 --> 01:48:53,198
- Eighty is great, Ben.
-Okay.
2162
01:48:53,277 --> 01:48:55,621
Thank you. Thank you so much.
2163
01:48:55,946 --> 01:48:57,823
Most of it went to UBS.
2164
01:48:57,948 --> 01:48:59,495
You're very lucky. The largest bank
2165
01:48:59,575 --> 01:49:02,795
in France froze customer's money
market accounts today.
2166
01:49:02,911 --> 01:49:04,458
This thing's hitting Europe.
2167
01:49:04,538 --> 01:49:06,381
Greece and Iceland are finished.
2168
01:49:06,457 --> 01:49:07,800
Spain is teetering.
2169
01:49:07,875 --> 01:49:09,468
Are you serious? Fuck.
2170
01:49:09,877 --> 01:49:11,720
Ben, callus
when you get home.
2171
01:49:11,795 --> 01:49:13,092
But, hey, before you go,
2172
01:49:13,172 --> 01:49:15,220
uh, I'm just wondering...
2173
01:49:15,883 --> 01:49:17,135
Um...
2174
01:49:18,302 --> 01:49:20,350
Why did you do this with us?
2175
01:49:21,305 --> 01:49:23,307
You didn't have to. Uh...
2176
01:49:23,640 --> 01:49:27,315
Thank you. But, uh, why?
2177
01:49:28,228 --> 01:49:31,152
You guys said you wanted to get rich.
Now you're rich.
2178
01:49:31,690 --> 01:49:32,782
Goal!
2179
01:49:32,858 --> 01:49:34,485
Pamplona puts themselves
on the scoreboard.
2180
01:49:38,655 --> 01:49:41,204
As the housing markets
and banks continued to hemorrhage,
2181
01:49:41,283 --> 01:49:43,706
only one of the big shorts refused to sell.
2182
01:49:43,786 --> 01:49:45,003
Mark Baum.
2183
01:49:48,373 --> 01:49:50,421
So it was beyond perfect
when he was asked to speak
2184
01:49:50,501 --> 01:49:52,344
at a conference opposite Bruce Miller,
2185
01:49:52,419 --> 01:49:54,888
the famous bullish investor.
2186
01:49:55,255 --> 01:49:57,474
After he and Mark had their debate,
Alan Greenspan,
2187
01:49:57,549 --> 01:50:01,019
one of the architects of the whole crisis
was scheduled to speak.
2188
01:50:01,261 --> 01:50:03,855
Everyone in Marks office showed up,
he even invited friends.
2189
01:50:05,349 --> 01:50:08,649
This was the Ali vs. Foreman
of the financial world.
2190
01:50:09,019 --> 01:50:11,021
The realist versus the fools.
2191
01:50:11,480 --> 01:50:15,075
And if it seems almost too perfect,
trust me, this happened.
2192
01:50:17,194 --> 01:50:23,372
Welcome, everyone.
Please give a generous welcome to
2193
01:50:23,700 --> 01:50:27,295
Mr. Bruce Miller and Mark Baum.
2194
01:50:44,471 --> 01:50:45,973
Strap yourself in.
2195
01:50:47,224 --> 01:50:49,397
So as some of you may know,
Bear Stearns
2196
01:50:49,476 --> 01:50:52,070
hasjust received a loan from JP Morgan.
2197
01:50:52,146 --> 01:50:54,990
Of course, we're gonna have to
wait and see how the markets react,
2198
01:50:55,065 --> 01:50:58,786
but that should lay to rest any
concerns about the bank's health.
2199
01:50:58,861 --> 01:51:03,583
Now, I take it you have no plans to sell
your $200 million in Bear stock?
2200
01:51:03,907 --> 01:51:05,534
No. As a matter of fact,
when we're done here,
2201
01:51:05,617 --> 01:51:07,415
I'll probably go out and buy some more.
2202
01:51:07,536 --> 01:51:08,833
{SCATTERED LAUGHTER)
2203
01:51:08,912 --> 01:51:12,416
For the opposing view, Mr. Baum.
2204
01:51:14,835 --> 01:51:16,929
I got to stand for this.
2205
01:51:19,673 --> 01:51:21,266
Okay, hi.
2206
01:51:21,675 --> 01:51:24,098
My firm's thesis is pretty simple.
2207
01:51:24,428 --> 01:51:26,271
Wall Street took a good idea,
2208
01:51:26,346 --> 01:51:27,848
Lewis Ranieri's mortgage bond,
2209
01:51:28,098 --> 01:51:30,351
and turned it into an atomic bomb
2210
01:51:30,434 --> 01:51:32,607
of fraud and stupidity
2211
01:51:32,936 --> 01:51:35,610
that's on its way to decimating
the world economy.
2212
01:51:35,689 --> 01:51:36,906
How do you really feel?
2213
01:51:38,358 --> 01:51:40,281
I'm glad you still
have a sense of humor.
2214
01:51:40,360 --> 01:51:42,408
I wouldn't if I were you.
2215
01:51:42,779 --> 01:51:46,829
Now, anyone who knows me knows that
2216
01:51:46,909 --> 01:51:49,378
I have no problem telling
someone they're wrong.
2217
01:51:49,453 --> 01:51:53,549
BearSiearns
is denying rumors of liquidity problems.
2218
01:51:53,624 --> 01:51:55,922
Holy fuck, it's 39 now!
2219
01:51:58,086 --> 01:52:00,635
We live in an era of fraud in America.
2220
01:52:00,714 --> 01:52:03,092
Notjust in banking, but in government,
2221
01:52:03,550 --> 01:52:06,520
education, religion, food,
2222
01:52:06,595 --> 01:52:08,268
even baseball.
2223
01:52:10,140 --> 01:52:11,357
What bothers me isn't that
2224
01:52:11,975 --> 01:52:15,821
fraud is not nice or that fraud is mean.
2225
01:52:16,104 --> 01:52:17,981
It's that for 15,000 years
2226
01:52:18,815 --> 01:52:20,362
fraud and short-sighted thinking
2227
01:52:20,442 --> 01:52:22,820
have never, ever worked.
2228
01:52:22,945 --> 01:52:25,869
- Jesus, Bear at 37...
- Not once.
2229
01:52:25,948 --> 01:52:29,202
Eventually, people get caught,
things go south.
2230
01:52:29,284 --> 01:52:30,661
It's fucking plummeting, man.
2231
01:52:30,827 --> 01:52:33,125
When the hell did we forget all that?
2232
01:52:37,292 --> 01:52:39,795
I thought we were
better than this. I really did.
2233
01:52:40,128 --> 01:52:42,176
And the fact that we're not
2234
01:52:42,297 --> 01:52:45,016
doesn't make me feel
all right and superior.
2235
01:52:45,092 --> 01:52:47,595
It makes me feel... Sad.
2236
01:52:48,011 --> 01:52:50,355
Every time I fucking hit
"refresh" it's dropping, man.
2237
01:52:52,015 --> 01:52:53,688
And as fun as it is to watch
2238
01:52:53,976 --> 01:52:56,274
pompous, dumb Wall Slreelers
be wildly wrong,
2239
01:52:56,353 --> 01:52:58,651
and you are wrong' sir,
2240
01:52:59,481 --> 01:53:02,485
I just know, that at the end of the day
2241
01:53:03,151 --> 01:53:05,870
average people are going to be the ones
2242
01:53:05,988 --> 01:53:08,161
that are gonna have to pay for all this.
2243
01:53:08,824 --> 01:53:10,952
Because they always, always do.
2244
01:53:11,034 --> 01:53:12,081
It's 32.
2245
01:53:12,160 --> 01:53:13,537
It's fucking tanked, man.
2246
01:53:13,662 --> 01:53:15,664
That's my two cents. Thank you.
2247
01:53:16,999 --> 01:53:18,342
Let me drop
a deuce at Deutsche.
2248
01:53:18,500 --> 01:53:20,502
Does our bull
have a response?
2249
01:53:21,503 --> 01:53:25,007
Only that, in the entire history
of Wall Street,
2250
01:53:25,132 --> 01:53:27,430
no investment bank has ever failed
2251
01:53:27,509 --> 01:53:29,511
unless caught in criminal activities.
2252
01:53:30,012 --> 01:53:33,516
So, yes, I stand by
my Bear Stearns optimism.
2253
01:53:33,849 --> 01:53:35,851
Mr. Miller, I'm sorry.
Quick question.
2254
01:53:36,351 --> 01:53:38,024
From the time you guys started talking,
2255
01:53:38,186 --> 01:53:41,065
Bear Stearns stock has
fallen more than 38%.
2256
01:53:41,148 --> 01:53:42,525
Would you still buy more?
2257
01:53:42,733 --> 01:53:46,863
Yeah' sure, of course
I'd buy more. Why not?
2258
01:53:47,321 --> 01:53:48,322
Boom.
2259
01:53:51,575 --> 01:53:52,918
Jesus Christ!
2260
01:53:54,369 --> 01:53:57,543
That concludes
the first part of our presentation.
2261
01:53:58,540 --> 01:54:03,171
Up next, we have the legendary
former chairman of the Fed,
2262
01:54:03,253 --> 01:54:05,051
Alan Greenspan.
2263
01:54:05,130 --> 01:54:06,473
Folks?
2264
01:54:24,608 --> 01:54:25,985
...employees
of Lehman Brothers today,
2265
01:54:26,068 --> 01:54:29,413
as the Wall Street giant's stock
went to zero.
2266
01:54:29,738 --> 01:54:31,661
The collapse of the venerable
New York bank
2267
01:54:31,740 --> 01:54:35,370
follows a tumultuous few months
of market volatility
2268
01:54:35,452 --> 01:54:38,080
and fear in the world economy.
2269
01:54:38,413 --> 01:54:40,131
I got to see inside.
2270
01:54:40,916 --> 01:54:42,259
How?
2271
01:54:42,959 --> 01:54:43,960
Come on.
2272
01:54:44,795 --> 01:54:47,890
I left my phone in the office.
I threw my pass out already.
2273
01:54:47,964 --> 01:54:49,386
Do you mind if I take you: pass'!?
2274
01:54:49,466 --> 01:54:52,060
I don't give a shit anymore.
You can do what you want.
2275
01:54:59,935 --> 01:55:01,653
Go directly to your transportation.
2276
01:55:01,728 --> 01:55:03,446
Do not talk to the press.
2277
01:55:03,605 --> 01:55:06,950
After 18 years, I just leave?
That's just fucking great!
2278
01:55:07,150 --> 01:55:10,029
I'll talk to whoever the hell I want!
2279
01:55:10,112 --> 01:55:12,456
Do not talk to the press.
2280
01:55:12,781 --> 01:55:14,749
Go directly to your transportation.
2281
01:55:14,825 --> 01:55:15,917
Do not talk to...
2282
01:55:18,495 --> 01:55:19,667
Hey, look,
you wanna get a bite tonight?
2283
01:55:19,788 --> 01:55:22,211
There's this, uh, new Cuban place
2284
01:55:22,290 --> 01:55:24,292
just opened on the Lower East Side.
it's supposed to be good.
2285
01:55:24,626 --> 01:55:26,299
- Oh, really?
-Yeah.
2286
01:55:26,795 --> 01:55:28,138
You and I?
2287
01:55:28,338 --> 01:55:29,931
Yeah, or other people.
2288
01:55:30,006 --> 01:55:31,758
- That sounds nice. I would like that.
-Yeah.
2289
01:55:31,842 --> 01:55:33,139
Finally.
2290
01:55:33,510 --> 01:55:34,853
Mark, hey.
2291
01:55:35,137 --> 01:55:36,434
It's a bloodbath up here.
2292
01:55:36,513 --> 01:55:38,015
Morgan stock has lost half its value.
2293
01:55:38,098 --> 01:55:40,396
It's dawn to 23.10. ifs in freefail.
2294
01:55:40,475 --> 01:55:43,479
Clients want to talk to you
about pulling their money.
2295
01:55:43,687 --> 01:55:47,191
It's now or never, Mark.
We got to sell.
2296
01:55:50,485 --> 01:55:51,657
Mark.
2297
01:55:53,029 --> 01:55:54,201
Mark, you hear me?
2298
01:55:54,531 --> 01:55:55,999
Mailbox one.
2299
01:55:56,158 --> 01:55:58,877
You have 15 messages.
2300
01:56:00,328 --> 01:56:01,955
Mike, I can'! seem
to get ahold of you.
2301
01:56:02,038 --> 01:56:04,507
Will you please call me
at your earliest convenience.
2302
01:56:05,834 --> 01:56:08,678
It's Jack. You're buying stocks?
2303
01:56:08,879 --> 01:56:11,849
The market's at an ail-time low.
This is crazy!
2304
01:56:12,090 --> 01:56:14,434
I met my wife on Matcfmcom.
2305
01:56:14,843 --> 01:56:16,186
My profile said,
2306
01:56:16,386 --> 01:56:18,730
"I am a medical student
with only one eye,
2307
01:56:18,805 --> 01:56:20,728
"an awkward social manner,
2308
01:56:20,807 --> 01:56:24,402
"and $145,000 in student loans."
2309
01:56:25,061 --> 01:56:26,529
She wrote back,
2310
01:56:26,813 --> 01:56:28,406
"You're just what I've been looking for."
2311
01:56:29,357 --> 01:56:31,030
She meant honest.
2312
01:56:31,234 --> 01:56:32,907
So let me be honest.
2313
01:56:33,069 --> 01:56:37,324
The housing crisis represents
the greatest financial opportunity of...
2314
01:56:37,407 --> 01:56:40,206
Making money is no!
like I thought it would be.
2315
01:56:40,535 --> 01:56:45,132
This business kills
the pan of life that is essential.
2316
01:56:45,207 --> 01:56:48,256
The part that has nothing
to do with business.
2317
01:56:50,545 --> 01:56:52,593
For the past two years, my insides...
2318
01:56:53,757 --> 01:56:56,135
...have felt like
they're eating themselves.
2319
01:56:56,259 --> 01:56:58,557
Ail the people I respected
2320
01:56:59,054 --> 01:57:01,557
won? talk to me anymore
2321
01:57:01,806 --> 01:57:03,649
except through lawyers.
2322
01:57:07,395 --> 01:57:08,772
People
2323
01:57:09,564 --> 01:57:13,239
want an authority to tell them
how to value things...
2324
01:57:13,610 --> 01:57:18,707
...but they choose this authority not
based on facts or results.
2325
01:57:19,157 --> 01:57:23,833
They choose it because it
seems authoritative and familiar.
2326
01:57:23,912 --> 01:57:26,381
And I am not
2327
01:57:26,456 --> 01:57:29,505
and never have been "familiar".
2328
01:57:31,461 --> 01:57:32,462
So...
2329
01:57:33,338 --> 01:57:36,467
So, I've come to the sullen realization
2330
01:57:36,550 --> 01:57:39,349
that I must close down the fund.
2331
01:57:39,427 --> 01:57:42,522
Sincerely, Michael J. Barry, M.D.
2332
01:58:42,240 --> 01:58:44,334
This isn't how I pictured it.
2333
01:58:46,328 --> 01:58:47,500
JAMIE; What did you think we'd find?
2334
01:58:47,579 --> 01:58:48,626
I don't know.
2335
01:58:50,498 --> 01:58:52,000
Grownups.
2336
01:58:55,920 --> 01:58:57,422
Mark, you there?
2337
01:59:00,091 --> 01:59:01,343
Mark?
2338
01:59:01,593 --> 01:59:04,517
Paulson and Bernanke
just left the White House.
2339
01:59:09,851 --> 01:59:12,024
There's going to be a bailout.
2340
01:59:13,605 --> 01:59:17,030
Well, they had to. Right?
2341
01:59:17,359 --> 01:59:18,531
Paper markets would've collapsed.
2342
01:59:18,610 --> 01:59:19,782
They knew.
2343
01:59:20,028 --> 01:59:21,530
Cash would've stopped
coming out of A TMs.
2344
01:59:21,613 --> 01:59:23,160
They had to backstop this.
2345
01:59:23,448 --> 01:59:25,792
They knew the taxpayers
would bail them out.
2346
01:59:25,867 --> 01:59:28,290
They weren't being stupid.
They just didn't care.
2347
01:59:28,453 --> 01:59:30,626
Yeah. 'Cause they're fucking crooks.
2348
01:59:32,540 --> 01:59:35,089
But at least we're going to
see some of them go to jail.
2349
01:59:36,294 --> 01:59:39,548
Right? I mean, they're gonna
have to break up the banks.
2350
01:59:40,632 --> 01:59:41,975
I mean, the paws oven.
2351
01:59:42,050 --> 01:59:44,724
I don't know. I don't know, Vinnie.
2352
01:59:47,472 --> 01:59:48,974
I have a feeling
2353
01:59:49,057 --> 01:59:50,934
that in a few years
people are gonna be doing
2354
01:59:51,017 --> 01:59:54,021
what they always do
when the economy tanks.
2355
01:59:54,479 --> 01:59:57,699
They will be blaming
immigrants and poor people.
2356
01:59:57,982 --> 01:59:59,325
JARED". But Mavk was wrung.
2357
02:00:00,443 --> 02:00:02,411
In the years that followed,
hundreds of bankers
2358
02:00:02,487 --> 02:00:05,115
and rating agencies executives
went to jail.
2359
02:00:05,281 --> 02:00:07,329
The SEC was completely overhauled.
2360
02:00:07,492 --> 02:00:10,211
And Congress had no choice
but to break up the big banks
2361
02:00:10,620 --> 02:00:13,089
and regulate the mortgage
and derivatives industries.
2362
02:00:17,877 --> 02:00:19,220
Just kidding.
2363
02:00:19,462 --> 02:00:21,681
The banks took the money
the American people gave them
2364
02:00:21,756 --> 02:00:24,054
and used it to pay themselves
huge bonuses
2365
02:00:24,134 --> 02:00:26,387
and lobby Congress to kill big reform.
2366
02:00:26,553 --> 02:00:28,806
And then they blamed
immigrants and poor people.
2367
02:00:28,888 --> 02:00:31,061
And this time, even teachers.
2368
02:00:32,434 --> 02:00:33,651
And when all was said and done,
2369
02:00:33,727 --> 02:00:35,479
only one single banker went to jail.
2370
02:00:36,396 --> 02:00:37,522
This poor schmuck.
2371
02:00:37,605 --> 02:00:40,074
Kareem Serageidin from Credit Suissa.
2372
02:00:40,400 --> 02:00:42,744
He hid a few billion
in mortgage bond losses,
2373
02:00:42,819 --> 02:00:46,073
something mos! of the big banks did
on a good day during the crisis.
2374
02:00:47,699 --> 02:00:49,701
Mark, can we sell now'?
2375
02:00:51,494 --> 02:00:53,997
The fund will make almost $1 billion.
2376
02:00:54,080 --> 02:00:55,707
You'll clear $200 mil, Mark.
2377
02:00:56,875 --> 02:00:59,128
You know, once we sell,
2378
02:00:59,878 --> 02:01:01,755
we'll bejusl like the rest of them.
2379
02:01:01,838 --> 02:01:02,964
You know that.
2380
02:01:03,298 --> 02:01:04,891
No, we're not.
We're not the bad guys here.
2381
02:01:04,966 --> 02:01:08,470
We didn't defraud the American people
and prey on their dreams
2382
02:01:08,553 --> 02:01:10,146
of owning a home. All right?
2383
02:01:10,221 --> 02:01:11,438
They did.
2384
02:01:12,640 --> 02:01:14,483
And now we get to
kick them in the teeth.
2385
02:01:19,898 --> 02:01:21,900
A billion dollars.
2386
02:01:23,568 --> 02:01:24,820
That's right.
2387
02:01:24,903 --> 02:01:27,747
But we got to close out our position
or it could be zero.
2388
02:01:28,239 --> 02:01:31,083
I mean, it's now or never, Mark.
2389
02:01:40,251 --> 02:01:41,673
0Y3'!-
2390
02:01:45,423 --> 02:01:46,845
Sell it all.
182586
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