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00:00:06,000 --> 00:00:12,074
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00:00:37,956 --> 00:00:39,457
(BIRDS CHIRPING)
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(TELEPHONE RINGING)
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00:01:20,957 --> 00:01:23,276
MAN: Hiya, Frank.
How are the wife and kids?
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00:01:23,376 --> 00:01:25,487
You know, for you,
I'm considering treasury bonds
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and utility stocks. Smoke?
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JARED: In the late '70s,
banking wasn't a job
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you went into to make large sums of money.
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It was a fucking snooze.
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(CHUCKLES) How about those Mets?
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JARED: Filled with losers.
Like selling insurance or
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accounting.
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And if banking was boring,
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then the bond department at the
bank was straight-up comatose.
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We all know about bonds.
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00:01:48,109 --> 00:01:50,178
You give them to your
snot-nosed kid when he turns 15.
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Maybe when he's 30
he makes a hundred bucks.
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Boring.
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00:01:53,740 --> 00:01:55,517
That is, until Lewis Ranieri
came on the scene
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at Salomon Brothers.
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00:02:02,624 --> 00:02:04,818
You might not know who he is,
but he changed your life
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00:02:04,918 --> 00:02:08,613
more than Michael Jordan,
the iPod and YouTube put together.
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00:02:08,713 --> 00:02:10,448
- (CHUCKLING)
- (MAN LAUGHING)
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00:02:10,548 --> 00:02:12,283
All right, gentlemen!
Let's get some money in here!
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00:02:12,383 --> 00:02:14,052
Let's make some money! What do you say?
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00:02:14,219 --> 00:02:15,870
(ALL CHEERING)
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00:02:15,970 --> 00:02:17,789
JARED: You see, Lewis didn't know it yet,
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00:02:17,889 --> 00:02:19,791
but he had already changed banking forever
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00:02:19,891 --> 00:02:21,100
with one simple idea.
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The mortgage-backed security.
Or private-label MBS.
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LEWIS: You've got your
average person's mortgage.
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Fixed rate, 30 years.
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Boring, safe, small payoff, right? But,
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00:02:35,448 --> 00:02:38,143
when you have thousands
of them all bundled together,
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00:02:38,243 --> 00:02:41,771
suddenly the yield goes up
but the risk is still small because,
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00:02:41,871 --> 00:02:42,814
well, they're mortgages!
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00:02:42,914 --> 00:02:44,315
And who the hell
doesn't pay their mortgage?
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00:02:44,415 --> 00:02:46,776
What exactly is the credit
rating on this bond?
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00:02:46,876 --> 00:02:49,712
This bond, gentlemen, is AAA-rated.
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00:02:50,255 --> 00:02:52,924
This is exactly what the Michigan state
pension fund has been looking for.
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00:02:53,424 --> 00:02:54,909
I'll buy $20 million.
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00:02:55,009 --> 00:02:56,177
Oh, come on, live a little.
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- $25 million.
- (ALL LAUGHING)
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JARED: The money came raining down,
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00:03:01,057 --> 00:03:02,542
and for the first time,
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00:03:02,642 --> 00:03:05,436
the banker went from the country club
to the strip club.
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00:03:08,064 --> 00:03:11,276
Pretty soon, stocks and savings
were almost inconsequential.
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00:03:11,442 --> 00:03:13,595
- They were doing $50, $100, $200 billion
- Whoo!
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00:03:13,695 --> 00:03:16,322
In mortgage bonds and dozens of other
securities a year.
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00:03:16,447 --> 00:03:17,657
(MEN CHEERING)
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00:03:25,957 --> 00:03:28,234
And America barely noticed
as its number one industry
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00:03:28,334 --> 00:03:30,420
became boring old banking.
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00:03:34,090 --> 00:03:37,594
And then one day,
almost 30 years later, in 2008,
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it all came crashing down.
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FEMALE REPORTER: March.
Bear Stearns was in a death spiral
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00:03:46,519 --> 00:03:47,921
and the Fed brokered its sale.
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00:03:48,021 --> 00:03:51,065
BRIAN WILLIAMS: It's been called the
worst financial crisis in modern times.
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00:03:51,399 --> 00:03:55,637
Certainly the largest financial disaster
in decades in this country,
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00:03:55,737 --> 00:03:58,406
and perhaps the end of an era
in American business.
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00:03:58,865 --> 00:04:01,100
JARED: In the end, Lewis Ranieri's
mortgage-backed security
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00:04:01,200 --> 00:04:04,662
mutated into a monstrosity that
collapsed the whole world economy.
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00:04:05,330 --> 00:04:08,666
And none of the experts or leaders or
talking heads had a clue it was coming.
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00:04:10,168 --> 00:04:13,129
I'm guessing most of you
still don't really know what happened.
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00:04:13,630 --> 00:04:16,407
Yeah, you got a soundbite you repeat
so you don't sound dumb, but come on.
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00:04:16,507 --> 00:04:18,927
Our financial institutions are strong.
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00:04:20,178 --> 00:04:22,580
But there were some who saw it coming.
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00:04:22,680 --> 00:04:24,749
While the whole world
was having a big old party,
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00:04:24,849 --> 00:04:28,086
a few outsiders and weirdos
saw what no one else could.
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00:04:28,186 --> 00:04:31,756
Not me. I'm not a weirdo.
I'm pretty fucking cool.
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00:04:31,856 --> 00:04:33,858
But we'll meet again later.
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00:04:34,359 --> 00:04:37,095
These outsiders saw the giant lie
at the heart of the economy.
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00:04:37,195 --> 00:04:38,596
And they saw it by doing something
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the rest of the suckers
never thought to do.
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They looked.
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(TAPPING)
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MIKE: During the 1930s,
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the housing market collapsed nationwide
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00:05:06,557 --> 00:05:08,668
by roughly 80%.
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I mean, half of all mortgage debt
was in default.
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00:05:13,982 --> 00:05:16,651
And, I mean, there were very
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00:05:17,777 --> 00:05:21,280
specific identifiers,
extremely recognizable.
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00:05:24,200 --> 00:05:25,243
I mean, for instance,
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(STAMMERING) one of the hallmarks of mania
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00:05:28,913 --> 00:05:30,248
is the rapid rise
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in complexity and the rates of fraud.
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00:05:32,500 --> 00:05:35,920
And did you know that they're going up?
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(CHEERLEADERS CHEERING)
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MAN: Whoo!
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(INAUDIBLE)
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00:05:55,440 --> 00:05:57,342
MIKE: I've always been
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more comfortable alone.
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(GIRLS TALKING INDISTINCTLY)
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00:06:00,903 --> 00:06:02,113
(GIRLS LAUGHING)
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00:06:06,743 --> 00:06:11,372
I believe maybe
it's because of my glass eye.
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00:06:13,791 --> 00:06:16,586
I lost the eye in a childhood illness.
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00:06:20,923 --> 00:06:23,259
It separates me from people.
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And did you know that they are going
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00:06:29,766 --> 00:06:30,875
up?
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The highest fraud rates since the 1930s.
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00:06:34,562 --> 00:06:36,881
MIKE'S MOM:
Hey, hey, it's okay. It's okay.
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No, I didn't know that.
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00:06:38,566 --> 00:06:40,026
(MIKE STUTTERING)
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(MIKE CHUCKLING)
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In 1933, the fourth year
of the Great Depression.
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Let's wash it off and put it back in.
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00:06:49,243 --> 00:06:51,204
MIKE'S DAD:
You were playing so great, son.
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I even heard the coach say it.
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Can we just go home?
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MIKE: Most social interactions
are awkward for me and for the person.
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00:07:01,089 --> 00:07:04,575
Even when I try to compliment someone,
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00:07:04,675 --> 00:07:06,052
it comes out wrong.
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00:07:06,969 --> 00:07:10,556
You have a very nice haircut.
Did you do it yourself?
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(CHUCKLES) What?
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00:07:12,725 --> 00:07:15,228
(STAMMERING) No. No, I...
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(SPLASHING)
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(TELEPHONE RINGING IN DISTANCE)
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I'm sorry. I'm just...
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(SIGHS)
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I'm going on and on.
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00:07:32,703 --> 00:07:34,313
My wife told me I need to share more.
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Mmm.
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00:07:36,374 --> 00:07:38,192
- That seems healthy.
- Yeah.
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00:07:38,292 --> 00:07:39,293
Mmm-hmm.
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00:07:43,631 --> 00:07:44,799
(CHUCKLES)
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Uh...
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So do I get the job?
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00:07:52,515 --> 00:07:54,851
I really think I could help your fund.
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00:07:56,227 --> 00:07:57,587
Yeah.
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00:07:57,687 --> 00:07:59,313
Yeah, sure. Go on.
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00:07:59,981 --> 00:08:01,149
(BOTH CHUCKLING)
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00:08:02,024 --> 00:08:05,261
- You're...
- David. Great.
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00:08:05,361 --> 00:08:07,180
I guess I'll go find a desk.
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00:08:07,280 --> 00:08:09,866
Is there anything you want me
to work on for start...
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00:08:10,366 --> 00:08:11,367
Uh...
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00:08:12,910 --> 00:08:14,270
Yeah.
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00:08:14,370 --> 00:08:16,080
DAVID: You could let me know later.
I could come back.
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00:08:16,372 --> 00:08:18,332
(STUTTERING)
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00:08:18,791 --> 00:08:23,321
Did you think it was strange when, um,
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the tech bubble burst in 2001
140
00:08:26,007 --> 00:08:28,785
and the housing market in San Jose,
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00:08:28,885 --> 00:08:31,095
the tech capital of the world,
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00:08:32,597 --> 00:08:34,332
went up?
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00:08:34,432 --> 00:08:35,458
Wasn't that strange?
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00:08:35,558 --> 00:08:36,501
DAVID: No.
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00:08:36,601 --> 00:08:39,170
No, it's housing.
Housing is always stable.
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00:08:39,270 --> 00:08:40,296
Low risk. It's solid.
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00:08:40,396 --> 00:08:42,340
That's the idea, yeah.
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00:08:42,440 --> 00:08:44,175
I want you to get me
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00:08:44,275 --> 00:08:47,470
the top 20 selling mortgage bonds.
150
00:08:47,570 --> 00:08:50,389
So you want to know what
the top 20 selling mortgage bonds are?
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00:08:50,489 --> 00:08:54,827
No, no, no, I want to know
what mortgages are in each one.
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00:08:56,245 --> 00:08:57,830
(CHUCKLING) Okay, aren't those
mortgages made up of...
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00:08:57,955 --> 00:08:59,190
(ROCK MUSIC PLAYING)
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00:08:59,290 --> 00:09:00,733
Wait, aren't those bonds made up
155
00:09:00,833 --> 00:09:02,860
of thousands and thousands of mortgages?
156
00:09:02,960 --> 00:09:04,420
Yeah.
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00:09:08,466 --> 00:09:09,967
DAVID: Right away, Dr. Burry.
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00:09:29,028 --> 00:09:33,349
I am a nice guy all day long.
159
00:09:33,449 --> 00:09:36,118
Ask anyone, I'm a pleasure to work with.
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00:09:38,037 --> 00:09:42,375
But the second my son screws up, I am...
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00:09:43,042 --> 00:09:45,544
...yelling at him
just like my dad did to me.
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00:09:48,589 --> 00:09:50,241
I hear the words that are
coming out of my mouth and...
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00:09:50,341 --> 00:09:51,576
(DOOR OPENS)
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00:09:51,676 --> 00:09:54,470
- MARK: Sorry I'm late! No cabs.
- (DOOR CLOSES)
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Oh...
166
00:09:56,639 --> 00:09:58,224
So, get this.
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00:09:58,975 --> 00:10:01,477
I met with this retail banker yesterday.
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00:10:01,727 --> 00:10:04,130
I'm supposed to be getting him
to invest in a fund,
169
00:10:04,230 --> 00:10:05,548
but instead
170
00:10:05,648 --> 00:10:08,509
I start grilling him about
overdraft penalties
171
00:10:08,609 --> 00:10:11,596
and how his bank will let
a customer write 10-12 checks
172
00:10:11,696 --> 00:10:12,930
before they tell them they're overdrawn.
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00:10:13,030 --> 00:10:16,934
And this creep is making billions
off screwing over people this way.
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00:10:17,034 --> 00:10:18,811
And I'm getting madder and madder.
175
00:10:18,911 --> 00:10:22,273
And I ask him,
I look him in the face and I say,
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00:10:22,373 --> 00:10:24,208
"How can you sleep at night
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00:10:24,709 --> 00:10:28,154
"knowing that you are
ripping off working people?"
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00:10:28,254 --> 00:10:29,947
And you know what he did? He left.
179
00:10:30,047 --> 00:10:32,742
He just walks out of the lunch,
doesn't say a word.
180
00:10:32,842 --> 00:10:33,826
What the fuck is that?
181
00:10:33,926 --> 00:10:36,245
Who's fucked up in that scenario? Am I?
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00:10:36,345 --> 00:10:38,789
Or is this douchebag,
who leaves me hanging?
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00:10:38,889 --> 00:10:40,124
Is he the fucked up one?
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00:10:40,224 --> 00:10:43,002
We have talked about this numerous times.
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00:10:43,102 --> 00:10:46,214
You can't come in late
and hijack the entire session.
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00:10:46,314 --> 00:10:47,757
MARK: What do you mean?
I didn't hijack the meeting.
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00:10:47,857 --> 00:10:48,941
Did I hijack the session?
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00:10:49,066 --> 00:10:50,192
Yeah.
189
00:10:50,651 --> 00:10:51,819
What do you do?
190
00:10:51,944 --> 00:10:53,095
MAN: I'm in commodities.
191
00:10:53,195 --> 00:10:54,472
Good luck with that.
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00:10:54,572 --> 00:10:58,142
THERAPIST:
Mark, I know you suffered a terrible loss.
193
00:10:58,242 --> 00:10:59,602
Maybe you want to talk about that.
194
00:10:59,702 --> 00:11:00,770
- I don't talk about that.
- (CELL PHONE CHIMING)
195
00:11:00,870 --> 00:11:02,271
Hold on.
196
00:11:02,371 --> 00:11:03,689
Hold on...
197
00:11:03,789 --> 00:11:06,625
Shit, I have to take this. Sorry. Sorry.
198
00:11:07,543 --> 00:11:09,654
No... (SIGHS) I don't care, Porter.
199
00:11:09,754 --> 00:11:11,322
This guy's whole business
is built on ripping people off.
200
00:11:11,422 --> 00:11:13,007
How long can that last?
201
00:11:14,467 --> 00:11:15,634
Bye, everybody!
202
00:11:16,719 --> 00:11:18,387
MIKE: (SOFTLY) 95...
203
00:11:18,637 --> 00:11:20,765
That's 30 days late... Sixty days late...
204
00:11:23,225 --> 00:11:25,670
They pay on time...
205
00:11:25,770 --> 00:11:26,771
(TYPING ON KEYBOARD)
206
00:11:28,606 --> 00:11:30,232
These FICO scores...
207
00:11:31,817 --> 00:11:32,818
(SIGHS)
208
00:11:34,111 --> 00:11:35,112
(TELEPHONE RINGING)
209
00:11:36,822 --> 00:11:38,933
Late. And they caught up
on their payments...
210
00:11:39,033 --> 00:11:40,518
Another 30 days late...
211
00:11:40,618 --> 00:11:43,854
LTV, 95... LTV, 90...
They caught up on their payments...
212
00:11:43,954 --> 00:11:45,481
Sixty days late? Jesus!
213
00:11:45,581 --> 00:11:47,692
LTV, 110? I've never heard of that!
214
00:11:47,792 --> 00:11:49,126
Thirty days late, rate adjusts...
215
00:11:50,127 --> 00:11:51,362
In '07 rate adjusts...
216
00:11:51,462 --> 00:11:52,630
In '06 rate adjusts...
217
00:11:52,755 --> 00:11:55,032
95... 90... Jesus!
218
00:11:55,132 --> 00:11:56,467
(WHIRRING)
219
00:11:56,759 --> 00:11:58,369
(WHISPERING) He hasn't moved all day.
220
00:11:58,469 --> 00:12:00,788
He does this every few days.
221
00:12:00,888 --> 00:12:02,540
He hasn't spoken to me since he hired me.
222
00:12:02,640 --> 00:12:04,041
MIKE: Maybe the LTV's at... High-risk,
223
00:12:04,141 --> 00:12:06,377
interest-only... I never heard
of that mortgage history,
224
00:12:06,477 --> 00:12:09,213
I never heard of that... How?
225
00:12:09,313 --> 00:12:10,589
Michael, how are you, guy?
226
00:12:10,689 --> 00:12:13,718
MIKE: Lawrence, I found
something really interesting.
227
00:12:13,818 --> 00:12:15,720
Great, Michael. Whenever you
find something interesting,
228
00:12:15,820 --> 00:12:17,013
we all tend to make money.
229
00:12:17,113 --> 00:12:18,489
What stock are you valuing?
230
00:12:18,614 --> 00:12:19,932
No, no, no, no. No stocks.
231
00:12:20,032 --> 00:12:22,076
I want to short the housing market.
232
00:12:22,410 --> 00:12:23,394
(BRUSHING)
233
00:12:23,494 --> 00:12:26,163
Really? But the housing market
is rock solid.
234
00:12:26,664 --> 00:12:28,065
Greenspan just said
235
00:12:28,165 --> 00:12:30,709
bubbles are regional, defaults are rare.
236
00:12:30,835 --> 00:12:32,945
Tell them I'll be there in a minute.
237
00:12:33,045 --> 00:12:34,822
- Say again?
- Look, look...
238
00:12:34,922 --> 00:12:36,741
(MUFFLED) Greenspan's wrong.
239
00:12:36,841 --> 00:12:40,244
I don't think you mean to do this,
but sometimes you sound very
240
00:12:40,344 --> 00:12:42,621
dismissive and superior.
241
00:12:42,721 --> 00:12:43,873
It's a fact. Greenspan's wrong.
242
00:12:43,973 --> 00:12:46,292
(MUFFLED) I don't know
how else you want me to say...
243
00:12:46,392 --> 00:12:47,752
Look, Michael.
244
00:12:47,852 --> 00:12:49,462
Metro Capital backed you four years ago
245
00:12:49,562 --> 00:12:51,339
when you were a doctor with a
246
00:12:51,439 --> 00:12:53,758
dinky webpage and some inheritance money.
247
00:12:53,858 --> 00:12:54,842
We've all done very well.
248
00:12:54,942 --> 00:12:56,052
Why don't you just stick with stocks?
249
00:12:56,152 --> 00:12:58,262
Look. You know me. I, I, I...
250
00:12:58,362 --> 00:13:02,099
I look for value wherever it can be found.
251
00:13:02,199 --> 00:13:03,267
And the fact is
252
00:13:03,367 --> 00:13:06,579
that these mortgage-backed
securities are filled
253
00:13:06,704 --> 00:13:10,107
with extremely risky
subprime adjustable-rate loans.
254
00:13:10,207 --> 00:13:12,693
And when the majority
of the adjustable rates
255
00:13:12,793 --> 00:13:15,045
kick in, in '07,
256
00:13:15,212 --> 00:13:16,364
they will begin to fail.
257
00:13:16,464 --> 00:13:19,784
And if they fail above 15%,
the whole bond is worthless.
258
00:13:19,884 --> 00:13:22,036
Michael, just take a beat.
259
00:13:22,136 --> 00:13:23,329
We'll talk about this later, okay?
260
00:13:23,429 --> 00:13:26,457
Lawrence, please,
don't patronize me. Listen...
261
00:13:26,557 --> 00:13:28,000
JARED: Mortgage-backed securities.
262
00:13:28,100 --> 00:13:29,393
It, it, it...
263
00:13:29,518 --> 00:13:31,295
- Subprime loans. Tranches.
- (QUACKING)
264
00:13:31,395 --> 00:13:33,047
It's pretty confusing, right?
265
00:13:33,147 --> 00:13:35,758
Does it make you feel bored? Or stupid?
266
00:13:35,858 --> 00:13:38,135
Well, it's supposed to.
267
00:13:38,235 --> 00:13:39,804
Wall Street loves to use confusing terms
268
00:13:39,904 --> 00:13:42,573
to make you think only they
can do what they do.
269
00:13:42,907 --> 00:13:44,100
Or, even better,
270
00:13:44,200 --> 00:13:46,560
for you to just leave them the fuck alone.
271
00:13:46,660 --> 00:13:48,604
So here's Margot Robbie
in a bubble bath to explain.
272
00:13:48,704 --> 00:13:49,772
(POPS)
273
00:13:49,872 --> 00:13:52,858
Basically, Lewis Ranieri's mortgage bonds
274
00:13:52,958 --> 00:13:55,236
were amazingly profitable
for the big banks.
275
00:13:55,336 --> 00:13:59,281
They made billions and billions
on their 2% fee
276
00:13:59,381 --> 00:14:01,575
they got for selling each of these bonds.
277
00:14:01,675 --> 00:14:05,079
But then they started running out
of mortgages to put in them.
278
00:14:05,179 --> 00:14:07,832
After all, there are only so many homes
279
00:14:07,932 --> 00:14:11,669
and so many people with
good enough jobs to buy them, right?
280
00:14:11,769 --> 00:14:13,838
So the banks started filling these bonds
281
00:14:13,938 --> 00:14:16,090
with riskier and riskier mortgages.
282
00:14:16,190 --> 00:14:17,341
Thank you, Benter.
283
00:14:17,441 --> 00:14:21,971
That way they can keep
that profit machine churning, right?
284
00:14:22,071 --> 00:14:26,434
By the way, these risky mortgages
are called subprime.
285
00:14:26,534 --> 00:14:28,894
So whenever you hear "subprime", think
286
00:14:28,994 --> 00:14:30,438
"shit".
287
00:14:30,538 --> 00:14:34,066
Our friend Michael Burry found out
that these mortgage bonds
288
00:14:34,166 --> 00:14:37,361
that were supposedly 65% AAA
289
00:14:37,461 --> 00:14:40,214
were actually just mostly full of shit.
290
00:14:40,798 --> 00:14:43,534
So now he's going to "short" the bonds.
291
00:14:43,634 --> 00:14:45,636
Which means to "bet against".
292
00:14:46,470 --> 00:14:47,513
Got it?
293
00:14:48,222 --> 00:14:49,473
Good.
294
00:14:52,560 --> 00:14:53,836
Now fuck off.
295
00:14:53,936 --> 00:14:56,255
It's only a matter of time before
someone else sees this investment.
296
00:14:56,355 --> 00:14:58,048
- We have to act now!
- (BANGING TABLE)
297
00:14:58,148 --> 00:15:00,384
How do you know the bonds are worthless?
298
00:15:00,484 --> 00:15:02,678
Aren't they filled with fucking thousands
299
00:15:02,778 --> 00:15:03,888
of pages of mortgages?
300
00:15:03,988 --> 00:15:06,223
I read them.
301
00:15:06,323 --> 00:15:08,225
- You read them?
- I read... Yes.
302
00:15:08,325 --> 00:15:11,520
No one reads them. Only the lawyers
who put them together read them.
303
00:15:11,620 --> 00:15:16,333
Look, I don't think that they
even know what they've made.
304
00:15:16,458 --> 00:15:19,712
The housing market is propped up on these
305
00:15:20,004 --> 00:15:22,656
bad loans, and I'm... (SIGHS)
306
00:15:22,756 --> 00:15:24,783
It's a time bomb, and I want to short it.
307
00:15:24,883 --> 00:15:27,161
Through what instrument, Michael?
308
00:15:27,261 --> 00:15:30,247
There are no insurance contracts
or options for mortgage bonds.
309
00:15:30,347 --> 00:15:31,599
The bonds are too stable.
310
00:15:31,724 --> 00:15:33,017
Lawrence...
311
00:15:34,143 --> 00:15:36,020
(STUTTERS)
312
00:15:36,353 --> 00:15:40,190
This is what I'm gonna do.
I am gonna get a bank
313
00:15:40,524 --> 00:15:42,568
to make me one.
314
00:15:43,193 --> 00:15:44,862
And then
315
00:15:45,696 --> 00:15:47,406
I'm gonna buy it.
316
00:15:47,740 --> 00:15:48,724
(CAR HONKING)
317
00:15:48,824 --> 00:15:50,559
MARK: I don't want that kind of business.
318
00:15:50,659 --> 00:15:53,329
Money is not money. That's bad money.
319
00:15:53,996 --> 00:15:56,206
Hey! Excuse me!
320
00:15:57,583 --> 00:16:00,486
Let me ask you this.
What company treats its customers
321
00:16:00,586 --> 00:16:03,172
that shittily and succeeds?
322
00:16:04,048 --> 00:16:05,866
- Fine. Okay, Goldman. You're right.
- (HORN HONKING)
323
00:16:05,966 --> 00:16:09,411
JARED: Mark Baum had built his career
on never assuming anyone or any company
324
00:16:09,511 --> 00:16:11,163
was legit without proving it.
325
00:16:11,263 --> 00:16:14,875
When he was a kid he excelled at studying
the Talmud in Yeshiva. Whatever.
326
00:16:14,975 --> 00:16:16,835
But one day his rabbi told his mom why.
327
00:16:16,935 --> 00:16:17,936
(HORN HONKING)
328
00:16:18,062 --> 00:16:21,065
Paul is a fine boy,
and Mark is an excellent student
329
00:16:21,190 --> 00:16:23,759
of the Torah and the Talmud.
330
00:16:23,859 --> 00:16:25,803
Then what's the problem, rabbi?
331
00:16:25,903 --> 00:16:29,073
It's the reason Mark is studying so hard.
332
00:16:29,907 --> 00:16:33,077
He's looking for inconsistencies
in the word of God!
333
00:16:35,829 --> 00:16:37,998
- So has he found any?
- (SCOFFS)
334
00:16:39,083 --> 00:16:42,319
JARED: Later, Baum started
his own fund on Wall Street.
335
00:16:42,419 --> 00:16:43,821
He had an amazing nose for bullshit.
336
00:16:43,921 --> 00:16:45,906
And he wasn't afraid to let
anyone know when and where
337
00:16:46,006 --> 00:16:48,617
the bull had gone number two.
338
00:16:48,717 --> 00:16:50,327
But then a tragedy happened to Mark,
339
00:16:50,427 --> 00:16:51,870
and it turned his world view dark
340
00:16:51,970 --> 00:16:54,290
and ready to believe
the whole system was a lie.
341
00:16:54,390 --> 00:16:55,916
- (PHONE CHIMES)
- Hold on.
342
00:16:56,016 --> 00:16:58,852
It's Cynthia.
I'll be in the office in 20 minutes.
343
00:16:59,770 --> 00:17:00,938
Hi, honey.
344
00:17:01,063 --> 00:17:02,339
(SIRENS WAILING)
345
00:17:02,439 --> 00:17:06,110
The therapist called. You did it again.
346
00:17:06,527 --> 00:17:09,263
There were no cabs.
What was I supposed to do?
347
00:17:09,363 --> 00:17:11,015
I worry about you, Mark.
348
00:17:11,115 --> 00:17:12,449
At least I went.
349
00:17:13,742 --> 00:17:15,686
You're running around
like you have to right
350
00:17:15,786 --> 00:17:17,621
- every wrong in the world.
- Okay.
351
00:17:17,746 --> 00:17:18,897
You're so angry.
352
00:17:18,997 --> 00:17:20,399
Fine. You know what?
353
00:17:20,499 --> 00:17:23,402
I'm a mean guy and I'm pissed off.
354
00:17:23,502 --> 00:17:25,404
But it is a shit storm out here, sweetie.
355
00:17:25,504 --> 00:17:28,782
You have no idea
the kind of crap people are pulling.
356
00:17:28,882 --> 00:17:31,535
And everyone's walking around like
they're in a goddamn Enya video.
357
00:17:31,635 --> 00:17:33,162
(BIRDS CHIRPING)
358
00:17:33,262 --> 00:17:34,705
They're all getting screwed, you know.
359
00:17:34,805 --> 00:17:37,374
You know what they care about?
They care about the ballgame.
360
00:17:37,474 --> 00:17:40,336
Or they care about
what actress just went into rehab.
361
00:17:40,436 --> 00:17:42,463
I think you should try medication.
362
00:17:42,563 --> 00:17:45,716
No, no. We agreed.
If it interfered with work.
363
00:17:45,816 --> 00:17:47,651
You hate Wall Street.
Maybe it's time to quit.
364
00:17:48,152 --> 00:17:50,095
- I love my job.
- You hate your job.
365
00:17:50,195 --> 00:17:51,180
I love my job.
366
00:17:51,280 --> 00:17:52,222
You're miserable.
367
00:17:52,322 --> 00:17:54,324
I love my job. I love my job, honey.
368
00:17:55,284 --> 00:17:56,577
Mark...
369
00:17:57,786 --> 00:18:00,856
I am sad every day about what happened.
370
00:18:00,956 --> 00:18:04,293
I know you must feel the same,
but you never show it.
371
00:18:10,549 --> 00:18:13,051
I know how close you were to your brother.
372
00:18:16,430 --> 00:18:17,514
MARK: Paul.
373
00:18:18,557 --> 00:18:20,184
Where'd you go, Paul?
374
00:18:25,439 --> 00:18:26,690
Paul!
375
00:18:32,362 --> 00:18:35,115
Every day I think you're
gonna talk about it, but you never do.
376
00:18:35,407 --> 00:18:37,643
- (TV PLAYING)
- (TYPING ON LAPTOP)
377
00:18:37,743 --> 00:18:38,744
(BEEPING)
378
00:18:38,994 --> 00:18:42,731
Will you at least think about the idea
of making a change?
379
00:18:42,831 --> 00:18:45,651
Fine. Fine. Honey, you know what?
I will consider it.
380
00:18:45,751 --> 00:18:49,113
But, honestly, Cynthia.
I'm okay. I really am.
381
00:18:49,213 --> 00:18:51,156
Hey, hey, hey! No, no.
382
00:18:51,256 --> 00:18:54,618
My cab. That's my cab.
That's my cab. That is my cab.
383
00:18:54,718 --> 00:18:56,286
- MARK: Schmuck. Fuck you.
- MAN: Fuck you.
384
00:18:56,386 --> 00:18:57,871
- MARK: Fuck you.
- MAN: Fuck you.
385
00:18:57,971 --> 00:18:58,956
(PHONE BEEPS)
386
00:18:59,056 --> 00:19:00,557
I'll call you later.
387
00:19:03,268 --> 00:19:04,353
(HORN HONKING)
388
00:19:07,940 --> 00:19:12,010
I want to buy swaps on mortgage bonds.
389
00:19:12,110 --> 00:19:14,446
A credit default swap that will pay off
390
00:19:15,489 --> 00:19:17,991
if the underlying bond fails.
391
00:19:18,826 --> 00:19:20,310
You want to bet against
the housing market?
392
00:19:20,410 --> 00:19:22,354
- Yes.
- Why?
393
00:19:22,454 --> 00:19:23,605
Those bonds only fail
394
00:19:23,705 --> 00:19:26,150
if millions of Americans
don't pay their mortgages.
395
00:19:26,250 --> 00:19:28,652
That's never happened in history.
396
00:19:28,752 --> 00:19:31,655
If you'll excuse me, Dr. Burry,
it seems like a foolish investment.
397
00:19:31,755 --> 00:19:34,491
Well, based on prevailing sentiment
398
00:19:34,591 --> 00:19:36,618
of the market and banks
in popular culture,
399
00:19:36,718 --> 00:19:38,996
yes, it's a foolish investment.
400
00:19:39,096 --> 00:19:41,598
But, uh... Everyone's wrong.
401
00:19:41,723 --> 00:19:43,083
(BOTH LAUGHING)
402
00:19:43,183 --> 00:19:44,685
That's a good one.
403
00:19:45,519 --> 00:19:46,520
(LAUGHS)
404
00:19:47,020 --> 00:19:48,672
This is Wall Street, Dr. Burry.
405
00:19:48,772 --> 00:19:50,716
If you offer us free money,
we are going to take it.
406
00:19:50,816 --> 00:19:55,445
My one concern is that
when the bonds fail,
407
00:19:56,572 --> 00:20:00,100
uh, I want to be certain, um, of payment
408
00:20:00,200 --> 00:20:02,953
um, in case of solvency issues
with your bank.
409
00:20:03,954 --> 00:20:06,315
I'm sorry, are you for real?
410
00:20:06,415 --> 00:20:09,443
You wanna bet against the housing market
and you're worried we won't pay you?
411
00:20:09,543 --> 00:20:11,128
Yes, that's correct.
412
00:20:11,837 --> 00:20:12,963
(LUCY CLEARS THROAT)
413
00:20:15,507 --> 00:20:16,884
(WHISPERING)
414
00:20:22,472 --> 00:20:24,349
LUCY: (WHISPERING)
...unless the market crashes.
415
00:20:24,474 --> 00:20:26,668
DEEB: (WHISPERS) The market
on housing's never gonna crash
416
00:20:26,768 --> 00:20:29,546
because it's so solid right now.
417
00:20:29,646 --> 00:20:32,399
I mean, who doesn't pay their mortgages?
418
00:20:36,320 --> 00:20:37,321
Mmm-hmm.
419
00:20:39,615 --> 00:20:43,060
(CLEARS THROAT) Dr. Burry, we could
work out a pay-as-we-go structure
420
00:20:43,160 --> 00:20:45,145
that would pay out if the bonds fail.
421
00:20:45,245 --> 00:20:48,774
But it would also apply to your payments
if the value of the mortgage bond goes up.
422
00:20:48,874 --> 00:20:51,568
You'd have to pay us monthly premiums.
423
00:20:51,668 --> 00:20:54,379
LUCY: Is that acceptable, Dr. Burry?
424
00:20:56,840 --> 00:20:58,175
Yes. Yes.
425
00:20:59,051 --> 00:21:01,578
Um, I have prospectuses on six
426
00:21:01,678 --> 00:21:04,556
mortgage-backed securities
I want to short.
427
00:21:06,975 --> 00:21:08,268
(DEEB READING SOFTLY)
428
00:21:09,019 --> 00:21:10,771
LUCY: (WHISPERING)
Majority of the mortgages...
429
00:21:11,438 --> 00:21:12,731
(CHUCKLES)
430
00:21:12,856 --> 00:21:14,191
(LUCY AND DEEB WHISPERING)
431
00:21:15,275 --> 00:21:16,276
(PAGES FLIPPING)
432
00:21:22,074 --> 00:21:24,601
DEEB: (WHISPERING) I don't see us
losing any money on these at all.
433
00:21:24,701 --> 00:21:25,869
(PRINTER WHIRRING)
434
00:21:35,295 --> 00:21:36,296
(INHALES)
435
00:21:38,090 --> 00:21:40,742
Dr. Burry, these should be fine.
436
00:21:40,842 --> 00:21:42,744
Yeah. We're prepared
to sell you $5 million
437
00:21:42,844 --> 00:21:44,721
in credit default swaps
on these mortgage bonds.
438
00:21:45,931 --> 00:21:47,349
Can we make it $100 million?
439
00:21:50,227 --> 00:21:52,604
Uh, absolutely,
we can make it $100 million.
440
00:21:54,189 --> 00:21:57,401
LUCY: We'll be in touch,
send some paperwork over.
441
00:21:58,235 --> 00:21:59,236
DEEB: Um...
442
00:22:00,362 --> 00:22:01,722
(SIGHING) I like these cups.
443
00:22:01,822 --> 00:22:03,473
(STUTTERING) Can I take one for my son?
444
00:22:03,573 --> 00:22:05,309
LUCY: Have... Yes. Yes.
445
00:22:05,409 --> 00:22:06,894
Thank you.
446
00:22:06,994 --> 00:22:08,370
LUCY: Have two.
447
00:22:13,792 --> 00:22:16,545
(INAUDIBLE)
448
00:22:16,962 --> 00:22:18,547
(HIP HOP MUSIC PLAYING)
449
00:22:28,348 --> 00:22:31,351
Is there any way to do $200 million?
450
00:22:32,811 --> 00:22:35,439
I mean, we can. But are you sure?
451
00:22:36,356 --> 00:22:39,526
Absolutely. Absolutely, we can do that.
452
00:22:53,248 --> 00:22:56,610
We do different projects. We do gardening.
453
00:22:56,710 --> 00:22:59,963
The bonds I'd like to bet against.
454
00:23:00,172 --> 00:23:01,657
It's not bad seeing yourself
on the big screen.
455
00:23:01,757 --> 00:23:02,758
It's very cool.
456
00:23:03,800 --> 00:23:07,454
I ordered the 24-ounce T-bone,
which was choice.
457
00:23:07,554 --> 00:23:08,997
- I went for volume...
- WOMAN: Yeah.
458
00:23:09,097 --> 00:23:10,707
...rather than prime.
459
00:23:10,807 --> 00:23:13,477
I went for subprime, and the gist was...
460
00:23:18,940 --> 00:23:19,941
(HORN HONKING)
461
00:23:20,817 --> 00:23:23,320
MAN: Can I have like, lettuce,
tomato, no onions?
462
00:23:23,945 --> 00:23:27,224
WOMAN: So, no onions.
Lettuce, tomato, Thousand Island okay?
463
00:23:27,324 --> 00:23:28,325
MAN: Yeah.
464
00:23:32,162 --> 00:23:33,705
(INDISTINCT CONVERSATIONS)
465
00:23:35,373 --> 00:23:37,067
Hey, Randall! What's with the Dom?
466
00:23:37,167 --> 00:23:39,027
Bonuses aren't for three months.
467
00:23:39,127 --> 00:23:43,073
We just sold $200 million
in credit swaps for mortgage bonds.
468
00:23:43,173 --> 00:23:45,342
Some fund manager from California.
469
00:23:45,467 --> 00:23:46,785
It's fucking crazy, right?
470
00:23:46,885 --> 00:23:47,953
A whole new way to make money, Doug.
471
00:23:48,053 --> 00:23:50,288
Wait, wait. I didn't know
there were swaps on mortgages.
472
00:23:50,388 --> 00:23:52,958
(LAUGHS) There are now.
We made it for him.
473
00:23:53,058 --> 00:23:54,710
He must have gone off
his Zoloft or something.
474
00:23:54,810 --> 00:23:56,128
I don't know. (CHUCKLES)
475
00:23:56,228 --> 00:23:57,963
- Want to join? No?
- Just a second.
476
00:23:58,063 --> 00:23:59,064
Oh...
477
00:23:59,231 --> 00:24:00,632
DOUG: Hey, Jared.
478
00:24:00,732 --> 00:24:02,175
Did you hear about the deal
that Randall just did
479
00:24:02,275 --> 00:24:03,468
with some fund manager?
480
00:24:03,568 --> 00:24:05,362
JARED: Randall? Bullshit.
481
00:24:05,821 --> 00:24:07,639
He's a foot soldier.
I'm sure it's a shit deal.
482
00:24:07,739 --> 00:24:08,990
No, it's for real.
483
00:24:10,200 --> 00:24:11,601
I told you we'd meet later.
484
00:24:11,701 --> 00:24:14,104
Unfortunately, it's in a place like this
which I would never be.
485
00:24:14,204 --> 00:24:16,857
I never hung out with
these idiots after work, ever.
486
00:24:16,957 --> 00:24:18,750
I had fashion friends.
487
00:24:19,167 --> 00:24:22,487
Apparently, this guy wanted $200 mil
in credit default swaps.
488
00:24:22,587 --> 00:24:24,322
Randall made the sale. Can you believe it?
489
00:24:24,422 --> 00:24:26,616
Somebody shorted $200 mil
on mortgage bonds?
490
00:24:26,716 --> 00:24:30,137
That was just with Deutsche.
Word is he hit half the town.
491
00:24:31,012 --> 00:24:32,122
How much in total?
492
00:24:32,222 --> 00:24:33,915
$1.3 billion.
493
00:24:34,015 --> 00:24:37,836
LAWRENCE: What? That's pretty much
all of Scion's liquidity.
494
00:24:37,936 --> 00:24:40,005
Michael, this is highly distressing.
495
00:24:40,105 --> 00:24:41,506
Lawrence, that is not
496
00:24:41,606 --> 00:24:44,134
all of our liquidity.
497
00:24:44,234 --> 00:24:45,427
And I'm not certain
498
00:24:45,527 --> 00:24:47,737
that you really understand this trade.
499
00:24:47,863 --> 00:24:48,889
This is a certainty.
500
00:24:48,989 --> 00:24:52,059
Mike, I consider myself a mentor to you.
501
00:24:52,159 --> 00:24:55,979
But our company is not comfortable
with this investment. Am I being clear?
502
00:24:56,079 --> 00:24:58,315
Lawrence, I have full autonomy
503
00:24:58,415 --> 00:25:01,318
when it comes to investment strategy.
504
00:25:01,418 --> 00:25:02,527
(SIGHS) You can read our agreement.
505
00:25:02,627 --> 00:25:05,947
Do not throw our inception agreement
in my face, Michael.
506
00:25:06,047 --> 00:25:08,425
- We had an underlying understanding
- (COMPUTER BEEPS)
507
00:25:08,592 --> 00:25:09,785
you wouldn't act like a goddamn crazy man.
508
00:25:09,885 --> 00:25:11,453
This is not crazy.
509
00:25:11,553 --> 00:25:12,996
It's all very logical.
510
00:25:13,096 --> 00:25:15,307
So, now we pay up premiums on these swaps
511
00:25:15,891 --> 00:25:18,627
against the housing market
until the mortgages fail?
512
00:25:18,727 --> 00:25:20,395
In other words, we lose millions
513
00:25:20,520 --> 00:25:23,190
until something that's
never happened before happens?
514
00:25:27,068 --> 00:25:28,069
That's correct.
515
00:25:32,365 --> 00:25:34,075
(TELEPHONES RINGING)
516
00:26:01,603 --> 00:26:02,838
KATHY: Hello, Mark Baum.
517
00:26:02,938 --> 00:26:05,006
Oh, hey, Kathy, you busted me.
518
00:26:05,106 --> 00:26:06,049
I had a personal thing this afternoon.
519
00:26:06,149 --> 00:26:07,134
I'm not your babysitter.
520
00:26:07,234 --> 00:26:09,845
If FrontPoint makes money
for Morgan Stanley, I'm happy.
521
00:26:09,945 --> 00:26:12,222
Okay. Hey, did I hear you're expecting?
522
00:26:12,322 --> 00:26:13,682
We're expecting to be expecting.
523
00:26:13,782 --> 00:26:15,433
IVF's are cleaning us out
but we're staying positive...
524
00:26:15,533 --> 00:26:17,035
That's exciting!
525
00:26:18,328 --> 00:26:19,329
(CHUCKLES)
526
00:26:21,164 --> 00:26:24,167
...lump on my ball.
And I go in for a scan.
527
00:26:24,292 --> 00:26:25,277
Mmm-hmm.
528
00:26:25,377 --> 00:26:29,072
Turns out that I have a very large thing
called an epididymis.
529
00:26:29,172 --> 00:26:31,700
Which is a thing that goes around the ball
530
00:26:31,800 --> 00:26:33,493
and is like a sac underneath.
531
00:26:33,593 --> 00:26:34,619
I have an extremely
532
00:26:34,719 --> 00:26:36,538
- pronounced epididymis.
- PORTER: I'm riveted...
533
00:26:36,638 --> 00:26:38,665
I'm riveted by this.
Do you have any pictures?
534
00:26:38,765 --> 00:26:42,294
DANNY: It's almost as large
as another testicle unto itself.
535
00:26:42,394 --> 00:26:44,462
So get this. Cynthia...
536
00:26:44,562 --> 00:26:47,591
Guys. Cynthia wants me to quit
and open a B&B in Vermont.
537
00:26:47,691 --> 00:26:48,800
(VINNIE LAUGHING)
538
00:26:48,900 --> 00:26:52,262
That sounds great. I'd love to see
Mark Baum run a bed and breakfast.
539
00:26:52,362 --> 00:26:54,306
Like, "Here's your
steel-cut oatmeal, asshole."
540
00:26:54,406 --> 00:26:56,975
JARED: Mark refused to kiss the ring
of the people with the checkbooks,
541
00:26:57,075 --> 00:27:00,103
so he had to set up his fund
under Morgan Stanley's umbrella.
542
00:27:00,203 --> 00:27:01,271
(LAUGHING)
543
00:27:01,371 --> 00:27:03,899
His small team reflected
his distrust of the system.
544
00:27:03,999 --> 00:27:05,417
You guys are sick. You're sick.
545
00:27:05,542 --> 00:27:07,652
She says this job is making me unhappy.
546
00:27:07,752 --> 00:27:08,778
VINNIE: But you're happy
when you're unhappy.
547
00:27:08,878 --> 00:27:10,363
I am happy when I'm unhappy.
548
00:27:10,463 --> 00:27:11,448
JARED: Vinnie Daniel.
549
00:27:11,548 --> 00:27:12,657
You know how to make a muffin?
550
00:27:12,757 --> 00:27:14,451
- Mark's numbers guy.
- Do you even know how
551
00:27:14,551 --> 00:27:15,994
- to do laundry? Make a bed?
- MARK: Okay...
552
00:27:16,094 --> 00:27:18,705
Vinnie lost his father to a violent crime
when he was young.
553
00:27:18,805 --> 00:27:20,624
Just like Mark, he didn't talk about it.
554
00:27:20,724 --> 00:27:21,958
I don't talk about that.
555
00:27:22,058 --> 00:27:24,377
Cynthia's no joke. She could
actually make him move to Vermont.
556
00:27:24,477 --> 00:27:26,129
I mean, she made me
start wearing a seatbelt.
557
00:27:26,229 --> 00:27:27,939
- Hey, you want me to...
- JARED: Porter Collins.
558
00:27:28,064 --> 00:27:30,217
Former Olympic rower who went to Brown.
559
00:27:30,317 --> 00:27:31,968
He worked with Baum at a previous firm
560
00:27:32,068 --> 00:27:33,970
and couldn't figure out
why no one listened to Baum.
561
00:27:34,070 --> 00:27:36,139
The guy with all the good ideas.
562
00:27:36,239 --> 00:27:38,033
Sorry. I think you have
the wrong FrontPoint.
563
00:27:38,158 --> 00:27:40,894
'Cause there is another FrontPoint
in this same building that is bonds.
564
00:27:40,994 --> 00:27:43,747
And Danny Moses.
The optimist of the bunch.
565
00:27:44,664 --> 00:27:45,857
And a hell of a trader.
566
00:27:45,957 --> 00:27:49,069
Which is the only reason they put up
with his bullshit optimism.
567
00:27:49,169 --> 00:27:50,403
DANNY: That was a weird call.
568
00:27:50,503 --> 00:27:53,782
You take longer with a wrong number
than anybody else.
569
00:27:53,882 --> 00:27:56,493
It was this guy from Deutsche
570
00:27:56,593 --> 00:27:59,179
who was talking about
shorting housing bonds.
571
00:28:00,555 --> 00:28:02,999
And then in the middle of the call
I realized he had the wrong FrontPoint.
572
00:28:03,099 --> 00:28:05,435
And then... 'Cause he wanted
the one on the 8th floor.
573
00:28:06,102 --> 00:28:08,004
He wanted to short housing bonds?
574
00:28:08,104 --> 00:28:09,130
Uh-huh. That happens like five times a day
575
00:28:09,230 --> 00:28:10,674
that somebody gets the wrong FrontPoint.
576
00:28:10,774 --> 00:28:12,926
- We should change our name.
- VINNIE: Wait. Wait.
577
00:28:13,026 --> 00:28:14,986
He wanted to short housing bonds?
578
00:28:15,278 --> 00:28:17,072
- Who bets against housing?
- (TYPING ON COMPUTER)
579
00:28:18,031 --> 00:28:19,240
VINNIE: What's the ABX at?
580
00:28:19,366 --> 00:28:20,517
What's ABX?
581
00:28:20,617 --> 00:28:23,453
It tracks subprime mortgage bond value.
Go back to sleep.
582
00:28:23,870 --> 00:28:26,164
- The ABX is at, uh...
- (BEEPING)
583
00:28:26,289 --> 00:28:29,526
Wow, it's down! It's down
three points since last year.
584
00:28:29,626 --> 00:28:31,861
That's weird. I haven't
heard a peep about that.
585
00:28:31,961 --> 00:28:32,988
What was this guy's name?
586
00:28:33,088 --> 00:28:35,198
Jared Vennett. Vennett.
587
00:28:35,298 --> 00:28:37,534
JARED: That's right.
These lucky sons of bitches
588
00:28:37,634 --> 00:28:40,370
caught wind of one of the best trades
in Wall Street history
589
00:28:40,470 --> 00:28:42,038
from a wrong number.
590
00:28:42,138 --> 00:28:44,374
They should have paid 10%
to my fuckstick assistant.
591
00:28:44,474 --> 00:28:46,793
DANNY:
His name was Jared Vennett. Vennett.
592
00:28:46,893 --> 00:28:48,712
Jared Vennett from Deutsche.
Sounded very sketchy.
593
00:28:48,812 --> 00:28:49,813
VINNIE: Sounds like a douchebag.
594
00:28:50,647 --> 00:28:52,424
(WHISPERING) Do you smell that?
595
00:28:52,524 --> 00:28:53,858
Do you smell that?
596
00:28:53,983 --> 00:28:55,235
I smell money.
597
00:28:56,027 --> 00:28:57,445
This is your basic mortgage...
598
00:29:01,241 --> 00:29:03,410
Okay, hi. How are you?
599
00:29:03,952 --> 00:29:05,145
Have a seat.
600
00:29:05,245 --> 00:29:07,997
MARK: Okay, Mr. Vennett
from Deutsche Bank. What do we have?
601
00:29:12,544 --> 00:29:14,129
There you go.
602
00:29:17,590 --> 00:29:20,118
MARK: So, how many people
have you talked to about this trade?
603
00:29:20,218 --> 00:29:22,954
A few. There's definitely some interest.
604
00:29:23,054 --> 00:29:24,456
- No!
- My boss would have my ass...
605
00:29:24,556 --> 00:29:25,957
- N.O.!
- You crazy, Jared?
606
00:29:26,057 --> 00:29:27,600
- Get lost.
- Fuck you.
607
00:29:28,351 --> 00:29:31,129
Which is why you're here talking to us,
a wrong number.
608
00:29:31,229 --> 00:29:32,630
Sounds like there's a lot of interest.
609
00:29:32,730 --> 00:29:35,050
All right. A few people have invited us in
610
00:29:35,150 --> 00:29:37,510
just to laugh at me on this deal.
Is that you?
611
00:29:37,610 --> 00:29:38,595
Is that what this is?
612
00:29:38,695 --> 00:29:39,721
VINNIE: That's not what this is.
613
00:29:39,821 --> 00:29:41,598
That's just how Mark is.
614
00:29:41,698 --> 00:29:42,974
- Let's see what you got.
- I'm sorry.
615
00:29:43,074 --> 00:29:44,742
You smell that? What is that?
616
00:29:44,868 --> 00:29:46,286
- MARK: What?
- What's that smell?
617
00:29:46,703 --> 00:29:47,687
Your cologne?
618
00:29:47,787 --> 00:29:48,830
JARED: No.
619
00:29:51,082 --> 00:29:52,375
Opportunity.
620
00:29:52,500 --> 00:29:53,777
No. Money.
621
00:29:53,877 --> 00:29:55,153
- Oh...
- MARK: Okay.
622
00:29:55,253 --> 00:29:56,796
- I smell money.
- Okay.
623
00:29:57,297 --> 00:29:59,966
- Chris, God damn it.
- Sorry.
624
00:30:03,178 --> 00:30:05,580
JARED: This is your basic mortgage bond.
625
00:30:05,680 --> 00:30:07,916
All right? The originals were simple.
626
00:30:08,016 --> 00:30:11,669
They were just thousands
of AAA mortgages bundled together,
627
00:30:11,769 --> 00:30:13,505
guaranteed by the U.S. government.
628
00:30:13,605 --> 00:30:15,423
The modern ones are different.
629
00:30:15,523 --> 00:30:18,443
They're private. And they're
made up of layers of tranches.
630
00:30:23,698 --> 00:30:26,101
The highest level, AAA,
is getting paid first.
631
00:30:26,201 --> 00:30:29,354
The lowest rated, B, is getting paid last,
taking on defaults first.
632
00:30:29,454 --> 00:30:32,107
Now, obviously, if you're buying B's,
you could make more money.
633
00:30:32,207 --> 00:30:33,358
But they're a little risky.
634
00:30:33,458 --> 00:30:35,627
Sometimes they fail.
635
00:30:36,878 --> 00:30:38,213
Chris?
636
00:30:42,050 --> 00:30:44,285
Somewhere along the line,
these B's and BB's
637
00:30:44,385 --> 00:30:45,829
went from a little risky
638
00:30:45,929 --> 00:30:48,331
to dog shit. Where's the trash?
639
00:30:48,431 --> 00:30:49,432
PORTER: It's right behind you.
640
00:30:49,807 --> 00:30:52,669
I'm talking rock-bottom FICO scores.
641
00:30:52,769 --> 00:30:53,770
(THUNKING)
642
00:30:53,895 --> 00:30:55,380
No income verification.
643
00:30:55,480 --> 00:30:56,506
(THUNKING)
644
00:30:56,606 --> 00:30:59,442
Adjustable rates. Dog shit!
645
00:31:00,902 --> 00:31:03,721
The default rates are already up
from 1% to 4%, fellas.
646
00:31:03,821 --> 00:31:06,032
And if they rise to 8%, and they will,
647
00:31:06,824 --> 00:31:09,060
a lot of these BBB's
are going to zero, too.
648
00:31:09,160 --> 00:31:10,578
And that... You're too close.
649
00:31:12,330 --> 00:31:13,314
...is an opportunity.
650
00:31:13,414 --> 00:31:14,357
- (EXHALES)
- MARK: Okay.
651
00:31:14,457 --> 00:31:18,069
You're saying that at 8% the bonds fail
and we are already at 4%?
652
00:31:18,169 --> 00:31:19,154
That's right.
653
00:31:19,254 --> 00:31:21,030
If they go to 8%, it's Armageddon?
654
00:31:21,130 --> 00:31:22,131
Yeah. That's right.
655
00:31:22,257 --> 00:31:23,967
How come nobody's talking about this?
656
00:31:24,092 --> 00:31:26,202
You're completely sure of the math?
657
00:31:26,302 --> 00:31:28,872
Look at him. That's my quant.
658
00:31:28,972 --> 00:31:29,998
MARK: Your what?
659
00:31:30,098 --> 00:31:31,875
My quantitative!
660
00:31:31,975 --> 00:31:34,644
My math specialist. Look at him.
661
00:31:34,769 --> 00:31:37,088
You notice anything different about him?
Look at his face.
662
00:31:37,188 --> 00:31:38,214
MARK: That's pretty racist.
663
00:31:38,314 --> 00:31:40,800
JARED: Look at his eyes!
I'll give you a hint.
664
00:31:40,900 --> 00:31:42,443
His name's Yang!
665
00:31:43,611 --> 00:31:46,890
He won a national
math competition in China!
666
00:31:46,990 --> 00:31:49,476
He doesn't even speak English!
667
00:31:49,576 --> 00:31:51,244
Yeah, I'm sure of the math.
668
00:31:52,954 --> 00:31:56,733
Actually, my name's Jiang
and I do speak English.
669
00:31:56,833 --> 00:32:00,195
Jared likes to say I don't because he
thinks it makes me seem more authentic.
670
00:32:00,295 --> 00:32:02,839
And I got second in that
national math competition.
671
00:32:03,423 --> 00:32:08,286
So you're offering us a chance
to short this pile of blocks? How?
672
00:32:08,386 --> 00:32:10,830
With something called
a credit default swap.
673
00:32:10,930 --> 00:32:12,040
(CLAPS HANDS)
674
00:32:12,140 --> 00:32:14,626
It's like insurance on the bond,
and if it goes bust
675
00:32:14,726 --> 00:32:17,879
you can make 10-to-1, even 20-to-1 return.
676
00:32:17,979 --> 00:32:20,106
And it's already slowly going bust!
677
00:32:20,356 --> 00:32:22,425
10-to-1? 20-to-1? No way.
678
00:32:22,525 --> 00:32:24,485
JARED: And no one's paying attention.
679
00:32:24,986 --> 00:32:27,388
No one is paying attention!
680
00:32:27,488 --> 00:32:30,934
Because the banks are too busy
getting paid obscene fees
681
00:32:31,034 --> 00:32:32,310
to sell these bonds.
682
00:32:32,410 --> 00:32:35,146
But wait. You are the bank.
You work for the bank.
683
00:32:35,246 --> 00:32:37,273
I bet your margins
are pretty nice and fat.
684
00:32:37,373 --> 00:32:39,651
Let's not talk about
my margins, by the way.
685
00:32:39,751 --> 00:32:41,778
Being nice and fat, that's a nice shirt.
Do they make it for men?
686
00:32:41,878 --> 00:32:43,071
(DANNY AND PORTER SNICKERING)
687
00:32:43,171 --> 00:32:44,113
VINNIE: Aren't you the bank?
688
00:32:44,213 --> 00:32:47,116
I work for the bank.
I don't think like a bank.
689
00:32:47,216 --> 00:32:51,079
Big bank, small bank,
I like to make money. All right?
690
00:32:51,179 --> 00:32:53,890
Let me put it this way.
I'm standing in front of a burning house...
691
00:32:54,015 --> 00:32:56,751
And I'm offering you fire insurance on it.
692
00:32:56,851 --> 00:32:59,354
How can these underlying bonds
be as bad as you say?
693
00:32:59,479 --> 00:33:00,672
It wouldn't be legal. (CLEARS THROAT)
694
00:33:00,772 --> 00:33:02,715
Nobody knows what's in them.
695
00:33:02,815 --> 00:33:04,300
Nobody knows what's in the bonds.
696
00:33:04,400 --> 00:33:07,470
I've seen some that are 65% AAA-rated
697
00:33:07,570 --> 00:33:10,515
that I know for a fact are filled with 95%
698
00:33:10,615 --> 00:33:13,409
subprime shit with FICOs below 550!
699
00:33:13,868 --> 00:33:14,978
Get the fuck out of here.
700
00:33:15,078 --> 00:33:16,437
You want me to really blow your mind?
701
00:33:16,537 --> 00:33:20,358
When the market deems a bond too risky
to buy, what do you think we do with it?
702
00:33:20,458 --> 00:33:21,568
Take a guess.
703
00:33:21,668 --> 00:33:23,069
I don't know. You tell me.
704
00:33:23,169 --> 00:33:27,073
All right. You think we just
warehouse it on the books? No.
705
00:33:27,173 --> 00:33:29,075
We just repackage it
with a bunch of other shit
706
00:33:29,175 --> 00:33:31,260
that didn't sell and put it into a CDO.
707
00:33:32,095 --> 00:33:34,138
- MARK: A CDO?
- JARED: Yes. A CDO.
708
00:33:34,931 --> 00:33:36,666
- What is that?
- This is where we take a bunch of B's,
709
00:33:36,766 --> 00:33:38,918
BB's and BBB's that haven't sold,
710
00:33:39,018 --> 00:33:40,687
- and we put them in a pile.
- (CLATTERING)
711
00:33:42,230 --> 00:33:44,190
JARED: And when the pile
gets large enough,
712
00:33:44,315 --> 00:33:46,843
the whole thing is suddenly
considered diversified
713
00:33:46,943 --> 00:33:51,639
and the whores at the rating agency
give it a 92%-93% AAA rating,
714
00:33:51,739 --> 00:33:53,741
no questions asked.
715
00:33:54,158 --> 00:33:55,159
(EXHALES)
716
00:33:55,410 --> 00:33:57,912
Hold it. What? Say that again.
717
00:33:58,204 --> 00:34:00,440
A collateralized debt obligation.
718
00:34:00,540 --> 00:34:02,025
It's important to understand
because it's what allowed
719
00:34:02,125 --> 00:34:06,237
a housing crisis to become
a nationwide economic disaster.
720
00:34:06,337 --> 00:34:09,549
Here's world-famous chef
Anthony Bourdain to explain.
721
00:34:09,674 --> 00:34:11,050
(LAUGHS)
722
00:34:14,137 --> 00:34:15,805
ANTHONY:
Okay, I'm a chef on a Sunday afternoon
723
00:34:15,972 --> 00:34:17,640
setting the menu at a big restaurant.
724
00:34:17,807 --> 00:34:19,208
I ordered my fish on Friday,
725
00:34:19,308 --> 00:34:22,019
which is the mortgage bond
that Michael Burry shorted.
726
00:34:22,228 --> 00:34:24,213
But some of the fresh fish doesn't sell.
727
00:34:24,313 --> 00:34:27,675
I don't know why. Maybe it just came out
halibut has the intelligence of a dolphin.
728
00:34:27,775 --> 00:34:29,469
So, what am I going to do?
729
00:34:29,569 --> 00:34:33,056
Throw all this unsold fish,
which is the BBB level of the bond,
730
00:34:33,156 --> 00:34:35,616
in the garbage and take the loss?
731
00:34:36,576 --> 00:34:37,560
No way.
732
00:34:37,660 --> 00:34:40,063
Being the crafty
and morally onerous chef that I am,
733
00:34:40,163 --> 00:34:42,832
whatever crappy levels
of the bond I don't sell,
734
00:34:42,957 --> 00:34:44,901
I throw into a seafood stew.
735
00:34:45,001 --> 00:34:48,404
See, it's not old fish.
It's a whole new thing!
736
00:34:48,504 --> 00:34:52,200
And the best part is
they're eating 3-day-old halibut.
737
00:34:52,300 --> 00:34:53,968
That is a CDO.
738
00:34:54,093 --> 00:34:56,913
PORTER: I just need to know,
how could these possibly be collated?
739
00:34:57,013 --> 00:34:59,415
Somehow you're like Dora the Explorer
740
00:34:59,515 --> 00:35:00,750
and you're the first person
741
00:35:00,850 --> 00:35:02,168
- who found this thing.
- Hold on. Hold on.
742
00:35:02,268 --> 00:35:04,128
So mortgage bonds are dog shit,
743
00:35:04,228 --> 00:35:06,422
CDOs are dog shit wrapped in cat shit.
744
00:35:06,522 --> 00:35:07,523
(BUZZING)
745
00:35:07,982 --> 00:35:09,801
Yeah, that's right.
746
00:35:09,901 --> 00:35:13,388
Institutions treat these CDOs
like they're as solid as treasury bonds,
747
00:35:13,488 --> 00:35:14,722
and they're going to zero.
748
00:35:14,822 --> 00:35:15,848
(CLATTERING)
749
00:35:15,948 --> 00:35:18,142
DANNY: No. That can't be right.
There were $500 billion
750
00:35:18,242 --> 00:35:20,578
in housing bonds sold last year alone.
751
00:35:20,870 --> 00:35:23,481
The rating agencies, the banks,
the fucking government,
752
00:35:23,581 --> 00:35:25,566
you're saying they're
all asleep at the wheel?
753
00:35:25,666 --> 00:35:29,128
Yeah. My whole department's
long on this stuff.
754
00:35:30,004 --> 00:35:33,883
They call me Chicken Little.
They call me Bubble Boy.
755
00:35:36,552 --> 00:35:39,972
- A's, zero. B's, zero.
- (CLATTERING)
756
00:35:40,264 --> 00:35:43,518
BB's, zero. BBB's, zero.
757
00:35:45,937 --> 00:35:47,296
And then that happens.
758
00:35:47,396 --> 00:35:49,065
What is that?
759
00:35:50,942 --> 00:35:52,652
That's America's housing market.
760
00:35:55,613 --> 00:35:56,639
Thank you.
761
00:35:56,739 --> 00:35:57,724
Fuckin' A, Jared.
762
00:35:57,824 --> 00:35:59,809
Shut your fucking mouth.
763
00:35:59,909 --> 00:36:02,078
- ...hang out with you.
- MARK: Good. Okay.
764
00:36:02,203 --> 00:36:04,313
JARED: Sack up, do the deal.
Let's be friends.
765
00:36:04,413 --> 00:36:05,606
MARK: We will see. Thank you.
766
00:36:05,706 --> 00:36:06,733
- JARED: Don't bullshit me.
- MARK: All right.
767
00:36:06,833 --> 00:36:07,917
JARED: You're gonna say no, aren't you?
768
00:36:08,042 --> 00:36:10,486
MIKE: No. No, I'm just
evaluating right now.
769
00:36:10,586 --> 00:36:12,296
- Thank you. Thank you for coming in.
- (DOOR OPENS)
770
00:36:13,381 --> 00:36:14,715
Bye, Jared.
771
00:36:20,763 --> 00:36:22,181
VINNIE: I don't like it.
772
00:36:23,140 --> 00:36:24,809
He's playing us.
773
00:36:25,935 --> 00:36:27,754
He's playing us.
He's got too much skin in the game
774
00:36:27,854 --> 00:36:29,522
and he's dumping his position.
775
00:36:30,481 --> 00:36:31,966
What if he's right?
776
00:36:32,066 --> 00:36:33,134
You want him to be right.
777
00:36:33,234 --> 00:36:34,777
MARK: Yes, I do.
778
00:36:35,361 --> 00:36:38,431
The banks have given us
25% interest rates on credit cards.
779
00:36:38,531 --> 00:36:40,224
They have screwed us on student loans
780
00:36:40,324 --> 00:36:42,059
that we can never get out from under.
781
00:36:42,159 --> 00:36:45,354
Then this guy walks into
my office and says
782
00:36:45,454 --> 00:36:48,399
those same banks got greedy,
they lost track of the market,
783
00:36:48,499 --> 00:36:50,526
and I can profit off of their stupidity?
784
00:36:50,626 --> 00:36:52,862
Fuck, yeah, I want him to be right!
785
00:36:52,962 --> 00:36:54,197
VINNIE: How come you don't hate this guy?
786
00:36:54,297 --> 00:36:55,948
He's everything
you taught us not to trust.
787
00:36:56,048 --> 00:36:57,742
I can't hate him. He is so transparent
788
00:36:57,842 --> 00:37:00,203
in his self-interest
that I kind of respect him.
789
00:37:00,303 --> 00:37:03,389
- Would I buy a car from him? No.
- (PORTER CHUCKLES)
790
00:37:03,639 --> 00:37:04,874
Is he right about the mortgage market?
791
00:37:04,974 --> 00:37:07,184
- No.
- Let's find out. Let's find out.
792
00:37:08,769 --> 00:37:10,588
Look. It's two very simple questions.
793
00:37:10,688 --> 00:37:12,173
Is there a housing bubble?
794
00:37:12,273 --> 00:37:14,842
And if there is,
how exposed are the banks?
795
00:37:14,942 --> 00:37:15,968
PORTER: Yeah. Okay.
796
00:37:16,068 --> 00:37:17,470
Let's get on this quickly too.
797
00:37:17,570 --> 00:37:18,930
Because if he's right,
798
00:37:19,030 --> 00:37:22,491
every loser with a couple million bucks
and a fund is gonna be jumping on this.
799
00:37:23,034 --> 00:37:24,035
Let's go.
800
00:37:25,036 --> 00:37:26,037
(ELEVATOR DINGS)
801
00:37:26,329 --> 00:37:27,830
WOMAN: Just that morning...
802
00:37:29,332 --> 00:37:31,125
(BREATHING DEEPLY)
803
00:37:32,001 --> 00:37:35,338
JPMorgan Chase. JPMorgan Chase.
804
00:37:37,173 --> 00:37:39,450
JAMIE: Okay. Stop saying "JPMorgan Chase".
805
00:37:39,550 --> 00:37:40,952
I got a good feeling about this.
806
00:37:41,052 --> 00:37:42,136
It's just a meeting though, you know?
807
00:37:43,262 --> 00:37:44,747
It's just a meeting.
It's something like...
808
00:37:44,847 --> 00:37:46,958
People have meetings
all the time. You know?
809
00:37:47,058 --> 00:37:48,668
People drink their coffee,
they have a meeting.
810
00:37:48,768 --> 00:37:50,086
- CHRIS: Brownfield Fund?
- JAMIE: Yes!
811
00:37:50,186 --> 00:37:52,046
- Hey. Hello.
- CHARLIE: Ted.
812
00:37:52,146 --> 00:37:53,481
Chris. I'm on Ted's desk.
813
00:37:53,606 --> 00:37:54,924
Chris. Okay.
814
00:37:55,024 --> 00:37:56,175
- I'm Charlie, Charlie Geller.
- Charlie.
815
00:37:56,275 --> 00:37:57,885
- Jamie Shipley. Hi.
- Jamie.
816
00:37:57,985 --> 00:38:00,930
We're so excited to get set up
on your trading platform.
817
00:38:01,030 --> 00:38:02,139
Cool.
818
00:38:02,239 --> 00:38:04,033
Here, have a seat a second.
819
00:38:04,784 --> 00:38:05,785
All right.
820
00:38:06,869 --> 00:38:09,772
So, I... Ted had asked me
to do some meeting prep.
821
00:38:09,872 --> 00:38:13,234
But I couldn't find
any marketing material on you guys.
822
00:38:13,334 --> 00:38:15,152
We just moved here from Boulder.
823
00:38:15,252 --> 00:38:16,737
- Yeah.
- Got it.
824
00:38:16,837 --> 00:38:19,198
Could we see some
of your offering documents?
825
00:38:19,298 --> 00:38:21,801
Well, Brownfield is its own money.
826
00:38:22,385 --> 00:38:24,078
- It's our money.
- Yeah.
827
00:38:24,178 --> 00:38:25,955
Can you tell us how much you manage?
828
00:38:26,055 --> 00:38:29,500
Of course. We're doing
$30 million right now.
829
00:38:29,600 --> 00:38:30,793
Um, but we started
830
00:38:30,893 --> 00:38:33,629
- four years ago with $110,000.
- CHRIS: Wow.
831
00:38:33,729 --> 00:38:38,342
So, as you can see,
that's pretty phenomenal returns.
832
00:38:38,442 --> 00:38:41,654
We want to get an ISDA agreement
with JPMorgan so we can
833
00:38:41,779 --> 00:38:44,265
deal in long-term options.
834
00:38:44,365 --> 00:38:45,700
- That's really cool.
- Yeah.
835
00:38:58,587 --> 00:39:00,364
That is so cool.
836
00:39:00,464 --> 00:39:01,532
Thank you.
837
00:39:01,632 --> 00:39:05,803
But you guys are under
the capital requirements for an ISDA.
838
00:39:05,928 --> 00:39:06,929
By how much?
839
00:39:07,596 --> 00:39:08,597
Uh...
840
00:39:08,806 --> 00:39:12,184
One billion four hundred
seventy million, so...
841
00:39:13,185 --> 00:39:14,729
...a lot.
842
00:39:15,980 --> 00:39:17,423
This makes us look bad, doesn't it,
843
00:39:17,523 --> 00:39:20,676
that we didn't know
what the capital requirements were?
844
00:39:20,776 --> 00:39:21,777
Uh...
845
00:39:22,361 --> 00:39:23,779
It's not great.
846
00:39:24,280 --> 00:39:25,556
But, uh,
847
00:39:25,656 --> 00:39:28,100
keep up those returns and give us a call
848
00:39:28,200 --> 00:39:29,977
way down the line. You know.
849
00:39:30,077 --> 00:39:31,062
Okay?
850
00:39:31,162 --> 00:39:32,455
- Okay.
- Thanks, Chris.
851
00:39:32,580 --> 00:39:33,522
Have a good one, guys.
852
00:39:33,622 --> 00:39:34,665
CHARLIE: Thank you, Chris.
853
00:39:37,168 --> 00:39:38,169
(SIGHS)
854
00:39:38,961 --> 00:39:39,962
Shit!
855
00:39:41,130 --> 00:39:42,365
Who the fuck schedules a meeting
856
00:39:42,465 --> 00:39:44,575
- at 4:50 in the afternoon?
- Oh, my, God.
857
00:39:44,675 --> 00:39:46,410
That was so painful.
858
00:39:46,510 --> 00:39:50,122
Dude, B of A and Bear
didn't even return our calls.
859
00:39:50,222 --> 00:39:52,375
And even fucking Wachovia
860
00:39:52,475 --> 00:39:54,143
- blew us off, man!
- I know.
861
00:39:54,310 --> 00:39:56,545
Here's the prospectuses
of all the other losers
862
00:39:56,645 --> 00:39:58,339
who didn't make it past the lobby.
863
00:39:58,439 --> 00:40:00,299
JAMIE: I don't think I can
do this anymore. You know.
864
00:40:00,399 --> 00:40:03,219
I'm young, yet.
I can still do something with my life.
865
00:40:03,319 --> 00:40:05,404
I miss Colorado anyway. The weed's better.
866
00:40:06,363 --> 00:40:08,365
Gentlemen, I need you to leave.
867
00:40:08,491 --> 00:40:09,867
Yep, yep, we're going. Let's go.
868
00:40:09,992 --> 00:40:11,102
Look at this. Look at this.
869
00:40:11,202 --> 00:40:12,520
This guy
870
00:40:12,620 --> 00:40:15,539
says that the housing market's
a giant bubble.
871
00:40:16,832 --> 00:40:17,817
(INHALES)
872
00:40:17,917 --> 00:40:20,069
Okay, so this part
isn't totally accurate, you know.
873
00:40:20,169 --> 00:40:22,238
We didn't find Jared Vennett's
housing bubble pitch
874
00:40:22,338 --> 00:40:24,240
in the lobby of a bank that rejected us.
875
00:40:24,340 --> 00:40:25,783
The truth is, um,
876
00:40:25,883 --> 00:40:28,744
a friend had told Charlie about it,
and I read about it
877
00:40:28,844 --> 00:40:30,246
in Grant's Interest Rate Observer.
878
00:40:30,346 --> 00:40:31,664
This is crazy.
879
00:40:31,764 --> 00:40:34,250
This is crazy stuff.
880
00:40:34,350 --> 00:40:37,003
Shit, he's saying
that there's 10-to-1 returns
881
00:40:37,103 --> 00:40:40,731
on credit default swaps
for mortgage-backed securities?
882
00:40:40,856 --> 00:40:43,484
And the whole housing market
is about to collapse?
883
00:40:44,193 --> 00:40:45,928
JARED: For Jamie and Charlie,
the housing market
884
00:40:46,028 --> 00:40:48,431
doomsday prediction
was music to their ears.
885
00:40:48,531 --> 00:40:50,241
(SINGING)
886
00:40:56,080 --> 00:40:58,024
They had started working
out of Jamie's garage
887
00:40:58,124 --> 00:41:00,026
with $110,000 Jamie had saved
888
00:41:00,126 --> 00:41:02,211
taking sailboats up and down
the East Coast.
889
00:41:04,130 --> 00:41:05,906
Our investment strategy was simple.
890
00:41:06,006 --> 00:41:08,034
People hate to think about
bad things happening,
891
00:41:08,134 --> 00:41:10,453
so they always underestimate
their likelihood.
892
00:41:10,553 --> 00:41:13,055
JARED:
Their strategy was simple and brilliant.
893
00:41:13,597 --> 00:41:14,665
What he said.
894
00:41:14,765 --> 00:41:17,460
Jamie and Charlie found markets
will sell options very cheaply
895
00:41:17,560 --> 00:41:19,754
on things they think will never happen.
896
00:41:19,854 --> 00:41:21,422
So when they were wrong,
they were wrong small,
897
00:41:21,522 --> 00:41:23,466
but when they were right,
they were right big.
898
00:41:23,566 --> 00:41:24,900
(IMITATING EXPLOSION)
899
00:41:30,322 --> 00:41:34,060
Within a few years they had
turned $110,000 into $30 million.
900
00:41:34,160 --> 00:41:35,811
But then it was time
to go to New York City.
901
00:41:35,911 --> 00:41:38,522
And so far, it wasn't going very well.
902
00:41:38,622 --> 00:41:40,357
So what if it does seem interesting. No...
903
00:41:40,457 --> 00:41:43,961
No bank will give us our ISDA.
We're dead in the water.
904
00:41:45,462 --> 00:41:47,865
These kind of trades
are totally out of the question.
905
00:41:47,965 --> 00:41:49,592
We got to call Ben.
906
00:41:50,718 --> 00:41:51,702
(EXHALES)
907
00:41:51,802 --> 00:41:53,304
Let's call Ben!
908
00:41:54,180 --> 00:41:56,248
JARED: Ben Rickert was
a former trader in Singapore
909
00:41:56,348 --> 00:41:59,085
for Chase who quit
the whole game in disgust.
910
00:41:59,185 --> 00:42:01,504
He happened to be Jamie's neighbor
when they were in Colorado
911
00:42:01,604 --> 00:42:03,756
and they met walking dogs.
912
00:42:03,856 --> 00:42:05,316
But Ben was dark.
913
00:42:05,441 --> 00:42:07,468
He didn't just think
the whole system would fail.
914
00:42:07,568 --> 00:42:09,778
He thought the whole world was going down.
915
00:42:11,822 --> 00:42:13,908
Every one of these vegetables
is fresh from my garden.
916
00:42:14,950 --> 00:42:16,076
(CHOPPING)
917
00:42:16,410 --> 00:42:17,686
BEN: You guys should
start your own garden.
918
00:42:17,786 --> 00:42:20,106
What you got to do is get
your soil off the petrochemicals.
919
00:42:20,206 --> 00:42:21,232
JAMIE: Hmm.
920
00:42:21,332 --> 00:42:23,526
I used wood ash and urine
to help restore the soil.
921
00:42:23,626 --> 00:42:25,194
It creates ammonium nitrate.
922
00:42:25,294 --> 00:42:27,046
Seeds are gonna be the new currency.
923
00:42:27,171 --> 00:42:29,156
And not those Franken-seeds from Monsanto.
924
00:42:29,256 --> 00:42:31,826
I'm talking about good,
healthy, organic seeds.
925
00:42:31,926 --> 00:42:33,035
Make yourself a garden.
926
00:42:33,135 --> 00:42:34,578
- Learn to live off the land.
- You're a fucking lunatic.
927
00:42:34,678 --> 00:42:36,872
JARED: Ben had real
experience in a big bank.
928
00:42:36,972 --> 00:42:40,643
Jamie and Charlie had never even
been in a Manhattan bank bathroom.
929
00:42:40,768 --> 00:42:42,419
But Ben was done with the banking world.
930
00:42:42,519 --> 00:42:43,838
He was very clear.
931
00:42:43,938 --> 00:42:45,506
JAMIE: All right,
let's crunch some numbers
932
00:42:45,606 --> 00:42:47,967
and then maybe
we'll talk about calling Ben.
933
00:42:48,067 --> 00:42:49,093
We're always crunching numbers.
934
00:42:49,193 --> 00:42:50,219
When haven't we crunched the numbers?
935
00:42:50,319 --> 00:42:51,362
We're gonna crunch
the numbers like harder...
936
00:42:51,487 --> 00:42:52,429
GUARD: I need you out of here.
937
00:42:52,529 --> 00:42:53,556
Of course. One second.
938
00:42:53,656 --> 00:42:54,323
Yes, ma'am. We're going.
939
00:42:57,534 --> 00:42:59,828
PORTER: Oh, God. I hate this.
This is a total waste of time.
940
00:43:00,037 --> 00:43:02,373
Oh, come on. Would you relax?
941
00:43:03,123 --> 00:43:06,235
There's a housing development
45 minutes outside town.
942
00:43:06,335 --> 00:43:08,195
Mark wants us to check that out first.
943
00:43:08,295 --> 00:43:10,281
Well, I hope there are some
Cuban restaurants on the way there.
944
00:43:10,381 --> 00:43:12,992
Because I heard the Cuban food
is amazing in Miami.
945
00:43:13,092 --> 00:43:15,786
Please don't be chipper
in the face of me being miserable.
946
00:43:15,886 --> 00:43:17,538
It really makes me hate you.
947
00:43:17,638 --> 00:43:20,182
How is wanting to eat good food
being chipper?
948
00:43:21,892 --> 00:43:23,060
Hello?
949
00:43:24,478 --> 00:43:25,729
Hello?
950
00:43:26,522 --> 00:43:27,856
PORTER: What do these go for?
951
00:43:29,525 --> 00:43:31,235
DANNY: $425,000 each?
952
00:43:31,819 --> 00:43:33,445
(DOG BARKING)
953
00:43:44,999 --> 00:43:46,250
(KNOCKING ON DOOR)
954
00:43:53,090 --> 00:43:54,658
What's up, man? What do you want?
955
00:43:54,758 --> 00:43:58,078
Hello. I'm surveying mortgage owners
who are over 90 days delinquent.
956
00:43:58,178 --> 00:44:00,706
I'm looking for a Harvey Humpsey.
957
00:44:00,806 --> 00:44:01,974
You want my landlord's dog?
958
00:44:04,143 --> 00:44:08,130
Your landlord filled out his mortgage
application using his dog's name?
959
00:44:08,230 --> 00:44:09,673
I guess so.
960
00:44:09,773 --> 00:44:12,259
Wait, has that asshole
not been paying his mortgage?
961
00:44:12,359 --> 00:44:13,677
'Cause I've been paying my rent.
962
00:44:13,777 --> 00:44:15,696
Well, yeah, he is over 90 days delinquent.
963
00:44:16,071 --> 00:44:17,640
Seriously, man,
964
00:44:17,740 --> 00:44:19,516
am I gonna have to leave?
965
00:44:19,616 --> 00:44:21,160
(FOOTSTEPS APPROACHING)
966
00:44:22,077 --> 00:44:24,438
'Cause my kid just got
settled in school, man.
967
00:44:24,538 --> 00:44:26,707
Hey. How are ya?
968
00:44:27,374 --> 00:44:28,542
My name's Ken.
969
00:44:28,667 --> 00:44:29,860
You're Ken?
970
00:44:29,960 --> 00:44:31,737
Um, you should talk
to your landlord about that.
971
00:44:31,837 --> 00:44:33,322
I'm sorry, I don't have
any more information.
972
00:44:33,422 --> 00:44:34,798
But you, um...
973
00:44:35,466 --> 00:44:37,034
You have a great day. See ya, Ken.
974
00:44:37,134 --> 00:44:38,535
KEN: There's books everywhere!
975
00:44:38,635 --> 00:44:40,871
Books everywhere?
976
00:44:40,971 --> 00:44:44,208
Seriously, man,
is everything gonna be okay?
977
00:44:44,308 --> 00:44:47,378
You should... You should call him.
978
00:44:47,478 --> 00:44:48,504
You should give him a call.
979
00:44:48,604 --> 00:44:50,256
It's not my fault, dude.
I've been paying...
980
00:44:50,356 --> 00:44:51,899
(DOOR CREAKING)
981
00:44:54,151 --> 00:44:55,235
Hello!
982
00:44:59,156 --> 00:45:01,267
Looks like the Mary Celeste.
983
00:45:01,367 --> 00:45:04,119
Look. All they took was the TV.
984
00:45:04,912 --> 00:45:06,855
DANNY: It's weird.
985
00:45:06,955 --> 00:45:09,291
PORTER: They didn't even
clean out the cat litter.
986
00:45:17,841 --> 00:45:18,884
PORTER: Oh, God.
987
00:45:30,521 --> 00:45:32,423
It's like Chernobyl.
988
00:45:32,523 --> 00:45:35,943
There's like a hundred houses.
There can't be four people living here.
989
00:45:37,986 --> 00:45:40,155
- Oh, fuck that!
- Shit!
990
00:45:46,495 --> 00:45:48,664
(HEAVY METAL MUSIC PLAYING)
991
00:45:55,045 --> 00:45:56,171
MAN: He's been in there for seven hours.
992
00:45:56,296 --> 00:45:57,881
Where does he go to the bathroom?
993
00:45:58,507 --> 00:45:59,575
I heard he had a breakdown.
994
00:45:59,675 --> 00:46:01,618
- He's letting the fund tank.
- (TELEPHONE RINGING)
995
00:46:01,718 --> 00:46:03,178
My buddy in Manhattan said...
996
00:46:03,303 --> 00:46:04,847
Dr. Burry's office.
997
00:46:05,180 --> 00:46:06,790
No, he actually prefers
that you email him.
998
00:46:06,890 --> 00:46:08,183
Excuse me.
999
00:46:08,517 --> 00:46:09,518
Mr. Fields, Mr...
1000
00:46:13,647 --> 00:46:15,399
- Hi, Lawrence.
- (WHISPERING) Holy shit!
1001
00:46:17,025 --> 00:46:20,554
We have no confidence
in your ability to identify
1002
00:46:20,654 --> 00:46:22,239
macroeconomic trends.
1003
00:46:22,364 --> 00:46:23,949
(MUSIC STOPPING)
1004
00:46:24,575 --> 00:46:27,102
MIKE: You flew here to tell me that? Why?
1005
00:46:27,202 --> 00:46:30,606
Anyone can see
that there is a real estate bubble.
1006
00:46:30,706 --> 00:46:32,524
Actually, no one can see a bubble.
1007
00:46:32,624 --> 00:46:33,817
That's what makes it a bubble.
1008
00:46:33,917 --> 00:46:36,195
That's dumb, Lawrence.
1009
00:46:36,295 --> 00:46:37,880
There's always markers.
1010
00:46:38,630 --> 00:46:41,075
Mortgage fraud has
1011
00:46:41,175 --> 00:46:42,926
quintupled since 2000
1012
00:46:43,051 --> 00:46:45,871
and the average take-home pay is flat,
1013
00:46:45,971 --> 00:46:47,414
but home prices are soaring.
1014
00:46:47,514 --> 00:46:49,583
That means the homes are debt, not assets.
1015
00:46:49,683 --> 00:46:51,894
So Mike Burry of San Jose, a guy who
1016
00:46:52,895 --> 00:46:56,273
gets his hair cut at Supercuts
and doesn't wear shoes,
1017
00:46:56,398 --> 00:46:59,234
knows more than Alan Greenspan
and Hank Paulson.
1018
00:46:59,401 --> 00:47:00,402
Well...
1019
00:47:01,111 --> 00:47:03,739
Dr. Mike Burry, yes, he does. (CHUCKLES)
1020
00:47:04,948 --> 00:47:06,725
That's cute. That's cute.
1021
00:47:06,825 --> 00:47:09,161
Are you being sarcastic with us, Mike?
1022
00:47:11,205 --> 00:47:12,189
(SIGHS)
1023
00:47:12,289 --> 00:47:13,690
Lawrence,
1024
00:47:13,790 --> 00:47:16,293
I don't know how to be sarcastic.
1025
00:47:16,960 --> 00:47:19,755
I don't know how to be funny.
I don't know how to
1026
00:47:20,422 --> 00:47:21,865
work people.
1027
00:47:21,965 --> 00:47:23,117
I...
1028
00:47:23,217 --> 00:47:25,536
I just know how to read numbers.
1029
00:47:25,636 --> 00:47:28,138
How big is your short position right now?
1030
00:47:28,514 --> 00:47:29,540
Um...
1031
00:47:29,640 --> 00:47:31,225
Just $1.3 billion.
1032
00:47:31,808 --> 00:47:33,185
And the premiums?
1033
00:47:33,310 --> 00:47:34,645
Well, we pay, uh,
1034
00:47:35,103 --> 00:47:38,440
- roughly $80 to 90 million
- (MARTIN LAUGHING)
1035
00:47:38,565 --> 00:47:40,008
each year, which is high,
1036
00:47:40,108 --> 00:47:42,177
but I was the first to do this trade.
1037
00:47:42,277 --> 00:47:45,722
Watch. It will pay. I may have
been early, but I'm not wrong.
1038
00:47:45,822 --> 00:47:48,158
It's the same thing.
It's the same thing, Mike!
1039
00:47:48,992 --> 00:47:53,121
You're managing a fund of,
what, $555 million?
1040
00:47:53,664 --> 00:47:57,167
In six years, it'll all be gone.
1041
00:47:57,960 --> 00:47:59,361
On one bet.
1042
00:47:59,461 --> 00:48:02,631
No, the second quarter of '07 is
when the adjustable rates kick in.
1043
00:48:02,756 --> 00:48:04,241
The defaults will skyrocket.
1044
00:48:04,341 --> 00:48:06,034
Yeah. Says you.
1045
00:48:06,134 --> 00:48:08,579
LAWRENCE: How much is eligible
for withdrawal before they do?
1046
00:48:08,679 --> 00:48:10,597
Say, in the next two quarters.
1047
00:48:11,306 --> 00:48:13,308
If your investors panic.
1048
00:48:16,853 --> 00:48:17,880
$302 million?
1049
00:48:17,980 --> 00:48:18,981
I...
1050
00:48:19,856 --> 00:48:21,483
My God, Mike.
1051
00:48:22,568 --> 00:48:23,944
(MIKE CHUCKLES)
1052
00:48:26,321 --> 00:48:28,223
No one will pull out.
That would be suicide.
1053
00:48:28,323 --> 00:48:30,742
I mean, I'm down 17% for the year.
1054
00:48:30,867 --> 00:48:33,145
But if they trust me,
and they trust me, because...
1055
00:48:33,245 --> 00:48:35,856
No one trusts you! No one!
1056
00:48:35,956 --> 00:48:38,375
I sent several emails to my investors
1057
00:48:38,500 --> 00:48:40,544
letting them know that the...
1058
00:48:41,044 --> 00:48:42,070
(EXHALES)
1059
00:48:42,170 --> 00:48:44,590
...the second quarter of '07 is when our
1060
00:48:44,715 --> 00:48:47,175
housing positions show returns and...
1061
00:48:48,552 --> 00:48:49,803
I've been very clear.
1062
00:48:50,596 --> 00:48:53,432
People will withdraw their money.
1063
00:48:54,016 --> 00:48:57,461
Lawrence, that would be so stupid.
I mean, the...
1064
00:48:57,561 --> 00:49:01,064
(STUTTERS) If the fund's capitals
drop too much,
1065
00:49:01,523 --> 00:49:04,593
then the swaps contracts are voided.
1066
00:49:04,693 --> 00:49:07,930
And then the banks get to
keep all of the collateral.
1067
00:49:08,030 --> 00:49:10,240
- MARTIN: Wait a minute. Wait.
- All of it.
1068
00:49:10,365 --> 00:49:12,476
The contracts are voided?
1069
00:49:12,576 --> 00:49:14,369
The contracts are voided?
1070
00:49:15,078 --> 00:49:16,747
Holy shit!
1071
00:49:17,205 --> 00:49:18,206
Oh, motherfucker!
1072
00:49:18,874 --> 00:49:20,375
- Michael?
- (TAPPING)
1073
00:49:20,751 --> 00:49:22,419
Give me my money back.
1074
00:49:25,839 --> 00:49:29,217
Michael, do you hear me?
I want my money back.
1075
00:49:31,720 --> 00:49:34,056
Give me my fucking money back...
1076
00:49:35,098 --> 00:49:36,516
(LAUGHS)...you motherfucker.
1077
00:49:37,434 --> 00:49:40,562
The market's in an itsy-bitsy
little gully right now.
1078
00:49:40,687 --> 00:49:42,923
It's like everybody said,
"Okay, that was crazy.
1079
00:49:43,023 --> 00:49:44,900
"Let's just all calm down."
1080
00:49:46,735 --> 00:49:49,946
I sold that house for $350,000
the year it was built.
1081
00:49:50,614 --> 00:49:52,783
Two years later, $480,000.
1082
00:49:52,908 --> 00:49:56,078
Then $585,000 maybe 18 months ago.
1083
00:49:56,203 --> 00:49:58,747
This couple bought it
for $650,000 last year.
1084
00:49:59,247 --> 00:50:01,066
He'd let it go for that.
1085
00:50:01,166 --> 00:50:02,818
Hi, John.
1086
00:50:02,918 --> 00:50:03,960
(MOUTHING) No, no, no.
1087
00:50:04,586 --> 00:50:05,962
It will break his heart,
but he'll let it go.
1088
00:50:06,088 --> 00:50:07,823
Why is he selling?
1089
00:50:07,923 --> 00:50:09,758
MARLENE: Neither one's working right now.
1090
00:50:10,759 --> 00:50:13,370
Marlene, you'd say
they're motivated, right?
1091
00:50:13,470 --> 00:50:16,456
As motivated as one can be
in this neighborhood.
1092
00:50:16,556 --> 00:50:19,084
This house on the left,
I would say they're probably motivated.
1093
00:50:19,184 --> 00:50:21,128
Wow, a lot of people seem very motivated.
1094
00:50:21,228 --> 00:50:22,312
MARLENE: Oh, it's just the gully.
1095
00:50:22,604 --> 00:50:24,339
That's all. Just...
1096
00:50:24,439 --> 00:50:25,841
Just nerves.
1097
00:50:25,941 --> 00:50:27,651
So where do we stand?
1098
00:50:28,819 --> 00:50:31,305
I need to talk to my wife. Um...
1099
00:50:31,405 --> 00:50:32,681
MAN: This market won't last.
1100
00:50:32,781 --> 00:50:34,558
MARK: Actually, could I talk
to a mortgage broker?
1101
00:50:34,658 --> 00:50:36,476
Anybody you recommend? Anybody you like.
1102
00:50:36,576 --> 00:50:38,562
MARLENE: Yes, yes, I have
someone. Absolutely.
1103
00:50:38,662 --> 00:50:39,896
Yeah, bitch better like me.
1104
00:50:39,996 --> 00:50:41,248
Sent her ass to Cabo.
1105
00:50:41,456 --> 00:50:42,774
(ALL LAUGHING)
1106
00:50:42,874 --> 00:50:45,460
So is Morgan Stanley
recruiting us? Is that it?
1107
00:50:45,752 --> 00:50:49,840
Oh, no. No. The bank owns our hedge
fund, but we're not really part of it.
1108
00:50:49,965 --> 00:50:52,409
We invest in financial service companies
1109
00:50:52,509 --> 00:50:55,454
and we're trying to understand
the residential mortgage business.
1110
00:50:55,554 --> 00:50:58,473
How many loans do you write each month?
1111
00:50:58,598 --> 00:51:00,125
- (BLOWS AIR) About 60.
- Yeah.
1112
00:51:00,225 --> 00:51:01,685
What was it four years ago?
1113
00:51:02,644 --> 00:51:03,962
- Ten...
- (PORTER WHISTLES)
1114
00:51:04,062 --> 00:51:05,297
Maybe 15.
1115
00:51:05,397 --> 00:51:07,674
Yeah, I was a bartender. Now I own a boat.
1116
00:51:07,774 --> 00:51:08,717
(LAUGHING) You own a...
1117
00:51:08,817 --> 00:51:12,054
So how many of these are
adjustable-rate mortgages?
1118
00:51:12,154 --> 00:51:13,805
- MAN IN BLACK: Well, most.
- Oh, yeah.
1119
00:51:13,905 --> 00:51:15,849
Yeah, I'd say about 90%.
1120
00:51:15,949 --> 00:51:19,061
The bonuses on those
skyrocketed a few years ago.
1121
00:51:19,161 --> 00:51:20,437
Adjustable's our bread and honey.
1122
00:51:20,537 --> 00:51:23,065
So do applicants ever get rejected?
1123
00:51:23,165 --> 00:51:24,583
(BOTH LAUGHING)
1124
00:51:27,419 --> 00:51:28,628
Seriously?
1125
00:51:29,504 --> 00:51:31,573
Look, if they get rejected,
I suck at my job.
1126
00:51:31,673 --> 00:51:33,158
DANNY: Even if they have no money?
1127
00:51:33,258 --> 00:51:36,119
Well, my firm offers NINJA loans.
1128
00:51:36,219 --> 00:51:38,680
- PORTER: Okay.
- "No Income, No Job."
1129
00:51:39,014 --> 00:51:41,208
I just leave the income section
blank if I want.
1130
00:51:41,308 --> 00:51:42,542
Corporate doesn't care.
1131
00:51:42,642 --> 00:51:45,921
These people just want homes.
And they go with the flow.
1132
00:51:46,021 --> 00:51:47,005
PORTER: Good for you.
1133
00:51:47,105 --> 00:51:48,148
Your companies don't verify?
1134
00:51:51,860 --> 00:51:56,740
If I write a loan on Friday afternoon,
a big bank will buy it by Monday lunch.
1135
00:51:57,282 --> 00:51:58,617
Yeah. Same here.
1136
00:52:00,410 --> 00:52:01,787
Could you hold on a second?
1137
00:52:01,912 --> 00:52:03,288
Yeah.
1138
00:52:08,960 --> 00:52:11,613
I don't get it. Why are they confessing?
1139
00:52:11,713 --> 00:52:13,673
They're not confessing.
1140
00:52:13,799 --> 00:52:15,467
They're bragging.
1141
00:52:22,891 --> 00:52:24,126
(MARK CLEARS THROAT)
1142
00:52:24,226 --> 00:52:28,230
Do people have any idea
what they are buying?
1143
00:52:29,189 --> 00:52:31,425
(CHUCKLES) I focus on
the immigrants, you know.
1144
00:52:31,525 --> 00:52:34,594
Once they find out they're getting a home,
they sign where you tell them to sign.
1145
00:52:34,694 --> 00:52:36,805
Don't ask questions.
Don't understand the rates.
1146
00:52:36,905 --> 00:52:38,348
- Fucking idiots.
- Yeah.
1147
00:52:38,448 --> 00:52:39,850
And you target immigrants, too?
1148
00:52:39,950 --> 00:52:42,786
Well, their credit actually
isn't bad enough for him.
1149
00:52:42,911 --> 00:52:43,912
(CHUCKLES)
1150
00:52:44,704 --> 00:52:46,373
Look, I'm a yield guy.
1151
00:52:46,873 --> 00:52:47,916
Okay...
1152
00:52:49,000 --> 00:52:52,404
I make $2,000
on a fixed-rate prime loan, right?
1153
00:52:52,504 --> 00:52:56,116
But I can make $10,000
on a subprime adjustable.
1154
00:52:56,216 --> 00:52:59,161
Trust me, I'm not driving a 7 Series
without strippers.
1155
00:52:59,261 --> 00:53:02,539
No one on the pole has good credit
and they're all cash rich.
1156
00:53:02,639 --> 00:53:04,975
I think I read Warren Buffett
say something like that.
1157
00:53:05,475 --> 00:53:07,727
What? Who's Warren Buffett?
1158
00:53:08,270 --> 00:53:10,964
Okay, so strippers. Like exotic dancers?
1159
00:53:11,064 --> 00:53:12,257
Yeah, yeah, yeah.
1160
00:53:12,357 --> 00:53:14,301
Nude, you know, topless.
1161
00:53:14,401 --> 00:53:16,236
- Strippers.
- Yeah.
1162
00:53:19,823 --> 00:53:21,016
Can you introduce us?
1163
00:53:21,116 --> 00:53:23,518
Yes! Yes.
1164
00:53:23,618 --> 00:53:24,870
(AUDIENCE CHEERING)
1165
00:53:25,620 --> 00:53:28,523
I always get option-pay adjustables.
I'm a private contractor.
1166
00:53:28,623 --> 00:53:30,275
MARK: What? I can't hear you. I'm sorry.
1167
00:53:30,375 --> 00:53:32,194
I always get option-pay adjustables.
1168
00:53:32,294 --> 00:53:34,529
I'm a private contractor.
I need flexibility.
1169
00:53:34,629 --> 00:53:37,199
And you tell the mortgage company
what you do?
1170
00:53:37,299 --> 00:53:39,284
I write "therapist".
1171
00:53:39,384 --> 00:53:40,844
- You can touch me.
- Always?
1172
00:53:41,469 --> 00:53:42,496
Only in V.I.P.
1173
00:53:42,596 --> 00:53:45,207
No, no, no, you say
you always do adjustables.
1174
00:53:45,307 --> 00:53:47,083
And you have more than
one loan on a property?
1175
00:53:47,183 --> 00:53:49,377
Everybody does. At least down here.
1176
00:53:49,477 --> 00:53:50,462
MARK: I'm sorry, what?
1177
00:53:50,562 --> 00:53:53,131
Everybody does. At least down here.
1178
00:53:53,231 --> 00:53:55,383
That way you only put down, like, 5%.
1179
00:53:55,483 --> 00:53:57,260
Prices have leveled off, though, right?
1180
00:53:57,360 --> 00:53:59,179
Yeah. There's a gully.
1181
00:53:59,279 --> 00:54:02,991
Would you mind not moving anymore?
I'll still pay you.
1182
00:54:06,786 --> 00:54:09,481
Sorry. We're not alone.
1183
00:54:09,581 --> 00:54:12,192
Okay, look. If home prices don't go up,
1184
00:54:12,292 --> 00:54:14,569
you are not going to be able to refinance.
1185
00:54:14,669 --> 00:54:17,781
And you'll be stuck paying
whatever your monthly payment is
1186
00:54:17,881 --> 00:54:20,592
once it jumps up
after your teaser rate expires.
1187
00:54:21,009 --> 00:54:23,053
Your monthlies could go up 200%-300%.
1188
00:54:23,470 --> 00:54:25,497
James says I can always refinance.
1189
00:54:25,597 --> 00:54:27,374
Well, he's a liar.
1190
00:54:27,474 --> 00:54:30,585
Actually, in this particular case,
James probably is wrong.
1191
00:54:30,685 --> 00:54:33,964
200 percent? On all my loans?
1192
00:54:34,064 --> 00:54:35,423
What do you mean "all" your loans?
1193
00:54:35,523 --> 00:54:37,943
We're talking about two loans
on one house, right?
1194
00:54:38,777 --> 00:54:40,737
I have five houses.
1195
00:54:40,862 --> 00:54:42,822
And a condo.
1196
00:54:44,699 --> 00:54:46,184
Hey, there's a bubble.
1197
00:54:46,284 --> 00:54:47,269
VINNIE: How do you know?
1198
00:54:47,369 --> 00:54:50,772
Trust me. Call Vennett,
buy $50 million in swaps on the MBS.
1199
00:54:50,872 --> 00:54:53,775
What do we got? Garibaldi IV, BBB.
1200
00:54:53,875 --> 00:54:55,360
Mark, are you sure?
1201
00:54:55,460 --> 00:54:57,279
Yeah. Yeah, it's time to call bullshit.
1202
00:54:57,379 --> 00:55:00,048
- Bullshit on what?
- Every fucking thing.
1203
00:55:06,179 --> 00:55:07,555
(TYPING)
1204
00:55:09,057 --> 00:55:10,392
(COMPUTER CHIMES)
1205
00:55:24,239 --> 00:55:25,907
FrontPoint! FrontPoint!
1206
00:55:27,742 --> 00:55:29,519
Is this America's angriest hedge fund?
1207
00:55:29,619 --> 00:55:31,746
VINNIE: All right, listen.
I got one last question for you.
1208
00:55:32,914 --> 00:55:34,749
How are you fucking us?
1209
00:55:36,584 --> 00:55:38,111
There's a nicer way to say that, Vinnie.
1210
00:55:38,211 --> 00:55:39,738
I'm serious.
1211
00:55:39,838 --> 00:55:42,908
We'll buy your swaps,
but only if you say how you're fucking us.
1212
00:55:43,008 --> 00:55:45,493
I'm not fucking you, Vinnie.
I'm kissing you.
1213
00:55:45,593 --> 00:55:48,330
I'm looking deep into your eyes
as I make love to you, Vinnie.
1214
00:55:48,430 --> 00:55:51,750
I'm handing you the deal of the century
on a fucking platter.
1215
00:55:51,850 --> 00:55:54,210
What do I get out of it? Easy.
1216
00:55:54,310 --> 00:55:56,713
I got a $20-million-a-month
negative carry.
1217
00:55:56,813 --> 00:56:00,675
I got bosses trying to pull the plug because
they think I'm out of my fucking mind.
1218
00:56:00,775 --> 00:56:01,760
All right?
1219
00:56:01,860 --> 00:56:02,928
We make this trade,
1220
00:56:03,028 --> 00:56:05,347
those problems aren't so big anymore.
1221
00:56:05,447 --> 00:56:09,184
And sure, swaps are a dark market,
so I set the price.
1222
00:56:09,284 --> 00:56:10,769
Whatever price I want.
1223
00:56:10,869 --> 00:56:12,287
And when you come for the payday,
1224
00:56:12,412 --> 00:56:14,622
I'm gonna rip your eyes out,
I'm gonna make a fortune.
1225
00:56:15,749 --> 00:56:17,233
But the good news is, Vinnie,
you're not gonna care
1226
00:56:17,333 --> 00:56:19,527
because you're gonna make
so much fucking money.
1227
00:56:19,627 --> 00:56:20,904
That's what I get out of it.
1228
00:56:21,004 --> 00:56:22,280
Want to know what you get out of it?
1229
00:56:22,380 --> 00:56:25,867
You get the ice cream, the hot fudge,
the banana, and the nuts.
1230
00:56:25,967 --> 00:56:27,702
Right now, I get the sprinkles, and, yeah,
1231
00:56:27,802 --> 00:56:30,413
if this goes through, I get the cherry.
1232
00:56:30,513 --> 00:56:32,707
But you get the sundae, Vinnie.
1233
00:56:32,807 --> 00:56:34,476
You get the sundae.
1234
00:56:36,936 --> 00:56:39,714
All right, I buy that. Thank you.
1235
00:56:39,814 --> 00:56:41,967
So what do you say?
1236
00:56:42,067 --> 00:56:43,927
- You want me to make you a market?
- Yeah.
1237
00:56:44,027 --> 00:56:47,530
We'll take $50 million, Garibaldi IV, BBB.
1238
00:56:48,990 --> 00:56:51,034
Sharpen your pencils.
I'll get the paperwork ready.
1239
00:56:52,535 --> 00:56:53,645
(SIGHS)
1240
00:56:53,745 --> 00:56:55,246
Fuck you, too.
1241
00:56:57,207 --> 00:56:58,708
Yes!
1242
00:57:00,668 --> 00:57:01,669
That's right.
1243
00:57:03,797 --> 00:57:05,699
- Oh, man.
- (EXHALES DEEPLY)
1244
00:57:05,799 --> 00:57:10,011
He has so many numbers,
and I always forget
1245
00:57:10,136 --> 00:57:11,746
which one he prefers,
because he's very specific.
1246
00:57:11,846 --> 00:57:13,039
Start with the first one.
1247
00:57:13,139 --> 00:57:14,349
I don't know if it's the first one.
1248
00:57:14,474 --> 00:57:15,750
Just try it.
1249
00:57:15,850 --> 00:57:17,393
Okay. I... Okay.
1250
00:57:18,186 --> 00:57:19,754
(COUNTRY MUSIC PLAYING)
1251
00:57:19,854 --> 00:57:21,256
(LINE RINGING)
1252
00:57:21,356 --> 00:57:23,024
(BIRD SCREECHING)
1253
00:57:26,152 --> 00:57:27,153
(PHONE RINGING)
1254
00:57:35,036 --> 00:57:37,789
- Ben Rickert.
- Hey, Ben. It's Jamie.
1255
00:57:39,332 --> 00:57:41,209
Jamie, you know you're
not supposed to use this line.
1256
00:57:41,626 --> 00:57:42,919
(DIAL TONE)
1257
00:57:43,670 --> 00:57:44,921
Told you.
1258
00:57:46,297 --> 00:57:48,967
Okay, let's try number two out of 14.
1259
00:57:52,220 --> 00:57:54,264
(LINE RINGING)
1260
00:57:54,722 --> 00:57:55,723
(PHONE RINGING)
1261
00:57:59,435 --> 00:58:00,462
(DIAL TONE)
1262
00:58:00,562 --> 00:58:01,546
Ben Rickert.
1263
00:58:01,646 --> 00:58:03,631
Ben, why do you do that, man? I mean...
1264
00:58:03,731 --> 00:58:06,134
You're a retired trader, okay?
No one is listening to your calls.
1265
00:58:06,234 --> 00:58:07,927
The NSA has a $52 billion budget
and the ability
1266
00:58:08,027 --> 00:58:09,387
to monitor tens of millions
of calls a second.
1267
00:58:09,487 --> 00:58:11,806
You think they're not using it?
1268
00:58:11,906 --> 00:58:14,726
Hey, I promise I will refrain from saying
1269
00:58:14,826 --> 00:58:16,995
"Ben Rickert" and "dirty bomb"
in the same sent...
1270
00:58:17,579 --> 00:58:18,580
(BEEPS)
1271
00:58:18,872 --> 00:58:20,523
- Jesus fucking Christ.
- I'm sorry, dude.
1272
00:58:20,623 --> 00:58:22,067
- (PHONE RINGING)
- (BEEPS)
1273
00:58:22,167 --> 00:58:23,251
Ben Rickert.
1274
00:58:23,376 --> 00:58:25,737
Did you get a chance to look
at what we sent you, Ben?
1275
00:58:25,837 --> 00:58:28,006
It's Charlie. I'm here, too.
1276
00:58:28,756 --> 00:58:31,092
Hi, Charlie. Yeah, I did. Hold on.
1277
00:58:37,098 --> 00:58:38,183
Ben, you still there?
1278
00:58:38,308 --> 00:58:39,434
Yeah.
1279
00:58:40,185 --> 00:58:42,212
I'll be honest, gentlemen.
1280
00:58:42,312 --> 00:58:44,230
It scared the shit out of me.
1281
00:58:44,355 --> 00:58:45,715
But that's a good thing, right?
1282
00:58:45,815 --> 00:58:48,610
That means this Vennett guy's not wrong.
1283
00:58:49,319 --> 00:58:50,403
No, he's not.
1284
00:58:53,114 --> 00:58:54,099
Cool.
1285
00:58:54,199 --> 00:58:55,767
Tell me more about these CDOs.
1286
00:58:55,867 --> 00:58:59,621
JAMIE: Yeah, yeah. Okay, so, you know,
Vennett mentions the CDOs,
1287
00:58:59,746 --> 00:59:02,999
but actually, we took a look and they're
way worse than even he realizes.
1288
00:59:03,124 --> 00:59:04,526
These things don't make any sense!
1289
00:59:04,626 --> 00:59:05,860
JAMIE: We can't even model them.
1290
00:59:05,960 --> 00:59:08,655
These are 100 times bigger than the MBS.
1291
00:59:08,755 --> 00:59:10,323
And 90% AAA-rated.
1292
00:59:10,423 --> 00:59:12,175
- Yes! Exactly!
- Over 90%.
1293
00:59:12,300 --> 00:59:13,368
It's incredible.
1294
00:59:13,468 --> 00:59:16,638
I took a good hard look
at the CDOs you want to short.
1295
00:59:17,388 --> 00:59:19,807
They're brilliant. Worthless. Total crap.
1296
00:59:20,475 --> 00:59:22,627
- Jamie. Very good.
- (LAUGHS)
1297
00:59:22,727 --> 00:59:26,214
What can I say? I'm good at finding shit.
1298
00:59:26,314 --> 00:59:29,050
CHARLIE: So, Ben, we shorted
the BB's and the BBB's,
1299
00:59:29,150 --> 00:59:31,219
and the risk is relatively low.
1300
00:59:31,319 --> 00:59:33,988
- Payoff is, like, 25-to-1.
- Yeah.
1301
00:59:36,324 --> 00:59:38,393
Okay, so, why are you calling me?
I don't do this anymore.
1302
00:59:38,493 --> 00:59:39,661
Look, Ben?
1303
00:59:40,995 --> 00:59:44,732
We need you to help us get the ISDA.
1304
00:59:44,832 --> 00:59:47,902
If we get a hunting license,
we can short this crap.
1305
00:59:48,002 --> 00:59:49,170
And we know you hate Wall Street.
1306
00:59:49,295 --> 00:59:50,446
We're not asking you to do the trading.
1307
00:59:50,546 --> 00:59:54,492
We're simply asking you
to help us get a seat
1308
00:59:54,592 --> 00:59:57,745
at the fucking table.
1309
00:59:57,845 --> 00:59:59,747
It's a pretty ugly table, guys.
1310
00:59:59,847 --> 01:00:04,836
Look, Ben, the system fucked up
in a big, big way here, okay?
1311
01:00:04,936 --> 01:00:07,021
And somehow, uh,
1312
01:00:07,355 --> 01:00:10,024
we know before anyone else.
1313
01:00:10,358 --> 01:00:13,278
You know?
This is a once-in-a-lifetime deal.
1314
01:00:15,863 --> 01:00:16,864
I'm thinking.
1315
01:00:21,953 --> 01:00:23,855
Okay. I'll call Deutsche Bank.
1316
01:00:23,955 --> 01:00:26,191
Thank you, Ben. Thank you.
1317
01:00:26,291 --> 01:00:29,877
And Bear. What about Bear?
They have some reprehensible product.
1318
01:00:30,211 --> 01:00:32,547
Okay. Bear will trade with anybody.
1319
01:01:20,678 --> 01:01:23,414
All right.
I'll see if I can push it through.
1320
01:01:23,514 --> 01:01:25,350
Thank you, Noah. And thank Jared for us.
1321
01:01:27,310 --> 01:01:28,519
Couldn't we go inside?
1322
01:01:28,644 --> 01:01:29,854
Yeah, me, too.
1323
01:02:13,981 --> 01:02:16,301
Hi. It's Mark. I need to
talk to Vinnie right now.
1324
01:02:16,401 --> 01:02:19,821
We're just asking you to explain to us
1325
01:02:19,987 --> 01:02:22,432
just how it is that you are fucking us,
1326
01:02:22,532 --> 01:02:23,783
because what we are seeing...
1327
01:02:26,661 --> 01:02:27,995
Morgan Stanley building, fast.
1328
01:02:28,955 --> 01:02:31,399
Are we hooked up
to the same computer screen?
1329
01:02:31,499 --> 01:02:33,167
It doesn't make any sense.
1330
01:02:33,376 --> 01:02:35,169
(INDISTINCT CONVERSATIONS)
1331
01:02:36,003 --> 01:02:37,463
MARK: Vinnie, you there?
1332
01:02:37,880 --> 01:02:38,865
Mark, you there?
1333
01:02:38,965 --> 01:02:39,907
Yeah, did you hear?
1334
01:02:40,007 --> 01:02:41,743
Mortgage defaults have
gone through the roof.
1335
01:02:41,843 --> 01:02:43,286
Is anybody jumping off of buildings yet?
1336
01:02:43,386 --> 01:02:45,580
Why would they?
Subprime mortgage bond prices are up.
1337
01:02:45,680 --> 01:02:46,706
What?
1338
01:02:46,806 --> 01:02:50,084
Vennett wants $1.9 million more
in collateral by close.
1339
01:02:50,184 --> 01:02:51,461
Vennett's asking us to post collateral.
1340
01:02:51,561 --> 01:02:52,962
What the hell is going on?
1341
01:02:53,062 --> 01:02:55,006
We don't know, but Deutsche's
on the phone demanding payment.
1342
01:02:55,106 --> 01:02:56,924
Call Vennett. Call that little shit.
1343
01:02:57,024 --> 01:02:58,968
Call Vennett.
Tell him to get his ass down here.
1344
01:02:59,068 --> 01:03:00,845
So subprime loans go bad,
1345
01:03:00,945 --> 01:03:04,140
but subprime bonds, which are made up
of subprime loans, are more valuable?
1346
01:03:04,240 --> 01:03:06,701
I know. They want another
$1.9 million by market close.
1347
01:03:06,826 --> 01:03:08,936
What about the ratings agencies?
Moody's, S&P...
1348
01:03:09,036 --> 01:03:11,439
Are they downgrading the CDOs
and mortgage bonds?
1349
01:03:11,539 --> 01:03:12,607
Where are the ratings agencies at?
1350
01:03:12,707 --> 01:03:14,208
They're the fucking same.
1351
01:03:14,333 --> 01:03:15,777
No, they're all still AAA.
1352
01:03:15,877 --> 01:03:18,363
What the hell? Are you fucking kidding me?
1353
01:03:18,463 --> 01:03:20,531
Those fuckers! Those motherfuckers!
1354
01:03:20,631 --> 01:03:23,576
They go public, and all they care about
is their bottom line and their shit.
1355
01:03:23,676 --> 01:03:25,411
Hey, Mark, that's not all.
1356
01:03:25,511 --> 01:03:26,788
The Morgan Stanley risk guys are here.
1357
01:03:26,888 --> 01:03:28,247
They called in Kathy Tao.
1358
01:03:28,347 --> 01:03:30,458
They're trying to convince her
to make us sell our swaps.
1359
01:03:30,558 --> 01:03:32,794
Apparently, tying up six years
of insurance payments
1360
01:03:32,894 --> 01:03:34,629
in hopes of a housing Armageddon
1361
01:03:34,729 --> 01:03:35,980
is not prudent investing.
1362
01:03:36,105 --> 01:03:37,340
What did Kathy say?
1363
01:03:37,440 --> 01:03:40,134
Nothing yet. She keeps asking
if this is one of your crusades.
1364
01:03:40,234 --> 01:03:42,136
Okay, I want you to walk back in there
1365
01:03:42,236 --> 01:03:43,888
and very calmly, very politely,
1366
01:03:43,988 --> 01:03:46,657
tell the risk assessors to fuck off.
1367
01:03:46,782 --> 01:03:48,409
And then meet me over
at Standard & Poor's.
1368
01:03:48,534 --> 01:03:50,019
We're gonna talk to Georgia.
1369
01:03:50,119 --> 01:03:51,145
VINNIE: All right. Okay.
1370
01:03:51,245 --> 01:03:53,147
Get that fuck Jared Vennett
in this office.
1371
01:03:53,247 --> 01:03:55,041
I'm gonna bash his fucking head in.
1372
01:03:56,417 --> 01:03:58,669
(INAUDIBLE)
1373
01:04:00,046 --> 01:04:01,614
Uh, gentlemen?
1374
01:04:01,714 --> 01:04:04,759
I spoke with Mark Baum.
He says to fuck off.
1375
01:04:18,564 --> 01:04:20,900
I can't see a damn thing.
1376
01:04:22,276 --> 01:04:24,762
(SIGHS) My eye doctor's always busy.
1377
01:04:24,862 --> 01:04:26,639
I end up taking
any appointment they'll give me,
1378
01:04:26,739 --> 01:04:29,075
and then the whole morning
gets shot to hell!
1379
01:04:30,243 --> 01:04:31,744
So...
1380
01:04:32,245 --> 01:04:33,746
All righty,
1381
01:04:34,121 --> 01:04:36,624
FrontPoint Partners,
1382
01:04:37,166 --> 01:04:39,527
how can Standard & Poor's help you?
1383
01:04:39,627 --> 01:04:40,862
VINNIE: Well, we don't understand why
1384
01:04:40,962 --> 01:04:43,573
the ratings agencies haven't
downgraded subprime bonds
1385
01:04:43,673 --> 01:04:46,701
since the underlying loans
are clearly deteriorating.
1386
01:04:46,801 --> 01:04:49,203
Well, the delinquency rates
do have people worried,
1387
01:04:49,303 --> 01:04:51,080
but they're actually within our models.
1388
01:04:51,180 --> 01:04:53,140
- So...
- VINNIE: Says you.
1389
01:04:54,308 --> 01:04:56,711
...you're convinced
the underlying mortgages
1390
01:04:56,811 --> 01:04:59,230
in these bonds are solid loans.
1391
01:04:59,355 --> 01:05:01,215
GEORGIA: That is our opinion, yes.
1392
01:05:01,315 --> 01:05:03,384
Have you looked at the loan-level data?
1393
01:05:03,484 --> 01:05:05,219
I mean, they're giving these loans
1394
01:05:05,319 --> 01:05:06,554
to anybody with a credit score
and a pulse.
1395
01:05:06,654 --> 01:05:09,223
Excuse me, sir. What do you think
we do here all day?
1396
01:05:09,323 --> 01:05:10,349
VINNIE: We're not sure.
That's why we're here.
1397
01:05:10,449 --> 01:05:11,559
Here's what I don't understand...
1398
01:05:11,659 --> 01:05:13,369
We check, recheck, recheck again.
1399
01:05:13,494 --> 01:05:14,770
MARK: If these mortgage bonds
are so stable...
1400
01:05:14,870 --> 01:05:16,564
Perhaps you could check your friend.
1401
01:05:16,664 --> 01:05:18,649
MARK:...have you ever refused to rate...
1402
01:05:18,749 --> 01:05:21,277
- VINNIE: Ma'am, that's delusional.
- GEORGIA: We stand behind them.
1403
01:05:21,377 --> 01:05:22,945
MARK: Georgia,
have you ever refused to rate
1404
01:05:23,045 --> 01:05:26,324
any of these bonds upper tranches AAA?
1405
01:05:26,424 --> 01:05:27,992
Can we see the paperwork on those deals?
1406
01:05:28,092 --> 01:05:30,077
I am under no obligation
to share that information
1407
01:05:30,177 --> 01:05:31,245
with you, whoever you might be.
1408
01:05:31,345 --> 01:05:33,055
Just answer the question, Georgia.
1409
01:05:33,180 --> 01:05:36,542
Can you name one time in the past year
where you checked the tape
1410
01:05:36,642 --> 01:05:40,855
and you didn't give the banks
the AAA percentage they wanted?
1411
01:05:43,107 --> 01:05:44,258
If we don't give them the ratings,
1412
01:05:44,358 --> 01:05:46,277
they'll go to Moody's,
right down the block.
1413
01:05:47,194 --> 01:05:50,531
If we don't work with them,
they will go to our competitors.
1414
01:05:51,198 --> 01:05:54,368
Not our fault.
Simply the way the world works.
1415
01:05:58,706 --> 01:06:01,208
- VINNIE: Holy shit.
- Yes, now you see.
1416
01:06:02,251 --> 01:06:04,278
And I never said that.
1417
01:06:04,378 --> 01:06:06,781
They're selling ratings for fees.
1418
01:06:06,881 --> 01:06:07,823
A ratings shop.
1419
01:06:07,923 --> 01:06:10,743
You can afford to make less. Make less.
1420
01:06:10,843 --> 01:06:12,703
Nobody said that.
1421
01:06:12,803 --> 01:06:14,956
And it is not my decision. I have a boss.
1422
01:06:15,056 --> 01:06:16,390
Are you kidding me?
1423
01:06:16,557 --> 01:06:17,833
No, I am not "kidding you".
1424
01:06:17,933 --> 01:06:20,211
How'd your boss do on the IPO?
1425
01:06:20,311 --> 01:06:21,504
MARK: Is that the angle you're taking?
1426
01:06:21,604 --> 01:06:25,132
So, now, anyone who has a boss
can't be held responsible
1427
01:06:25,232 --> 01:06:26,634
for doing shitty and illegal things.
1428
01:06:26,734 --> 01:06:28,302
What are you, four?
1429
01:06:28,402 --> 01:06:32,682
No, I am not four, Mr. Baum. I am not, no.
1430
01:06:32,782 --> 01:06:36,160
And I wonder what
your incentives might be.
1431
01:06:36,285 --> 01:06:37,812
Is it maybe in your best interest
1432
01:06:37,912 --> 01:06:40,915
to have the ratings change?
Is it, perhaps?
1433
01:06:42,708 --> 01:06:45,252
How many credit default swaps
do you own? Hmm?
1434
01:06:47,296 --> 01:06:49,156
It doesn't make me wrong.
1435
01:06:49,256 --> 01:06:50,366
No.
1436
01:06:50,466 --> 01:06:52,593
It just makes you a hypocrite.
1437
01:06:59,600 --> 01:07:01,268
(HEAVY METAL MUSIC PLAYING)
1438
01:07:33,217 --> 01:07:35,202
Fuck!
1439
01:07:35,302 --> 01:07:36,412
BEN: Mortgage delinquencies went up
1440
01:07:36,512 --> 01:07:38,539
and the CDOs got more valuable.
Unbelievable.
1441
01:07:38,639 --> 01:07:40,875
- Unbelievable.
- We know. It's completely backwards.
1442
01:07:40,975 --> 01:07:42,543
I just called an old friend at Bear.
1443
01:07:42,643 --> 01:07:44,295
He didn't even know what a CDO is.
1444
01:07:44,395 --> 01:07:48,716
JAMIE: Yeah, I just had to wire
Bear and Deutsche $70,000.
1445
01:07:48,816 --> 01:07:51,152
It's like two plus two equals
1446
01:07:51,652 --> 01:07:52,803
fish.
1447
01:07:52,903 --> 01:07:55,556
CHARLIE: It's rigged.
We bought into a rigged game.
1448
01:07:55,656 --> 01:07:57,433
We're gonna lose everything.
1449
01:07:57,533 --> 01:07:59,994
I'm gonna have to move
back in with my mom.
1450
01:08:00,536 --> 01:08:01,896
Can't do that.
1451
01:08:01,996 --> 01:08:04,148
BEN: All right.
Well, I got a colonic appointment.
1452
01:08:04,248 --> 01:08:05,900
Wait a minute. Hold on, Ben.
1453
01:08:06,000 --> 01:08:07,318
Ben, look.
1454
01:08:07,418 --> 01:08:09,779
Either the banks are clueless
1455
01:08:09,879 --> 01:08:12,156
and they don't know
how to value these CDOs,
1456
01:08:12,256 --> 01:08:17,261
or they're such crooks
that the CDOs are worth shit
1457
01:08:17,428 --> 01:08:19,013
and they're hiding it.
1458
01:08:21,348 --> 01:08:22,808
I think we should buy more swaps.
1459
01:08:23,350 --> 01:08:24,377
What?
1460
01:08:24,477 --> 01:08:26,462
Suck it up and pay up, fellas.
We made a deal.
1461
01:08:26,562 --> 01:08:28,589
No way! No!
1462
01:08:28,689 --> 01:08:30,091
Are you fucking kidding me?
1463
01:08:30,191 --> 01:08:32,510
Are you serious? You think this is a game?
1464
01:08:32,610 --> 01:08:33,861
No. No. No. No. No.
1465
01:08:34,028 --> 01:08:35,279
Yeah. Yeah.
1466
01:08:35,780 --> 01:08:37,865
(ALL SHOUTING)
1467
01:08:41,827 --> 01:08:43,496
No! No! No!
1468
01:08:43,621 --> 01:08:45,272
BEN: No, seriously, a colonic once a year.
1469
01:08:45,372 --> 01:08:46,357
DANNY: Ass!
1470
01:08:46,457 --> 01:08:48,776
PORTER: And you got a matching
little butler boy, you buttfuck!
1471
01:08:48,876 --> 01:08:49,877
(SIGHS)
1472
01:08:53,130 --> 01:08:54,949
- Are you done?
- DANNY: I think so, yeah.
1473
01:08:55,049 --> 01:08:57,802
God! I pulled a muscle
in my back from yelling.
1474
01:08:58,719 --> 01:08:59,720
Ow!
1475
01:09:00,387 --> 01:09:03,724
VINNIE: Mortgage defaults
have done nothing but go up.
1476
01:09:04,058 --> 01:09:07,228
Yet you quote us
a higher price on the bonds.
1477
01:09:08,103 --> 01:09:10,214
Please explain that to me.
There's no way that makes sense.
1478
01:09:10,314 --> 01:09:13,317
There's no way you're marking
these swaps appropriately.
1479
01:09:13,984 --> 01:09:15,903
Why shouldn't we back out
of this trade right now?
1480
01:09:18,405 --> 01:09:21,809
JARED: Didn't I say when we made this deal
that the ratings agencies, the SEC
1481
01:09:21,909 --> 01:09:24,395
and the big banks were clueless?
Didn't I say that?
1482
01:09:24,495 --> 01:09:25,771
- CHRIS: Yes.
- Didn't I say it?
1483
01:09:25,871 --> 01:09:27,706
Yes, you did. You did.
1484
01:09:27,832 --> 01:09:29,275
Shut up.
1485
01:09:29,375 --> 01:09:32,319
Now their foot's on fire, they think
their steak is done, and you're surprised?
1486
01:09:32,419 --> 01:09:35,197
That's not stupidity. That's fraud.
1487
01:09:35,297 --> 01:09:36,991
Tell me the difference
between stupid and illegal,
1488
01:09:37,091 --> 01:09:39,076
and I'll have my wife's brother arrested.
1489
01:09:39,176 --> 01:09:40,427
(SNICKERS)
1490
01:09:40,970 --> 01:09:41,971
That was funny.
1491
01:09:42,096 --> 01:09:45,750
JARED: I guess you just don't realize
how clueless the system really is.
1492
01:09:45,850 --> 01:09:48,169
Yes, there's some shady shit going down,
1493
01:09:48,269 --> 01:09:51,605
but trust me, it's fueled by stupidity!
1494
01:09:52,815 --> 01:09:54,149
Look at yourselves.
1495
01:09:54,942 --> 01:09:58,387
You know,
you pass yourself off as cynical people
1496
01:09:58,487 --> 01:10:00,848
but you still have some faith
in the system, don't you?
1497
01:10:00,948 --> 01:10:02,224
I don't.
1498
01:10:02,324 --> 01:10:05,186
Well, except for Vinnie.
And who gives a shit?
1499
01:10:05,286 --> 01:10:07,021
- JAMIE: No way!
- Look...
1500
01:10:07,121 --> 01:10:10,274
Either we're right or we're wrong
in a giant, giant way.
1501
01:10:10,374 --> 01:10:12,234
And if we're wrong,
then we got to find someone
1502
01:10:12,334 --> 01:10:13,944
to help us get out of this trade.
1503
01:10:14,044 --> 01:10:16,781
I'm not feeling remotely confident
that we're right.
1504
01:10:16,881 --> 01:10:20,284
And if we're wrong, who's gonna tell us?
1505
01:10:20,384 --> 01:10:23,804
Who understands this stuff?
It makes no sense!
1506
01:10:24,221 --> 01:10:25,222
(STATIC)
1507
01:10:26,265 --> 01:10:28,042
BEN: I think we need to go to Vegas.
1508
01:10:28,142 --> 01:10:30,294
- What's in Vegas?
- Vegas?
1509
01:10:30,394 --> 01:10:32,271
What the hell's in Las Vegas?
1510
01:10:33,355 --> 01:10:36,550
The American Securitization Forum
is there next week.
1511
01:10:36,650 --> 01:10:39,053
Every bond and CDO salesman,
subprime lender
1512
01:10:39,153 --> 01:10:41,222
and swap trader is gonna be there.
1513
01:10:41,322 --> 01:10:44,058
I'm telling you,
your bet is against dumb money.
1514
01:10:44,158 --> 01:10:46,977
It's about time you find out
just how dumb that money really is.
1515
01:10:47,077 --> 01:10:48,203
PORTER: God, I hate Vegas.
1516
01:10:48,329 --> 01:10:49,730
I hear the food has gotten
really good in Vegas.
1517
01:10:49,830 --> 01:10:51,315
They have a Nobu now.
1518
01:10:51,415 --> 01:10:52,791
Would you fucking stop it?
1519
01:11:16,023 --> 01:11:17,024
(INDISTINCT CHATTER)
1520
01:11:34,208 --> 01:11:35,626
(INDISTINCT CHATTER)
1521
01:11:39,380 --> 01:11:40,381
CHARLIE: Any sense?
1522
01:11:40,547 --> 01:11:42,049
BEN: And if a bond is "rich" it is...
1523
01:11:42,383 --> 01:11:45,452
- I don't know, loaded with assets?
- "Rich" just means overpriced.
1524
01:11:45,552 --> 01:11:47,496
I can't sleep on planes,
so I did my homework.
1525
01:11:47,596 --> 01:11:49,999
Okay, let's focus. What's our goal?
1526
01:11:50,099 --> 01:11:52,418
To figure out if this is a deal of a lifetime
1527
01:11:52,518 --> 01:11:54,295
or if everyone here
knows something we don't
1528
01:11:54,395 --> 01:11:56,213
and we're gonna get royally screwed.
1529
01:11:56,313 --> 01:11:59,066
Right. Remember that
when you meet with the guys from Bear.
1530
01:11:59,233 --> 01:12:00,968
I set you up with a face-to-face.
1531
01:12:01,068 --> 01:12:02,344
- Awesome.
- Where is that?
1532
01:12:02,444 --> 01:12:06,765
Holy shit. Five years ago,
Securitization was a loser convention.
1533
01:12:06,865 --> 01:12:08,951
100, maybe 200 people would show.
1534
01:12:09,076 --> 01:12:11,186
$500 billion a year later, you get this.
1535
01:12:11,286 --> 01:12:12,938
PORTER: There's a lot of
smug-looking people in here, huh?
1536
01:12:13,038 --> 01:12:16,483
It's like someone hit a piñata
filled with white people who suck at golf.
1537
01:12:16,583 --> 01:12:18,068
I mean, who are all these clowns?
1538
01:12:18,168 --> 01:12:19,528
DANNY: Oh, come on. I think it looks fun.
1539
01:12:19,628 --> 01:12:23,073
MARK: Certainly. Vennett says these
are the people we're betting against.
1540
01:12:23,173 --> 01:12:25,034
- Yeah, here we go. Here we go.
- DANNY: There he is.
1541
01:12:25,134 --> 01:12:26,885
Chris, on my left. Chris, on my left.
1542
01:12:27,344 --> 01:12:28,454
Gentlemen.
1543
01:12:28,554 --> 01:12:32,124
When do we get a chance to face time
with some of these lovely folks?
1544
01:12:32,224 --> 01:12:33,642
Chris, give him the keycards.
1545
01:12:33,767 --> 01:12:34,960
Do you even know which keycards
you're giving out?
1546
01:12:35,060 --> 01:12:36,045
- You're just giving them out?
- Thank you.
1547
01:12:36,145 --> 01:12:38,839
First of all, how was your travel?
How are you? Uneventful?
1548
01:12:38,939 --> 01:12:40,132
- Uneventful.
- Okay.
1549
01:12:40,232 --> 01:12:41,926
I've been here for six hours.
I've already been to the gym,
1550
01:12:42,026 --> 01:12:43,344
I had two poached eggs
1551
01:12:43,444 --> 01:12:45,054
and I played blackjack
with Harry Dean Stanton.
1552
01:12:45,154 --> 01:12:46,613
MARK: Thank you for your diary.
1553
01:12:47,072 --> 01:12:48,682
Face time. I'd like some face time.
1554
01:12:48,782 --> 01:12:50,225
Just remember.
We're here to gather information.
1555
01:12:50,325 --> 01:12:51,727
We're gathering information, okay?
1556
01:12:51,827 --> 01:12:54,188
We're not advertising
our short position. All right?
1557
01:12:54,288 --> 01:12:55,898
We don't want to spook everybody.
Can you do that?
1558
01:12:55,998 --> 01:12:57,524
I know you got a big mouth,
you like to run it.
1559
01:12:57,624 --> 01:12:59,360
Can you just keep it shut for a few days?
1560
01:12:59,460 --> 01:13:00,569
Okay. Okay.
1561
01:13:00,669 --> 01:13:02,504
Yeah, don't worry. We'll play nice.
1562
01:13:02,629 --> 01:13:03,906
Ladies and gentlemen.
1563
01:13:04,006 --> 01:13:06,200
Business is good.
1564
01:13:06,300 --> 01:13:07,701
Profits are strong
1565
01:13:07,801 --> 01:13:10,704
and the mortgage continues
to be the bedrock
1566
01:13:10,804 --> 01:13:13,140
on which this economy is built.
1567
01:13:13,432 --> 01:13:14,975
(AUDIENCE APPLAUDING)
1568
01:13:17,811 --> 01:13:19,380
And, yes, we had to take some losses
1569
01:13:19,480 --> 01:13:22,758
in our subprime department last year,
but those losses
1570
01:13:22,858 --> 01:13:25,486
will be contained at only 5%.
1571
01:13:25,652 --> 01:13:27,763
Now, in our residential sector...
1572
01:13:27,863 --> 01:13:29,031
VINNIE: Mark, it's not a Q and A.
1573
01:13:29,156 --> 01:13:30,808
...our rollout of those
variable rate packages
1574
01:13:30,908 --> 01:13:32,534
were gobbled up by the consumers!
1575
01:13:32,659 --> 01:13:34,703
MARK: I have a question, please.
1576
01:13:36,497 --> 01:13:37,498
Uh...
1577
01:13:37,664 --> 01:13:39,733
Sir, the Q and A is after my statements.
1578
01:13:39,833 --> 01:13:42,236
But you know what? You seem anxious.
How can I help you?
1579
01:13:42,336 --> 01:13:44,238
- Thank you. How are you?
- Fine, thank you.
1580
01:13:44,338 --> 01:13:47,449
Would you say that it is a possibility
1581
01:13:47,549 --> 01:13:52,179
or a probability that
subprime losses stop at 5%?
1582
01:13:52,387 --> 01:13:53,455
Thank you.
1583
01:13:53,555 --> 01:13:58,352
I would say it is a very
strong probability, indeed.
1584
01:13:58,852 --> 01:14:01,396
So back to the residential sector.
1585
01:14:01,522 --> 01:14:03,590
When we rolled out the new
variable rates package...
1586
01:14:03,690 --> 01:14:06,193
- MARK: Excuse me.
- Um... (CHUCKLES)
1587
01:14:07,694 --> 01:14:08,762
Yes, sir.
1588
01:14:08,862 --> 01:14:12,241
Zero! Zero!
1589
01:14:12,366 --> 01:14:15,102
There is a 0% chance
1590
01:14:15,202 --> 01:14:18,981
that your subprime losses will stop at 5%.
1591
01:14:19,081 --> 01:14:20,149
- Zero.
- (CELL PHONE CHIMES)
1592
01:14:20,249 --> 01:14:21,775
Excuse me.
1593
01:14:21,875 --> 01:14:22,901
I have to take this.
1594
01:14:23,001 --> 01:14:24,945
MAN: He must be from Bank of America.
1595
01:14:25,045 --> 01:14:26,046
(ALL LAUGHING)
1596
01:14:26,672 --> 01:14:29,324
- MAN: Our subprime department is fine.
- No, I'm not doing anything right now.
1597
01:14:29,424 --> 01:14:30,951
MAN: As I was saying,
our residential department...
1598
01:14:31,051 --> 01:14:32,219
How are the kids?
1599
01:14:32,344 --> 01:14:34,705
MAN:...consumers
reacted to our packages...
1600
01:14:34,805 --> 01:14:36,457
Mark Baum really did that.
1601
01:14:36,557 --> 01:14:37,791
When we were in Vegas, he did that.
1602
01:14:37,891 --> 01:14:40,060
He said that, he took the call.
1603
01:14:40,519 --> 01:14:42,229
Now you see what I had to deal with?
1604
01:14:42,563 --> 01:14:44,439
(GUNFIRE)
1605
01:14:51,029 --> 01:14:52,573
(SHOUTING)
1606
01:14:53,073 --> 01:14:54,575
(WHOOPING)
1607
01:14:55,909 --> 01:14:58,020
Yeah, the Beretta... Meh.
1608
01:14:58,120 --> 01:15:00,314
But this Uzi is fucking awesome!
1609
01:15:00,414 --> 01:15:02,983
I need this CDO machine
to run for another two years.
1610
01:15:03,083 --> 01:15:06,320
And then I'm rich as fuck
and I got my house in Aspen.
1611
01:15:06,420 --> 01:15:09,615
But do you have any concerns
about the performance
1612
01:15:09,715 --> 01:15:11,283
of the underlying securitizations?
1613
01:15:11,383 --> 01:15:13,160
It's easy to see that delinquencies
1614
01:15:13,260 --> 01:15:16,121
and default rates
are on the rise right now.
1615
01:15:16,221 --> 01:15:18,390
Could you please stop
being such a buzzkill, dude?
1616
01:15:18,765 --> 01:15:21,293
We didn't bring you out here
to talk about work, bro.
1617
01:15:21,393 --> 01:15:22,836
Why did you bring us out here?
1618
01:15:22,936 --> 01:15:26,131
Because we need to be able
to expense the ammo to a client.
1619
01:15:26,231 --> 01:15:29,234
I'm gonna go shoot some terrorists.
Watch how it's done, boys!
1620
01:15:29,443 --> 01:15:30,694
CHARLIE: These guys are morons.
1621
01:15:30,819 --> 01:15:32,446
- Fucking tool.
- MAN: Whoo!
1622
01:15:32,779 --> 01:15:33,822
These guys are morons.
1623
01:15:34,948 --> 01:15:36,116
Fuck, yes! Boom!
1624
01:15:36,283 --> 01:15:37,392
Yeah, man!
1625
01:15:37,492 --> 01:15:39,853
We need to be buying up every swap
we can get our hands on here.
1626
01:15:39,953 --> 01:15:42,231
Just hold on, okay? Hold on.
1627
01:15:42,331 --> 01:15:44,625
My brother's ex-girlfriend
works for the SEC.
1628
01:15:44,750 --> 01:15:46,568
She just told me she's in town, okay?
1629
01:15:46,668 --> 01:15:48,795
So, if we're missing something,
maybe she can tell me.
1630
01:15:48,921 --> 01:15:50,531
You know, give me some insight.
1631
01:15:50,631 --> 01:15:52,366
In the meantime, you go to the main floor
1632
01:15:52,466 --> 01:15:54,176
and price some swaps.
1633
01:15:54,635 --> 01:15:58,622
JAMIE: (STAMMERS) Well, actually, we're
about to invest in housing bonds, and...
1634
01:15:58,722 --> 01:16:01,375
I was wondering if the SEC
is worried about them at all.
1635
01:16:01,475 --> 01:16:04,211
I know you're not allowed
to tell me specifics, but just generally.
1636
01:16:04,311 --> 01:16:06,505
Oh, we don't investigate mortgage bonds.
1637
01:16:06,605 --> 01:16:09,942
Truth is, since we got our budget cut,
we don't investigate much.
1638
01:16:11,985 --> 01:16:14,930
- Then why are you here? I thought...
- I'm not here for the SEC.
1639
01:16:15,030 --> 01:16:16,698
I'm here on my own dime.
1640
01:16:17,658 --> 01:16:20,853
I'm floating my resume to some big banks.
1641
01:16:20,953 --> 01:16:22,521
How's your brother, by the way?
1642
01:16:22,621 --> 01:16:24,481
How are you floating
your resume to big banks?
1643
01:16:24,581 --> 01:16:27,401
I mean, you're supposed to be the ones,
you know, policing the big banks.
1644
01:16:27,501 --> 01:16:28,902
Grow up, Jamie.
1645
01:16:29,002 --> 01:16:32,739
There must be some kind of law against
working for a financial institution
1646
01:16:32,839 --> 01:16:36,034
right after you've been working
in financial regulation, right?
1647
01:16:36,134 --> 01:16:38,220
No. No.
1648
01:16:39,304 --> 01:16:41,848
(GASPS) Hey! Dougie!
1649
01:16:42,683 --> 01:16:45,627
Hey! Come over here.
What are you doing at Caesars?
1650
01:16:45,727 --> 01:16:47,229
He's at Goldman.
1651
01:16:47,854 --> 01:16:48,881
See you.
1652
01:16:48,981 --> 01:16:54,011
We can do BBB-level swaps
at 500 basis points. Maybe.
1653
01:16:54,111 --> 01:16:57,890
You're pricing the swaps
like the bond is gonna collapse
1654
01:16:57,990 --> 01:17:00,367
even though the bond value's
going up? Really?
1655
01:17:00,909 --> 01:17:01,977
Sign of the times.
1656
01:17:02,077 --> 01:17:03,078
CHARLIE: What the hell is going on?
1657
01:18:01,970 --> 01:18:05,749
Lewis, can you come in
early tomorrow, please?
1658
01:18:05,849 --> 01:18:08,126
I need to unload the AIG and Countrywide
1659
01:18:08,226 --> 01:18:09,670
and Freddie Mac positions
1660
01:18:09,770 --> 01:18:12,272
so that we can afford
the premiums on the...
1661
01:18:12,439 --> 01:18:13,423
(SIGHS)
1662
01:18:13,523 --> 01:18:16,443
...core mortgage shorts on the swaps.
1663
01:18:16,902 --> 01:18:18,403
No problem, Dr. Burry.
1664
01:18:20,447 --> 01:18:21,615
- Dr. Burry?
- Hmm?
1665
01:18:23,533 --> 01:18:24,534
(CLEARS THROAT)
1666
01:18:25,202 --> 01:18:29,081
If the investors withdraw,
what's going to happen here? Are we done?
1667
01:18:29,206 --> 01:18:31,124
Honestly, I don't know.
1668
01:18:35,379 --> 01:18:37,089
(STAMMERS)
1669
01:18:38,799 --> 01:18:41,051
The bonds aren't going down.
1670
01:18:42,302 --> 01:18:44,971
They won't move. It's possible
1671
01:18:45,389 --> 01:18:49,976
that we are in a completely
fraudulent system.
1672
01:18:51,395 --> 01:18:54,064
Or... (STAMMERS) You're wrong.
1673
01:18:58,819 --> 01:18:59,903
Sure.
1674
01:19:00,654 --> 01:19:04,658
It's possible I'm wrong.
I just don't know how.
1675
01:19:09,371 --> 01:19:13,542
I guess when someone's wrong,
they never...
1676
01:19:13,917 --> 01:19:16,169
They never know how.
1677
01:19:20,465 --> 01:19:21,508
LEWIS: See you in the morning.
1678
01:19:21,633 --> 01:19:22,676
Yeah.
1679
01:19:24,469 --> 01:19:26,471
Even Bear upped their prices.
1680
01:19:27,055 --> 01:19:29,541
And they keep calling us Brownhole.
1681
01:19:29,641 --> 01:19:31,251
You just don't have the money
or the reputation.
1682
01:19:31,351 --> 01:19:32,686
Don't take it personally.
1683
01:19:32,811 --> 01:19:34,087
I don't think I have
the strip club in me tonight.
1684
01:19:34,187 --> 01:19:37,841
I'm just gonna get some ginger ale
and watch some pay-per-view.
1685
01:19:37,941 --> 01:19:40,318
I'll book us some flights out
for the morning.
1686
01:19:41,736 --> 01:19:44,348
CHARLIE: (STAMMERS) A deal.
We need a deal, right? A deal.
1687
01:19:44,448 --> 01:19:46,241
We need a deal we can afford.
1688
01:19:46,366 --> 01:19:48,643
We need a deal
that they're not gonna refuse.
1689
01:19:48,743 --> 01:19:52,080
So... What can we do? We can...
1690
01:19:53,373 --> 01:19:56,276
The AA tranches. What if we
bet against the AA tranches?
1691
01:19:56,376 --> 01:19:57,711
Who's not gonna take that bet?
1692
01:19:58,420 --> 01:20:01,323
We know they say they're 95% AAA-rated,
1693
01:20:01,423 --> 01:20:03,408
but in reality they're more like 25%.
1694
01:20:03,508 --> 01:20:05,911
Some of them are 0%!
1695
01:20:06,011 --> 01:20:08,622
We also know that if
the bottom tranches fail at over 8%,
1696
01:20:08,722 --> 01:20:09,873
the upper tranches are affected.
1697
01:20:09,973 --> 01:20:11,183
They go to zero.
1698
01:20:11,433 --> 01:20:14,394
I'll bet you right now
that those AA's are actually like B's.
1699
01:20:14,853 --> 01:20:17,939
I rarely ever say these words,
but I think Charlie's right.
1700
01:20:18,273 --> 01:20:19,941
Look, Ben.
1701
01:20:21,610 --> 01:20:23,028
The payoff
1702
01:20:23,528 --> 01:20:24,930
is 200 to 1.
1703
01:20:25,030 --> 01:20:27,073
But they're all taking
the ratings at face value.
1704
01:20:27,199 --> 01:20:30,577
So they're charging pennies
on the dollar a bet against the AA's.
1705
01:20:32,204 --> 01:20:35,023
Just when I start thinking
you guys are clowns...
1706
01:20:35,123 --> 01:20:37,609
No one on the planet's
betting against AA's.
1707
01:20:37,709 --> 01:20:40,612
The banks will think we're either high
or having a stroke.
1708
01:20:40,712 --> 01:20:43,048
They'll take every dime we have to offer.
1709
01:20:45,634 --> 01:20:46,968
Kinda brilliant.
1710
01:20:48,762 --> 01:20:50,831
This is what we did
that no one else thought of.
1711
01:20:50,931 --> 01:20:53,834
Not even Baum or Burry
thought to short the AA's.
1712
01:20:53,934 --> 01:20:55,293
But we did.
1713
01:20:55,393 --> 01:20:56,937
Little Brownhole Capital.
1714
01:20:57,270 --> 01:21:02,175
We're interested in shorting
some of the AA tranche of CDOs.
1715
01:21:02,275 --> 01:21:04,052
Come on, guys, what's the angle?
1716
01:21:04,152 --> 01:21:06,446
Oh, got no angle.
We're new to this. We're just excited.
1717
01:21:06,571 --> 01:21:10,283
We want to do $15 million
in swaps on the AA tranche.
1718
01:21:10,742 --> 01:21:11,810
I don't understand.
1719
01:21:11,910 --> 01:21:14,538
You can buy as much
AA tranche as you want.
1720
01:21:16,748 --> 01:21:18,859
$40 million against the AA.
1721
01:21:18,959 --> 01:21:21,169
Brother, I will sell you
as much as you want.
1722
01:21:21,461 --> 01:21:23,672
You understand perfectly, Bob.
You want the deal?
1723
01:21:24,756 --> 01:21:25,740
(MEN LAUGHING)
1724
01:21:25,840 --> 01:21:27,842
That's cool. That's all right with me.
1725
01:21:30,053 --> 01:21:31,263
Pleasure.
1726
01:21:36,101 --> 01:21:37,978
Oh! (VOCALIZING)
1727
01:21:39,479 --> 01:21:41,398
- Don't do that. Stop. Stop.
- (CONTINUES VOCALIZING)
1728
01:21:42,107 --> 01:21:43,316
- Stop that.
- Charlie.
1729
01:21:44,025 --> 01:21:45,485
Stop it! Stop.
1730
01:21:47,904 --> 01:21:48,989
What?
1731
01:21:50,407 --> 01:21:51,783
Do you have any idea what you just did?
1732
01:21:52,200 --> 01:21:53,852
Come on. We just made
the deal of our lifetimes!
1733
01:21:53,952 --> 01:21:55,103
We should celebrate.
1734
01:21:55,203 --> 01:21:57,105
You just bet against the American economy.
1735
01:21:57,205 --> 01:21:58,690
Fuck, yeah, we did!
1736
01:21:58,790 --> 01:22:00,734
- Fuck, yeah!
- Which means...
1737
01:22:00,834 --> 01:22:03,503
Which means if we're right...
1738
01:22:04,546 --> 01:22:07,908
If we're right, people lose homes.
People lose jobs.
1739
01:22:08,008 --> 01:22:11,177
People lose retirement savings.
People lose pensions.
1740
01:22:11,303 --> 01:22:12,454
You know what I hate
about fucking banking?
1741
01:22:12,554 --> 01:22:14,080
It reduces people to numbers.
Here's a number.
1742
01:22:14,180 --> 01:22:17,000
Every 1% unemployment goes up,
40,000 people die. Did you know that?
1743
01:22:17,100 --> 01:22:18,585
- No.
- Did you know that?
1744
01:22:18,685 --> 01:22:20,270
No, I didn't know that.
1745
01:22:21,730 --> 01:22:23,398
We were just excited.
1746
01:22:25,817 --> 01:22:27,819
Just don't fucking dance.
1747
01:22:28,486 --> 01:22:30,322
- CHARLIE: All right.
- JAMIE: Where are you going?
1748
01:22:34,701 --> 01:22:36,870
Whoa, I just got really scared.
1749
01:22:38,413 --> 01:22:40,315
First of all, great show today.
1750
01:22:40,415 --> 01:22:41,858
- You were terrific.
- Thank you.
1751
01:22:41,958 --> 01:22:43,568
Your big mouth was a revelation.
1752
01:22:43,668 --> 01:22:45,378
I appreciate that.
1753
01:22:45,503 --> 01:22:47,239
You worried you and your swaps
are getting played?
1754
01:22:47,339 --> 01:22:50,450
Well, this is an opportunity for you
to meet who you're betting against.
1755
01:22:50,550 --> 01:22:52,327
Try not to get too righteous
and listen a little.
1756
01:22:52,427 --> 01:22:53,803
Okay, fine. Who is this guy?
1757
01:22:53,928 --> 01:22:55,597
JAMIE: A real solid-gold asshole.
1758
01:22:55,764 --> 01:22:56,848
I'm a CDO manager.
1759
01:22:56,973 --> 01:22:57,999
A "CDO manager"?
1760
01:22:58,099 --> 01:22:59,517
Yeah, at Harding Advisors.
1761
01:23:00,101 --> 01:23:03,229
I didn't realize that there was
anything to manage with CDOs.
1762
01:23:04,189 --> 01:23:05,190
MR. CHAU: Oh.
1763
01:23:05,940 --> 01:23:08,468
We select the securities
that go into the CDO portfolio
1764
01:23:08,568 --> 01:23:09,928
and monitor the assets.
1765
01:23:10,028 --> 01:23:11,805
I do most of Merrill Lynch's CDOs.
1766
01:23:11,905 --> 01:23:14,849
Do you represent the investors
or Merrill Lynch?
1767
01:23:14,949 --> 01:23:15,976
The investors.
1768
01:23:16,076 --> 01:23:17,102
You do.
1769
01:23:17,202 --> 01:23:18,536
- Yeah.
- But...
1770
01:23:18,745 --> 01:23:20,605
Merrill Lynch isn't gonna
send you any customers
1771
01:23:20,705 --> 01:23:24,250
unless you put Merrill Lynch's bonds
in your CDO.
1772
01:23:25,377 --> 01:23:28,088
Good question. Let's just say
Merrill and I have, um...
1773
01:23:28,713 --> 01:23:30,799
We have a good relationship.
1774
01:23:30,924 --> 01:23:33,118
You have a good relationship
with Merrill Lynch.
1775
01:23:33,218 --> 01:23:34,869
We've been doing business
together for a long time.
1776
01:23:34,969 --> 01:23:37,430
And so the CDOs that you create
1777
01:23:37,555 --> 01:23:41,459
are of the highest quality
and the highest value.
1778
01:23:41,559 --> 01:23:43,461
- Absolutely. Yep.
- Absolutely.
1779
01:23:43,561 --> 01:23:47,107
Are you at all concerned
about the rising default rates?
1780
01:23:49,067 --> 01:23:52,237
I assume no risk for these
products myself, Mark.
1781
01:23:54,906 --> 01:23:56,074
Okay.
1782
01:23:57,659 --> 01:24:00,829
So let me get this straight.
The bank calls you up.
1783
01:24:01,413 --> 01:24:02,939
They give you the bonds they want to sell.
1784
01:24:03,039 --> 01:24:04,357
They give you clients,
1785
01:24:04,457 --> 01:24:06,818
they give you money to run your business.
1786
01:24:06,918 --> 01:24:08,612
Give you fat fees for doing so.
1787
01:24:08,712 --> 01:24:10,714
But you represent the investors?
1788
01:24:10,964 --> 01:24:11,965
(CHUCKLES)
1789
01:24:12,257 --> 01:24:13,299
Is that right?
1790
01:24:13,425 --> 01:24:14,451
Yeah.
1791
01:24:14,551 --> 01:24:15,994
But we're not
in the Merrill Lynch building.
1792
01:24:16,094 --> 01:24:17,662
- Okay. Where are you?
- We're in New Jersey.
1793
01:24:17,762 --> 01:24:19,831
You're 20 minutes away.
1794
01:24:19,931 --> 01:24:21,850
Well, five if you use a helicopter.
1795
01:24:23,727 --> 01:24:24,853
That's funny, huh?
1796
01:24:24,978 --> 01:24:26,146
That's hilarious.
1797
01:24:26,271 --> 01:24:28,398
(INDISTINCT CHATTER)
1798
01:24:29,357 --> 01:24:30,400
Oh, boy.
1799
01:24:30,775 --> 01:24:32,969
Your boss is about to explode.
1800
01:24:33,069 --> 01:24:34,679
No, he's too curious to explode.
1801
01:24:34,779 --> 01:24:36,222
Hold on. Say that again.
1802
01:24:36,322 --> 01:24:38,433
CDO "A" has parts of CDO "B".
1803
01:24:38,533 --> 01:24:40,435
And CDO "B" has parts of CDO "A".
1804
01:24:40,535 --> 01:24:42,771
But then they both get put inside CDO "C".
1805
01:24:42,871 --> 01:24:44,606
Yeah, that one's called CDO squared.
1806
01:24:44,706 --> 01:24:46,791
A CDO of a CDO.
1807
01:24:47,208 --> 01:24:48,209
All right?
1808
01:24:48,376 --> 01:24:50,320
And then there's CDOs
made up of the opposite side
1809
01:24:50,420 --> 01:24:51,963
of the bet you made with your swaps.
1810
01:24:52,213 --> 01:24:54,507
We call them synthetic CDOs.
1811
01:24:54,632 --> 01:24:56,785
What did you say? Synthetic CDOs.
1812
01:24:56,885 --> 01:24:58,595
That is fucking crazy.
1813
01:24:58,720 --> 01:25:00,388
It's not. It's awesome.
1814
01:25:01,806 --> 01:25:05,310
His face is starting to boil.
He looks like the bad guy from Dune.
1815
01:25:08,188 --> 01:25:09,297
(INDISTINCT CHATTER)
1816
01:25:09,397 --> 01:25:11,316
All right, let's say
1817
01:25:11,816 --> 01:25:15,153
you have a pool of $50 million
in subprime loans.
1818
01:25:15,487 --> 01:25:18,056
How much money could be
out there betting on it,
1819
01:25:18,156 --> 01:25:20,934
in your synthetic CDOs and swaps
1820
01:25:21,034 --> 01:25:22,602
right now, tonight?
1821
01:25:22,702 --> 01:25:25,330
Let's see, $50 million... Hmm...
1822
01:25:26,331 --> 01:25:27,273
A billion dollars.
1823
01:25:27,373 --> 01:25:28,374
What?
1824
01:25:29,501 --> 01:25:32,837
JARED: If the mortgage bonds that
Michael Burry discovered were the match...
1825
01:25:34,255 --> 01:25:36,658
How much bigger is the market
for insuring mortgage bonds
1826
01:25:36,758 --> 01:25:38,218
than actual mortgages?
1827
01:25:39,385 --> 01:25:40,553
About 20 times.
1828
01:25:40,720 --> 01:25:42,789
JARED: If the mortgage bonds
were the match
1829
01:25:42,889 --> 01:25:45,583
and the CDOs were
the kerosene-soaked rags,
1830
01:25:45,683 --> 01:25:47,711
then the synthetic CDO was the atomic bomb
1831
01:25:47,811 --> 01:25:50,755
with the drunk President
holding his finger over the button.
1832
01:25:50,855 --> 01:25:53,091
It was at that moment
in that dumb restaurant
1833
01:25:53,191 --> 01:25:56,344
with that stupid look on his face
that Mark Baum realized
1834
01:25:56,444 --> 01:25:58,863
that the whole world economy
might collapse.
1835
01:26:02,492 --> 01:26:04,394
And I know what you're thinking.
1836
01:26:04,494 --> 01:26:06,813
"What the fuck is a synthetic CDO?"
1837
01:26:06,913 --> 01:26:07,914
(CROWD CHEERING)
1838
01:26:09,207 --> 01:26:12,819
Well, here's Dr. Richard Thaler,
father of behavioral economics
1839
01:26:12,919 --> 01:26:15,547
and Selena Gomez to explain.
1840
01:26:15,880 --> 01:26:19,033
Okay. So here's how a synthetic CDO works.
1841
01:26:19,133 --> 01:26:21,995
Let's say I bet $10 million
on a blackjack hand.
1842
01:26:22,095 --> 01:26:24,597
$10 million because this hand
is meant to represent
1843
01:26:24,973 --> 01:26:27,225
a single mortgage bond.
1844
01:26:30,186 --> 01:26:33,606
Okay, Selena has a pretty good
hand here, showing 18.
1845
01:26:33,731 --> 01:26:34,716
Dealer showing seven.
1846
01:26:34,816 --> 01:26:36,843
That's a really good hand for Selena.
1847
01:26:36,943 --> 01:26:40,805
Good odds. In fact, her chances
of winning this hand are 87%.
1848
01:26:40,905 --> 01:26:44,267
So, my odds are good.
I'm on a winning streak.
1849
01:26:44,367 --> 01:26:47,020
Everybody in this place
wants to get in on the action.
1850
01:26:47,120 --> 01:26:48,480
How could I lose, right?
1851
01:26:48,580 --> 01:26:50,064
Now, this is a classic error.
1852
01:26:50,164 --> 01:26:53,109
In basketball it's called
the Hot Hand Fallacy.
1853
01:26:53,209 --> 01:26:55,737
A player makes a bunch of shots in a row.
1854
01:26:55,837 --> 01:26:58,114
People are sure they're
gonna make the next one.
1855
01:26:58,214 --> 01:27:00,158
People think that whatever's happening now
1856
01:27:00,258 --> 01:27:02,994
is gonna continue to
happen into the future.
1857
01:27:03,094 --> 01:27:06,414
During the real estate boom,
markets were going up and up
1858
01:27:06,514 --> 01:27:08,166
and people thought
they would never go down.
1859
01:27:08,266 --> 01:27:10,794
So people who are watching
and think that I won't lose
1860
01:27:10,894 --> 01:27:12,337
will make a side bet.
1861
01:27:12,437 --> 01:27:14,672
Now, this is the first synthetic CDO.
1862
01:27:14,772 --> 01:27:16,341
I love Selena Gomez.
1863
01:27:16,441 --> 01:27:17,926
I bet you $50 million she wins.
1864
01:27:18,026 --> 01:27:20,094
And I'll give you 3-to-1 odds.
1865
01:27:20,194 --> 01:27:24,015
3-to-1 odds? Okay, I'll take that bet.
1866
01:27:24,115 --> 01:27:27,435
RICHARD: Now, somebody else
is gonna want to make a bet
1867
01:27:27,535 --> 01:27:28,661
on the outcome of their bet.
1868
01:27:28,828 --> 01:27:29,938
Bet you 50 million she wins.
1869
01:27:30,038 --> 01:27:32,982
That will lead to synthetic
CDO number two.
1870
01:27:33,082 --> 01:27:36,252
Hey, I bet you $200 million
that lady in the glasses
1871
01:27:36,419 --> 01:27:37,921
wins that bet.
1872
01:27:38,087 --> 01:27:41,174
She probably will win.
So I want a great payoff.
1873
01:27:41,341 --> 01:27:42,425
How about 20-to-1?
1874
01:27:42,550 --> 01:27:43,676
Deal.
1875
01:27:44,010 --> 01:27:48,289
And this will go on and on with more
and more synthetic CDOs.
1876
01:27:48,389 --> 01:27:52,435
And we can transform an original
$10 million investment
1877
01:27:52,602 --> 01:27:54,520
into billions of dollars.
1878
01:27:55,438 --> 01:27:56,773
You okay?
1879
01:27:58,191 --> 01:27:59,192
No.
1880
01:28:00,568 --> 01:28:02,403
I actually feel pretty sick.
1881
01:28:03,071 --> 01:28:04,572
(ALL GROAN)
1882
01:28:05,698 --> 01:28:07,033
(GROANING CONTINUES)
1883
01:28:07,617 --> 01:28:09,535
So I'm going to leave.
1884
01:28:11,120 --> 01:28:13,373
You think I'm a parasite,
don't you, Mr. Baum?
1885
01:28:14,082 --> 01:28:18,002
But, apparently,
society values me very much.
1886
01:28:19,045 --> 01:28:20,797
In fact, let's do this.
1887
01:28:22,840 --> 01:28:25,843
I'll tell you how much I'm worth.
1888
01:28:26,386 --> 01:28:27,887
You tell me how much you're worth.
1889
01:28:29,097 --> 01:28:34,185
God, you are an incredibly
big piece of shit.
1890
01:28:39,941 --> 01:28:41,801
Short everything that guy has touched.
1891
01:28:41,901 --> 01:28:43,528
I want half a billion more in swaps.
1892
01:28:44,070 --> 01:28:46,264
You sure about that?
The collateral calls could bankrupt you.
1893
01:28:46,364 --> 01:28:47,307
MARK: Yeah. Yeah.
1894
01:28:47,407 --> 01:28:48,391
Where are you going?
1895
01:28:48,491 --> 01:28:51,477
I am going to try to find moral redemption
1896
01:28:51,577 --> 01:28:53,413
at the roulette table.
1897
01:29:32,994 --> 01:29:34,620
(INAUDIBLE)
1898
01:29:57,602 --> 01:29:58,978
Hey, hey, hey!
1899
01:30:03,066 --> 01:30:04,525
Things are worse than I thought.
1900
01:30:06,652 --> 01:30:08,571
I honestly think
the economy might collapse.
1901
01:30:08,988 --> 01:30:10,098
But you've been saying
1902
01:30:10,198 --> 01:30:13,284
that the system's broken
for years, Mark. So...
1903
01:30:13,743 --> 01:30:15,661
Why are you so shocked?
1904
01:30:18,164 --> 01:30:21,567
It's more twisted
than I could have imagined.
1905
01:30:21,667 --> 01:30:23,544
You love to be the virtuous one.
1906
01:30:24,003 --> 01:30:25,571
I'm a banker. I'm a part of it.
1907
01:30:25,671 --> 01:30:27,949
You always have, Mark.
Like you're untainted.
1908
01:30:28,049 --> 01:30:31,511
It changed me. It changed me into a person
1909
01:30:32,095 --> 01:30:33,913
who is not able to reach out to someone...
1910
01:30:34,013 --> 01:30:35,932
He was in pain.
My brother was in real pain.
1911
01:30:36,516 --> 01:30:38,851
There's no perfect way to help.
1912
01:30:41,854 --> 01:30:44,315
It's sad. It's scary.
1913
01:30:44,440 --> 01:30:47,593
So stop trying to fix the world.
1914
01:30:47,693 --> 01:30:48,761
He told me...
1915
01:30:48,861 --> 01:30:50,179
You're not a saint.
1916
01:30:50,279 --> 01:30:52,031
Saints don't live on Park Avenue.
1917
01:30:52,240 --> 01:30:53,850
...that he was having bad thoughts.
1918
01:30:53,950 --> 01:30:56,744
CYNTHIA: Just feel the feelings
like the rest of us.
1919
01:30:57,078 --> 01:31:01,249
MARK: My first response
was to offer him some money.
1920
01:31:01,582 --> 01:31:04,085
I offered him fucking money!
1921
01:31:04,502 --> 01:31:06,129
(INAUDIBLE)
1922
01:31:09,757 --> 01:31:12,385
His face was so smashed.
1923
01:31:23,771 --> 01:31:25,565
(SOBBING)
1924
01:31:31,445 --> 01:31:32,780
That's right.
1925
01:31:44,292 --> 01:31:45,543
(ROCK MUSIC PLAYING)
1926
01:31:45,668 --> 01:31:46,919
(MOANING)
1927
01:32:29,921 --> 01:32:32,215
(SCREAMING)
1928
01:32:39,472 --> 01:32:40,790
MIKE'S WIFE: Michael?
1929
01:32:40,890 --> 01:32:42,208
- Michael?
- Yes. Yes.
1930
01:32:42,308 --> 01:32:44,377
- Is everything okay?
- Yes, honey.
1931
01:32:44,477 --> 01:32:46,604
- You sure?
- Yeah, baby.
1932
01:32:48,397 --> 01:32:49,690
I'm fine. (LAUGHS)
1933
01:32:58,658 --> 01:33:00,309
MIKE: To all investors.
1934
01:33:00,409 --> 01:33:01,494
As you may know,
1935
01:33:02,495 --> 01:33:06,082
our agreement allows me
to take extraordinary measures
1936
01:33:06,540 --> 01:33:09,443
when markets aren't functioning properly.
1937
01:33:09,543 --> 01:33:13,256
I currently have reason to
believe the mortgage bond market
1938
01:33:13,923 --> 01:33:15,675
is fraudulent.
1939
01:33:17,843 --> 01:33:22,582
So, in order to protect investors
from this fraudulent market,
1940
01:33:22,682 --> 01:33:25,918
I've decided to restrict
investors' withdrawals
1941
01:33:26,018 --> 01:33:27,687
until further notice.
1942
01:33:28,020 --> 01:33:31,691
Sincerely, Dr. Michael J. Burry.
1943
01:33:41,117 --> 01:33:42,868
(HEAVY METAL MUSIC PLAYING)
1944
01:33:43,703 --> 01:33:44,996
(COMPUTER CHIMES)
1945
01:33:51,502 --> 01:33:55,339
(PHONES RINGING)
1946
01:34:06,684 --> 01:34:07,810
(SNIFFLES)
1947
01:34:39,258 --> 01:34:40,826
LAUREN CONRAD: (ON TV)
I never would have guessed my life
1948
01:34:40,926 --> 01:34:43,412
could change as much
as it has since I moved to L.A.
1949
01:34:43,512 --> 01:34:45,873
JASON WAHLER: It's not just, like,
that easy to, like, not see you.
1950
01:34:45,973 --> 01:34:49,060
REPORTER: He lashed out at rumors
he used performance enhancing drugs.
1951
01:34:49,268 --> 01:34:50,670
This record is not tainted.
1952
01:34:50,770 --> 01:34:51,921
Oh, my God, dude.
1953
01:34:52,021 --> 01:34:53,714
Will you please stop
changing the channels?
1954
01:34:53,814 --> 01:34:55,424
- You're driving me crazy.
- All right.
1955
01:34:55,524 --> 01:34:57,485
- Fine.
- Just put the business news on.
1956
01:34:58,444 --> 01:34:59,595
REPORTER:...and the S&P
picked up three points.
1957
01:34:59,695 --> 01:35:00,680
Jesus!
1958
01:35:00,780 --> 01:35:02,515
Mortgage meltdown continued today.
1959
01:35:02,615 --> 01:35:05,326
Subprime mortgage lender
New Century Financial,
1960
01:35:05,451 --> 01:35:08,062
once the industry leader, by the way,
filed for bankruptcy.
1961
01:35:08,162 --> 01:35:09,230
- The company immediately...
- Whoa, whoa, whoa.
1962
01:35:09,330 --> 01:35:10,539
(REPORTER CLEARS THROAT)
1963
01:35:10,706 --> 01:35:11,857
Good time for my voice to go...
1964
01:35:11,957 --> 01:35:14,193
Fired 3,200 workers.
1965
01:35:14,293 --> 01:35:16,612
The manufacturing index also
fell in the month of March...
1966
01:35:16,712 --> 01:35:17,780
It's starting.
1967
01:35:17,880 --> 01:35:19,448
...a warning that
economic growth could slow.
1968
01:35:19,548 --> 01:35:21,008
The Institute of Supply Management
1969
01:35:21,133 --> 01:35:22,535
also reported a rise in prices...
1970
01:35:22,635 --> 01:35:24,261
I'm gonna call my mom.
1971
01:35:26,514 --> 01:35:29,375
The principal source
of the slowdown in economic growth...
1972
01:35:29,475 --> 01:35:31,519
Time and time and time again,
1973
01:35:31,644 --> 01:35:33,754
I have gone to bat for you, Mark!
1974
01:35:33,854 --> 01:35:35,131
We've known each other for seven years...
1975
01:35:35,231 --> 01:35:37,566
She's got some lungs on her.
I'm impressed.
1976
01:35:38,734 --> 01:35:40,569
I can't help but enjoy it.
1977
01:35:41,487 --> 01:35:43,097
PORTER: There's no fucking way.
There's no fucking way
1978
01:35:43,197 --> 01:35:44,657
that the big banks are that stupid.
1979
01:35:45,658 --> 01:35:47,493
Bye, Kathy!
1980
01:35:52,164 --> 01:35:53,165
VINNIE: Well?
1981
01:35:54,375 --> 01:35:56,360
MARK: (SIGHS) Kathy thinks
that it would be a good idea
1982
01:35:56,460 --> 01:35:57,987
if we sold our shorts.
1983
01:35:58,087 --> 01:35:59,071
PORTER: What else is new?
1984
01:35:59,171 --> 01:36:01,032
And she said that
Morgan Stanley will buy them.
1985
01:36:01,132 --> 01:36:02,133
DANNY: Holy shit!
1986
01:36:02,842 --> 01:36:04,076
What did you say?
1987
01:36:04,176 --> 01:36:05,845
I told her we're not selling shit.
1988
01:36:07,847 --> 01:36:09,181
(WHISTLES)
1989
01:36:12,017 --> 01:36:15,855
Uh, if you need the files for 2005...
1990
01:36:16,021 --> 01:36:19,024
Mr. Fields' suit is very specific
to files from the past year.
1991
01:36:19,775 --> 01:36:22,511
Good. Then get out.
Say hi to Lawrence for me.
1992
01:36:22,611 --> 01:36:23,779
Will do.
1993
01:36:23,988 --> 01:36:25,698
(CELL PHONE RINGING)
1994
01:36:26,824 --> 01:36:28,476
You can't call me back for a week?
1995
01:36:28,576 --> 01:36:30,411
LUCY: I am so sorry, Mike.
1996
01:36:30,786 --> 01:36:33,939
Goldman had a systems failure.
I lost a ton of messages.
1997
01:36:34,039 --> 01:36:36,083
Yeah, B of A said they had a power outage,
1998
01:36:36,208 --> 01:36:39,378
and Morgan Stanley
said their server crashed.
1999
01:36:39,503 --> 01:36:40,613
Huh. That's weird.
2000
01:36:40,713 --> 01:36:43,240
Well, I would call it improbable.
2001
01:36:43,340 --> 01:36:46,886
So where do you have our position marked?
2002
01:36:47,720 --> 01:36:49,455
I think it's the same, Mike.
2003
01:36:49,555 --> 01:36:51,415
What? Can you explain that to me, please,
2004
01:36:51,515 --> 01:36:54,794
because how can the value
of an insurance contract
2005
01:36:54,894 --> 01:36:59,090
not be affected by the demise
of the very thing it insures?
2006
01:36:59,190 --> 01:37:01,967
They're independent markets.
They're not always correlated.
2007
01:37:02,067 --> 01:37:03,052
I know it sounds odd,
2008
01:37:03,152 --> 01:37:05,613
but these are very complicated products.
2009
01:37:06,447 --> 01:37:08,307
They are correlated.
2010
01:37:08,407 --> 01:37:10,393
They're gonna lose their houses,
they're gonna lose their jobs,
2011
01:37:10,493 --> 01:37:11,494
they're gonna lose their...
2012
01:37:14,371 --> 01:37:16,207
Will you listen to me?
2013
01:37:16,415 --> 01:37:19,043
This is like the end of capitalism.
2014
01:37:19,168 --> 01:37:22,505
This is like the Dark Ages all over again.
2015
01:37:23,547 --> 01:37:24,657
I don't want to talk to Dad.
2016
01:37:24,757 --> 01:37:27,301
Okay, I love you, too. Save your money.
2017
01:37:28,010 --> 01:37:32,014
She says I need to be on Xanax
and double my dose of Zoloft.
2018
01:37:32,181 --> 01:37:34,125
I asked Bear Stearns to price our shorts.
2019
01:37:34,225 --> 01:37:35,793
They tell me the CDOs still haven't moved.
2020
01:37:35,893 --> 01:37:37,670
CHARLIE: This is fucking insane!
2021
01:37:37,770 --> 01:37:41,398
You realize that? These people are
crooks and they should be in prison.
2022
01:37:41,565 --> 01:37:42,675
Look at the TABX.
2023
01:37:42,775 --> 01:37:44,593
You can see that the CDOs are worth zero!
2024
01:37:44,693 --> 01:37:45,694
So you know what they're doing, huh?
2025
01:37:45,819 --> 01:37:46,862
You know what they're doing, right?
2026
01:37:46,987 --> 01:37:48,639
Yeah. They're unloading them.
2027
01:37:48,739 --> 01:37:52,017
They're selling their dog shit CDOs,
then they go to another bank
2028
01:37:52,117 --> 01:37:54,161
and short the shit they just fucking sold!
2029
01:37:54,328 --> 01:37:55,896
Let's go to the press, man!
2030
01:37:55,996 --> 01:37:59,291
This is a massive story.
Who wouldn't publish it?
2031
01:38:00,251 --> 01:38:01,585
Robert Redford!
2032
01:38:02,002 --> 01:38:03,446
No, you don't understand!
2033
01:38:03,546 --> 01:38:05,089
CASEY: I got it, guys. I got it.
2034
01:38:06,840 --> 01:38:08,409
What am I supposed to do?
2035
01:38:08,509 --> 01:38:10,177
Do you want me to write a piece called
"We're All Fucked"?
2036
01:38:10,302 --> 01:38:12,163
Yes! That's a perfect title!
2037
01:38:12,263 --> 01:38:16,433
Casey, right now every bank in town
is unloading these shit bonds
2038
01:38:16,600 --> 01:38:18,294
onto unsuspecting customers.
2039
01:38:18,394 --> 01:38:21,380
And they won't devalue them
until they get them off their books.
2040
01:38:21,480 --> 01:38:23,924
This level of criminality
is unprecedented,
2041
01:38:24,024 --> 01:38:26,277
even on fucking Wall Street.
2042
01:38:27,403 --> 01:38:30,239
Jamie... And this is me
being honest here, okay?
2043
01:38:30,531 --> 01:38:33,058
It took me years to build
my relationships on Wall Street.
2044
01:38:33,158 --> 01:38:37,313
No bank or ratings agency is going
to confirm a story like this
2045
01:38:37,413 --> 01:38:39,915
just because it comes
from two guys in a...
2046
01:38:40,040 --> 01:38:43,294
Sorry, garage band hedge fund
that thinks it's the apocalypse.
2047
01:38:43,460 --> 01:38:44,461
(SIGHS)
2048
01:38:44,962 --> 01:38:45,963
Wow.
2049
01:38:46,130 --> 01:38:47,381
I thought you were for real, Casey.
2050
01:38:47,506 --> 01:38:48,799
You know, I'll have to say I really did.
2051
01:38:49,049 --> 01:38:50,050
CASEY: Really?
2052
01:38:50,301 --> 01:38:52,369
Yeah, Jamie, you try being for real
with a three-year-old
2053
01:38:52,469 --> 01:38:54,305
and a wife getting her master's degree.
2054
01:38:54,555 --> 01:38:57,891
I'm not gonna burn my reputation
on your wild hunch.
2055
01:38:58,726 --> 01:38:59,893
Wow.
2056
01:39:00,060 --> 01:39:01,228
- Wow.
- (CASEY SIGHS)
2057
01:39:01,395 --> 01:39:02,421
Thanks for coming, guys.
2058
01:39:02,521 --> 01:39:03,672
Totally fucking awesome to see you.
2059
01:39:03,772 --> 01:39:05,774
Yeah, Casey. I've always hated you,
2060
01:39:05,899 --> 01:39:07,885
because you were a prick in college
2061
01:39:07,985 --> 01:39:10,321
and you are a prick today!
2062
01:39:10,779 --> 01:39:13,282
Thanks, Charlie.
Still living with your mom?
2063
01:39:13,824 --> 01:39:15,267
JAMIE: Charlie, come on!
2064
01:39:15,367 --> 01:39:17,286
MARK: Mark Baum again. Call me.
2065
01:39:17,870 --> 01:39:19,480
Subprime bonds fell off a cliff.
2066
01:39:19,580 --> 01:39:21,524
Rumor has it the default numbers are huge.
2067
01:39:21,624 --> 01:39:24,401
Who got the remittance data early?
I bet it's Goldman.
2068
01:39:24,501 --> 01:39:25,819
VINNIE: Yeah, fuck you very much.
2069
01:39:25,919 --> 01:39:28,756
Jared, it's chaos down here. Where are we?
2070
01:39:29,173 --> 01:39:32,384
"And Caesar wept, for there
were no more worlds to conquer."
2071
01:39:33,969 --> 01:39:35,220
Shane?
2072
01:39:35,596 --> 01:39:36,847
Shane?
2073
01:39:38,432 --> 01:39:41,126
Well, nobody's buying CDO
or mortgage bonds anymore
2074
01:39:41,226 --> 01:39:42,519
and everybody wants swaps.
2075
01:39:42,853 --> 01:39:45,172
Swaps are now the most
popular product on the street.
2076
01:39:45,272 --> 01:39:47,091
- That's good for us.
- Yes and no.
2077
01:39:47,191 --> 01:39:48,592
I heard from somebody
who heard from somebody...
2078
01:39:48,692 --> 01:39:51,403
No, Alex, no. Sorry.
2079
01:39:54,573 --> 01:39:56,392
Bennie Cleager over at Morgan is taking on
2080
01:39:56,492 --> 01:39:58,077
some heavy losses in the bond department.
2081
01:39:59,578 --> 01:40:01,121
Your ship might be taking on water.
2082
01:40:01,622 --> 01:40:03,957
It might be time to get
our lifejacket and get out.
2083
01:40:04,708 --> 01:40:06,210
I'm jacked.
2084
01:40:06,752 --> 01:40:09,254
I'm jacked! I'm jacked to the tits!
2085
01:40:09,880 --> 01:40:10,906
Good.
2086
01:40:11,006 --> 01:40:13,092
- Do you feel it?
- No.
2087
01:40:14,635 --> 01:40:16,428
(TOILET FLUSHING)
2088
01:40:19,264 --> 01:40:20,724
What'd you hear, Tommy?
2089
01:40:22,893 --> 01:40:23,877
It's happening.
2090
01:40:23,977 --> 01:40:25,813
PORTER: Everybody wants our swaps.
2091
01:40:26,021 --> 01:40:28,023
Kathy's office is looking for you.
2092
01:40:28,357 --> 01:40:30,776
DANNY: They're singing
a different tune now, aren't they?
2093
01:40:32,111 --> 01:40:33,612
That's not good.
2094
01:40:38,450 --> 01:40:39,810
Maybe later. Not now.
2095
01:40:39,910 --> 01:40:42,287
This is a joke. Never.
2096
01:40:42,454 --> 01:40:43,539
(CELL PHONE RINGING)
2097
01:40:45,791 --> 01:40:46,875
Listening.
2098
01:40:47,292 --> 01:40:48,861
- DEEB: Dr. Burry?
- Yeah.
2099
01:40:48,961 --> 01:40:50,362
Deeb Winston, Goldman Sachs.
2100
01:40:50,462 --> 01:40:51,947
Listen, I've been reviewing your position.
2101
01:40:52,047 --> 01:40:54,283
I wanted to discuss your marks
and make sure they're fair.
2102
01:40:54,383 --> 01:40:57,202
(STAMMERS) Yeah,
I think you mean that you've
2103
01:40:57,302 --> 01:41:00,055
secured a net short position yourselves.
2104
01:41:00,222 --> 01:41:02,975
So you're free to mark my swaps
accurately for once
2105
01:41:03,142 --> 01:41:05,811
because it's now
in your interest to do so.
2106
01:41:07,980 --> 01:41:10,065
I'm not sure what you want me to say.
2107
01:41:10,232 --> 01:41:11,734
I think that...
2108
01:41:13,235 --> 01:41:15,320
I think that you've already said it.
2109
01:41:23,162 --> 01:41:25,272
You tell Jeff at Goldman
that I'm not transferring funds.
2110
01:41:25,372 --> 01:41:26,999
This is bullshit!
2111
01:41:31,587 --> 01:41:32,796
(KNOCKS)
2112
01:41:34,173 --> 01:41:35,924
Okay, we'll talk later.
2113
01:41:36,425 --> 01:41:37,843
Thank you.
2114
01:41:39,261 --> 01:41:40,245
(SIGHS)
2115
01:41:40,345 --> 01:41:42,206
Thanks for coming so quickly, Mark.
2116
01:41:42,306 --> 01:41:43,640
- Yeah.
- Um...
2117
01:41:43,932 --> 01:41:45,167
I know you've been hearing rumblings
2118
01:41:45,267 --> 01:41:46,752
about some losses Morgan has suffered.
2119
01:41:46,852 --> 01:41:48,812
- Congratulations.
- On what?
2120
01:41:49,438 --> 01:41:50,481
Oh.
2121
01:41:51,190 --> 01:41:52,675
Thanks. Um...
2122
01:41:52,775 --> 01:41:54,109
Having fun?
2123
01:41:55,152 --> 01:41:56,487
Yes. (LAUGHS)
2124
01:41:57,696 --> 01:41:59,031
Tons. Um...
2125
01:41:59,531 --> 01:42:01,867
I just wanted you to know that, um...
2126
01:42:02,451 --> 01:42:04,103
That, yes,
Morgan has suffered some losses,
2127
01:42:04,203 --> 01:42:07,998
but our liquidity is strong
and there's no cause for concern.
2128
01:42:08,207 --> 01:42:11,043
Would Bennie Cleager be concerned?
2129
01:42:11,376 --> 01:42:12,695
Because word on the street
2130
01:42:12,795 --> 01:42:15,631
is that he took some pretty heavy losses.
2131
01:42:16,965 --> 01:42:18,742
Kathy, come on. We know each other.
2132
01:42:18,842 --> 01:42:21,053
- (SIGHS)
- What's going on?
2133
01:42:21,470 --> 01:42:22,971
How bad is this?
2134
01:42:23,138 --> 01:42:24,306
Okay.
2135
01:42:25,098 --> 01:42:28,127
Two years ago, Bennie Cleager
in Morgan's bond department
2136
01:42:28,227 --> 01:42:31,755
also started shorting subprime housing,
$2 billion in BBBs.
2137
01:42:31,855 --> 01:42:33,090
Bennie is smarter than I thought.
2138
01:42:33,190 --> 01:42:34,591
No, he's not smart at all.
2139
01:42:34,691 --> 01:42:37,052
The premiums on the swap
ate into his desk's profit.
2140
01:42:37,152 --> 01:42:39,096
To cover his BBB shorts,
2141
01:42:39,196 --> 01:42:41,682
he sold a lot of A and AA swaps
as protection.
2142
01:42:41,782 --> 01:42:42,783
A lot.
2143
01:42:43,492 --> 01:42:46,662
He believed that there was no way
that they could be affected.
2144
01:42:47,246 --> 01:42:50,582
Tell me Morgan Stanley doesn't hold
the contracts on these swaps.
2145
01:42:53,919 --> 01:42:55,420
Holy shit.
2146
01:42:56,088 --> 01:42:59,508
All this time I've been trying to figure
out who I'm betting against,
2147
01:42:59,758 --> 01:43:01,593
and it's Morgan Stanley.
2148
01:43:02,553 --> 01:43:03,887
Which is me.
2149
01:43:05,597 --> 01:43:07,933
What's your exposure? $3 billion?
2150
01:43:08,851 --> 01:43:10,686
Please, don't tell me it's more than four.
2151
01:43:10,853 --> 01:43:12,463
I can't answer that. I can't answer that.
2152
01:43:12,563 --> 01:43:15,716
Yes, you can answer that,
because I walk in here
2153
01:43:15,816 --> 01:43:18,902
and people are crying in your hallway.
2154
01:43:19,278 --> 01:43:20,445
Kathy,
2155
01:43:20,946 --> 01:43:22,973
you bring me in to tell me
everything's fine,
2156
01:43:23,073 --> 01:43:24,283
and everything's not fine.
2157
01:43:24,950 --> 01:43:26,827
What, what is happening?
2158
01:43:29,037 --> 01:43:31,206
The long exposure is...
2159
01:43:33,125 --> 01:43:34,626
...$15 billion.
2160
01:43:40,591 --> 01:43:41,700
Jesus!
2161
01:43:41,800 --> 01:43:44,161
He kept saying defaults
over 8% were impossible.
2162
01:43:44,261 --> 01:43:45,245
MARK: Oh, my God.
2163
01:43:45,345 --> 01:43:46,555
That there would be a million homeless!
2164
01:43:48,015 --> 01:43:50,267
Yeah, but we have nothing
to do with Morgan Stanley.
2165
01:43:53,186 --> 01:43:54,313
Yeah...
2166
01:43:54,646 --> 01:43:56,481
Tell the bankruptcy court.
2167
01:43:56,732 --> 01:43:59,860
Morgan fails, all our accounts
go on their balance sheet.
2168
01:44:00,485 --> 01:44:02,112
DANNY: It's just crazy.
2169
01:44:02,321 --> 01:44:03,639
Morgan makes the sucker's bet
2170
01:44:03,739 --> 01:44:06,074
and we pay their fucking gambling debt?
2171
01:44:06,575 --> 01:44:09,077
Short the bank stocks. Then we wait.
2172
01:44:12,998 --> 01:44:15,000
Or we sell our swaps
when the market opens.
2173
01:44:16,752 --> 01:44:19,780
We get our bonuses,
our investors get their profits, we get...
2174
01:44:19,880 --> 01:44:22,382
What, 30 cents on the dollar?
It's not bad.
2175
01:44:22,674 --> 01:44:24,159
We're three times that.
2176
01:44:24,259 --> 01:44:25,953
Not if there's
no market left to sell them in.
2177
01:44:26,053 --> 01:44:27,955
Forget it.
We're not giving out any lifeboats.
2178
01:44:28,055 --> 01:44:30,415
VINNIE: If Morgan goes under,
we end up with nothing.
2179
01:44:30,515 --> 01:44:31,516
Vinnie.
2180
01:44:33,268 --> 01:44:36,438
Jesus, come on. I say when we sell.
2181
01:44:40,567 --> 01:44:42,928
Look, I get that this is personal for you,
2182
01:44:43,028 --> 01:44:45,305
but we have a fiduciary responsibility.
2183
01:44:45,405 --> 01:44:46,907
No. No, we don't.
2184
01:44:47,199 --> 01:44:49,368
Nobody's acting responsible.
2185
01:44:49,534 --> 01:44:52,287
Fuck responsibility. Are you kidding me?
2186
01:44:52,788 --> 01:44:54,857
The assholes at the big banks will take...
2187
01:44:54,957 --> 01:44:55,983
WOMAN: You boys want any appetizers?
2188
01:44:56,083 --> 01:44:57,834
MARK: We're talking, please!
2189
01:44:58,585 --> 01:45:00,087
- Excuse us.
- Sorry.
2190
01:45:02,214 --> 01:45:05,008
We are going to wait,
and we are going to wait,
2191
01:45:05,133 --> 01:45:06,635
and we are going to wait
2192
01:45:06,802 --> 01:45:10,555
until they feel the pain,
until they start to bleed.
2193
01:45:10,889 --> 01:45:13,000
- That is what I want.
- But what about our clients
2194
01:45:13,100 --> 01:45:14,376
who've entrusted us with their savings...
2195
01:45:14,476 --> 01:45:15,627
I say when we sell.
2196
01:45:15,727 --> 01:45:16,753
This isn't about you.
2197
01:45:16,853 --> 01:45:18,088
This isn't about you
and your Upper East Side
2198
01:45:18,188 --> 01:45:19,231
- mahogany soapbox.
- Hey! Hey!
2199
01:45:19,398 --> 01:45:20,732
I say when we sell!
2200
01:45:22,317 --> 01:45:24,069
DANNY: Whatever you say, Mark.
2201
01:45:30,784 --> 01:45:32,577
Dude, did you hear the news?
2202
01:45:34,413 --> 01:45:36,732
Okay. So, not only do
two mortgage hedge funds
2203
01:45:36,832 --> 01:45:38,609
backed by Bear Stearns go belly up,
2204
01:45:38,709 --> 01:45:41,820
but now there's
a class-action lawsuit against Bear.
2205
01:45:41,920 --> 01:45:43,071
CHARLIE: Holy shit!
2206
01:45:43,171 --> 01:45:45,657
Let's go! Push! Push!
2207
01:45:45,757 --> 01:45:47,159
So, what? Bear could really collapse here.
2208
01:45:47,259 --> 01:45:49,036
- This is a risk we really shouldn't take.
- Then what?
2209
01:45:49,136 --> 01:45:51,121
JAMIE: We bought 80% of our swaps at Bear.
2210
01:45:51,221 --> 01:45:52,789
- We'd lose everything.
- So what?
2211
01:45:52,889 --> 01:45:54,307
- Hey, sir?
- One second!
2212
01:45:54,433 --> 01:45:55,375
That's my opinion.
2213
01:45:55,475 --> 01:45:56,668
We bought these fucking things.
2214
01:45:56,768 --> 01:45:57,920
We have no clue how to sell them.
2215
01:45:58,020 --> 01:45:59,421
I know. We have to get Ben to do it.
2216
01:45:59,521 --> 01:46:01,506
I've been trying to call him
and he won't get back to me.
2217
01:46:01,606 --> 01:46:03,842
No. He's on vacation
with his wife's family.
2218
01:46:03,942 --> 01:46:05,110
They're in England.
2219
01:46:06,069 --> 01:46:07,070
What?
2220
01:46:07,195 --> 01:46:08,447
(BELL RINGING SOFTLY)
2221
01:46:08,572 --> 01:46:09,781
(TYPING ON COMPUTER)
2222
01:46:11,616 --> 01:46:13,702
(MEN TALKING INDISTINCTLY)
2223
01:46:14,786 --> 01:46:16,355
- JAMIE: Hello, Ben. Hey.
- BEN: Guys?
2224
01:46:16,455 --> 01:46:18,023
Yeah, we're here. Can you hear us?
2225
01:46:18,123 --> 01:46:19,624
- Guys?
- CHARLIE: Yeah, we got you.
2226
01:46:19,791 --> 01:46:22,627
BEN: Yeah. I hardly got
cell phone or Wi-Fi service.
2227
01:46:23,754 --> 01:46:26,339
I'm trying to sell $200 million
worth of securities.
2228
01:46:26,673 --> 01:46:29,009
In a pub. It smells like sheep.
2229
01:46:29,301 --> 01:46:30,302
You can do this.
2230
01:46:30,427 --> 01:46:31,536
CHARLIE: I don't want to pressure you, Ben
2231
01:46:31,636 --> 01:46:34,222
but if you don't pull this off,
we lose everything.
2232
01:46:34,473 --> 01:46:37,768
All right. Let's see what
Credit Suisse's appetite is.
2233
01:46:42,939 --> 01:46:44,091
This is Brownfield Fund.
2234
01:46:44,191 --> 01:46:46,109
I want to unload my credit default swaps.
2235
01:46:46,443 --> 01:46:47,986
MAN: All right. What you got?
2236
01:46:48,153 --> 01:46:49,821
Twenty AA tranches of A.B.S. CDOs.
2237
01:46:50,447 --> 01:46:52,824
MAN: A.B.S.? Are these...
These are pretty bad?
2238
01:46:52,991 --> 01:46:54,993
Absolutely. They're complete shit.
2239
01:46:55,285 --> 01:46:56,770
What's your notional value?
2240
01:46:56,870 --> 01:46:59,539
Face value is 205 million. Dollars.
2241
01:46:59,831 --> 01:47:02,401
All right, we could, we could go to forty.
2242
01:47:02,501 --> 01:47:03,777
No. We want at least 100 million.
2243
01:47:03,877 --> 01:47:07,547
100 million? Who are you,
a drug dealer or a banker?
2244
01:47:07,672 --> 01:47:10,158
'Cause if you're a banker,
you can fuck right off!
2245
01:47:10,258 --> 01:47:11,410
I don't know if we can make a market.
2246
01:47:11,510 --> 01:47:12,619
BEN: Just give me your best price?
2247
01:47:12,719 --> 01:47:15,247
Yeah. Chuck 100 million in for me, mate.
2248
01:47:15,347 --> 01:47:16,598
I think we're far apart.
2249
01:47:17,099 --> 01:47:19,518
Look, if you don't want the deal,
you can just hang up.
2250
01:47:21,978 --> 01:47:23,522
That's what I thought.
2251
01:47:24,314 --> 01:47:26,316
- 90 million.
- 70.
2252
01:47:27,317 --> 01:47:29,152
(SIGHS) 85.
2253
01:47:29,361 --> 01:47:31,321
- 78.
- 84.
2254
01:47:32,531 --> 01:47:34,533
- 78.
- BEN: 84.
2255
01:47:36,368 --> 01:47:37,661
MIKE: It's Dr. Burry.
2256
01:47:38,245 --> 01:47:41,081
Looks like the collapse
of the financial sector is imminent.
2257
01:47:42,082 --> 01:47:44,042
Let's start to sell my position.
2258
01:47:44,417 --> 01:47:46,253
It's $1.3 billion.
2259
01:47:47,754 --> 01:47:49,589
Sure, I'll hold.
2260
01:47:50,966 --> 01:47:52,759
(TYPING ON COMPUTER)
2261
01:47:59,641 --> 01:48:01,101
(BEEPING)
2262
01:48:13,405 --> 01:48:14,906
So, I was right.
2263
01:48:15,740 --> 01:48:18,243
I took a rash of shit for two years, but
2264
01:48:18,660 --> 01:48:20,579
I was right.
2265
01:48:20,912 --> 01:48:22,664
And everyone was wrong.
2266
01:48:23,582 --> 01:48:26,751
And, yeah,
I got a bonus check for it. Sue me.
2267
01:48:27,419 --> 01:48:28,503
You know?
2268
01:48:28,920 --> 01:48:32,532
It's a lot of money. I get it.
I can feel you judging me.
2269
01:48:32,632 --> 01:48:33,925
That's palpable.
2270
01:48:34,634 --> 01:48:38,638
But, hey, I never said
I was the hero of this story.
2271
01:48:39,264 --> 01:48:41,808
JAMIE: Hey, Ben. How are we looking?
2272
01:48:43,018 --> 01:48:44,352
BEN: (CUTTING OUT) Eight... on...
2273
01:48:45,103 --> 01:48:46,438
Sorry?
2274
01:48:46,813 --> 01:48:48,940
No. Eighty million.
2275
01:48:49,149 --> 01:48:50,759
$80 million, $80 million,
that's good, right?
2276
01:48:50,859 --> 01:48:51,927
- Eighty is great.
- Is that good?
2277
01:48:52,027 --> 01:48:53,178
- Eighty is great, Ben.
- Okay.
2278
01:48:53,278 --> 01:48:55,614
Thank you. Thank you so much.
2279
01:48:55,947 --> 01:48:57,824
Most of it went to UBS.
2280
01:48:57,949 --> 01:48:59,476
You're very lucky. The largest bank
2281
01:48:59,576 --> 01:49:02,787
in France froze customer's money
market accounts today.
2282
01:49:02,913 --> 01:49:04,439
This thing's hitting Europe.
2283
01:49:04,539 --> 01:49:06,358
Greece and Iceland are finished.
2284
01:49:06,458 --> 01:49:07,776
Spain is teetering.
2285
01:49:07,876 --> 01:49:09,461
Are you serious? Fuck.
2286
01:49:09,878 --> 01:49:11,696
CHARLIE: Ben, call us when you get home.
2287
01:49:11,796 --> 01:49:13,073
But, hey, before you go,
2288
01:49:13,173 --> 01:49:15,217
uh, I'm just wondering...
2289
01:49:15,884 --> 01:49:17,135
Um...
2290
01:49:18,303 --> 01:49:20,347
Why did you do this with us?
2291
01:49:21,306 --> 01:49:23,308
You didn't have to. Uh...
2292
01:49:23,642 --> 01:49:27,312
Thank you. But, uh, why?
2293
01:49:28,230 --> 01:49:31,149
You guys said you wanted to get rich.
Now you're rich.
2294
01:49:31,691 --> 01:49:32,759
COMMENTATOR: Goal!
2295
01:49:32,859 --> 01:49:34,486
Pamplona puts themselves
on the scoreboard.
2296
01:49:38,657 --> 01:49:41,184
JARED: As the housing markets
and banks continued to hemorrhage,
2297
01:49:41,284 --> 01:49:43,687
only one of the big shorts
refused to sell.
2298
01:49:43,787 --> 01:49:44,996
Mark Baum.
2299
01:49:48,375 --> 01:49:50,402
So it was beyond perfect
when he was asked to speak
2300
01:49:50,502 --> 01:49:52,320
at a conference opposite Bruce Miller,
2301
01:49:52,420 --> 01:49:54,881
the famous bullish investor.
2302
01:49:55,257 --> 01:49:57,450
After he and Mark had their debate,
Alan Greenspan,
2303
01:49:57,550 --> 01:50:01,012
one of the architects of the whole crisis
was scheduled to speak.
2304
01:50:01,263 --> 01:50:03,848
Everyone in Mark's office showed up,
he even invited friends.
2305
01:50:04,266 --> 01:50:05,250
(CELL PHONE VIBRATING)
2306
01:50:05,350 --> 01:50:08,645
This was the Ali vs. Foreman
of the financial world.
2307
01:50:09,020 --> 01:50:11,022
The realist versus the fools.
2308
01:50:11,481 --> 01:50:15,068
And if it seems almost too perfect,
trust me, this happened.
2309
01:50:15,860 --> 01:50:17,028
(CELL PHONE CONTINUES VIBRATING)
2310
01:50:17,195 --> 01:50:23,368
Welcome, everyone.
Please give a generous welcome to
2311
01:50:23,702 --> 01:50:27,289
Mr. Bruce Miller and Mark Baum.
2312
01:50:27,664 --> 01:50:29,749
(AUDIENCE APPLAUDING)
2313
01:50:43,221 --> 01:50:44,372
(CELL PHONE VIBRATING)
2314
01:50:44,472 --> 01:50:45,974
- Strap yourself in.
- (WOMAN COUGHS)
2315
01:50:47,225 --> 01:50:49,377
So as some of you may know, Bear Stearns
2316
01:50:49,477 --> 01:50:52,047
has just received a loan from JP Morgan.
2317
01:50:52,147 --> 01:50:54,966
Of course, we're gonna have to
wait and see how the markets react,
2318
01:50:55,066 --> 01:50:58,762
but that should lay to rest any
concerns about the bank's health.
2319
01:50:58,862 --> 01:51:03,575
Now, I take it you have no plans to sell
your $200 million in Bear stock?
2320
01:51:03,908 --> 01:51:05,518
No. As a matter of fact,
when we're done here,
2321
01:51:05,618 --> 01:51:07,412
I'll probably go out and buy some more.
2322
01:51:07,537 --> 01:51:08,813
- (SCATTERED LAUGHTER)
- (CELL PHONES VIBRATING)
2323
01:51:08,913 --> 01:51:12,417
For the opposing view, Mr. Baum.
2324
01:51:14,836 --> 01:51:16,921
I got to stand for this.
2325
01:51:19,674 --> 01:51:21,259
Okay, hi.
2326
01:51:21,676 --> 01:51:24,095
My firm's thesis is pretty simple.
2327
01:51:24,429 --> 01:51:27,849
Wall Street took a good idea,
Lewis Ranieri's mortgage bond,
2328
01:51:28,099 --> 01:51:30,335
and turned it into an atomic bomb
2329
01:51:30,435 --> 01:51:32,604
of fraud and stupidity
2330
01:51:32,937 --> 01:51:35,590
that's on its way to decimating
the world economy.
2331
01:51:35,690 --> 01:51:36,900
How do you really feel?
2332
01:51:37,025 --> 01:51:38,234
(AUDIENCE CHUCKLING)
2333
01:51:38,360 --> 01:51:40,262
MARK: I'm glad you still
have a sense of humor.
2334
01:51:40,362 --> 01:51:42,405
I wouldn't if I were you.
2335
01:51:42,781 --> 01:51:46,810
Now, anyone who knows me knows that
2336
01:51:46,910 --> 01:51:49,354
I have no problem telling
someone they're wrong.
2337
01:51:49,454 --> 01:51:53,525
PORTER: (WHISPERING) Bear Stearns
is denying rumors of liquidity problems.
2338
01:51:53,625 --> 01:51:55,919
(WHISPERING) Holy fuck, it's 39 now!
2339
01:51:58,088 --> 01:52:00,615
We live in an era of fraud in America.
2340
01:52:00,715 --> 01:52:03,093
Not just in banking, but in government,
2341
01:52:03,551 --> 01:52:06,496
education, religion, food,
2342
01:52:06,596 --> 01:52:08,264
even baseball.
2343
01:52:08,765 --> 01:52:09,974
(VIBRATING)
2344
01:52:10,141 --> 01:52:11,351
What bothers me isn't that
2345
01:52:11,976 --> 01:52:15,814
fraud is not nice or that fraud is mean.
2346
01:52:16,106 --> 01:52:17,982
It's that for 15,000 years
2347
01:52:18,817 --> 01:52:20,343
fraud and short-sighted thinking
2348
01:52:20,443 --> 01:52:22,821
have never, ever worked.
2349
01:52:22,946 --> 01:52:25,849
- PORTER: Jesus, Bear at 37...
- Not once.
2350
01:52:25,949 --> 01:52:29,185
Eventually, people get caught,
things go south.
2351
01:52:29,285 --> 01:52:30,662
DANNY: It's fucking plummeting, man.
2352
01:52:30,829 --> 01:52:33,123
When the hell did we forget all that?
2353
01:52:37,293 --> 01:52:39,796
I thought we were
better than this. I really did.
2354
01:52:40,130 --> 01:52:42,173
And the fact that we're not
2355
01:52:42,298 --> 01:52:44,993
doesn't make me feel
all right and superior.
2356
01:52:45,093 --> 01:52:47,595
It makes me feel... Sad.
2357
01:52:48,012 --> 01:52:50,348
Every time I fucking hit
"refresh" it's dropping, man.
2358
01:52:52,016 --> 01:52:53,685
And as fun as it is to watch
2359
01:52:53,977 --> 01:52:56,254
pompous, dumb Wall Streeters
be wildly wrong,
2360
01:52:56,354 --> 01:52:58,648
and you are wrong, sir,
2361
01:52:59,482 --> 01:53:02,485
I just know, that at the end of the day
2362
01:53:03,153 --> 01:53:05,864
average people are going to be the ones
2363
01:53:05,989 --> 01:53:08,158
that are gonna have to pay for all this.
2364
01:53:08,825 --> 01:53:10,935
Because they always, always do.
2365
01:53:11,035 --> 01:53:12,062
DANNY: It's 32.
2366
01:53:12,162 --> 01:53:13,538
VINNIE: It's fucking tanked, man.
2367
01:53:13,663 --> 01:53:15,665
That's my two cents. Thank you.
2368
01:53:17,000 --> 01:53:18,334
DANNY: Let me drop a deuce at Deutsche.
2369
01:53:18,501 --> 01:53:20,503
WOMAN: Does our bull have a response?
2370
01:53:21,504 --> 01:53:25,008
Only that, in the entire history
of Wall Street,
2371
01:53:25,133 --> 01:53:27,410
no investment bank has ever failed
2372
01:53:27,510 --> 01:53:29,512
unless caught in criminal activities.
2373
01:53:30,013 --> 01:53:33,516
So, yes, I stand by
my Bear Stearns optimism.
2374
01:53:33,850 --> 01:53:35,852
MAN: Mr. Miller, I'm sorry.
Quick question.
2375
01:53:36,352 --> 01:53:38,021
From the time you guys started talking,
2376
01:53:38,188 --> 01:53:41,049
Bear Stearns stock has
fallen more than 38%.
2377
01:53:41,149 --> 01:53:42,525
Would you still buy more?
2378
01:53:42,734 --> 01:53:46,863
Yeah, sure, of course
I'd buy more. Why not?
2379
01:53:47,322 --> 01:53:48,306
Boom.
2380
01:53:48,406 --> 01:53:50,158
(ALL TALKING INDISTINCTLY)
2381
01:53:51,576 --> 01:53:52,911
DANNY: Jesus Christ!
2382
01:53:54,370 --> 01:53:57,540
WOMAN: That concludes
the first part of our presentation.
2383
01:53:58,541 --> 01:54:03,154
Up next, we have the legendary
former chairman of the Fed,
2384
01:54:03,254 --> 01:54:05,031
Alan Greenspan.
2385
01:54:05,131 --> 01:54:06,466
Folks?
2386
01:54:24,609 --> 01:54:25,969
MALE REPORTER:...employees
of Lehman Brothers today,
2387
01:54:26,069 --> 01:54:29,405
as the Wall Street giant's stock
went to zero.
2388
01:54:29,739 --> 01:54:31,641
The collapse of the venerable
New York bank
2389
01:54:31,741 --> 01:54:35,353
follows a tumultuous few months
of market volatility
2390
01:54:35,453 --> 01:54:38,081
and fear in the world economy.
2391
01:54:38,414 --> 01:54:40,124
I got to see inside.
2392
01:54:40,917 --> 01:54:42,252
How?
2393
01:54:42,961 --> 01:54:43,962
Come on.
2394
01:54:44,796 --> 01:54:47,866
I left my phone in the office.
I threw my pass out already.
2395
01:54:47,966 --> 01:54:49,367
Do you mind if I take your pass?
2396
01:54:49,467 --> 01:54:52,053
I don't give a shit anymore.
You can do what you want.
2397
01:54:59,936 --> 01:55:01,629
Go directly to your transportation.
2398
01:55:01,729 --> 01:55:03,439
Do not talk to the press.
2399
01:55:03,606 --> 01:55:06,943
After 18 years, I just leave?
That's just fucking great!
2400
01:55:07,151 --> 01:55:10,013
I'll talk to whoever the hell I want!
2401
01:55:10,113 --> 01:55:12,448
MAN: Do not talk to the press.
2402
01:55:12,782 --> 01:55:14,726
Go directly to your transportation.
2403
01:55:14,826 --> 01:55:15,910
Do not talk to...
2404
01:55:18,496 --> 01:55:19,664
PORTER: Hey, look,
you wanna get a bite tonight?
2405
01:55:19,789 --> 01:55:22,192
There's this, uh, new Cuban place
2406
01:55:22,292 --> 01:55:24,294
just opened on the Lower East Side.
It's supposed to be good.
2407
01:55:24,627 --> 01:55:26,296
- Oh, really?
- Yeah.
2408
01:55:26,796 --> 01:55:28,131
You and I?
2409
01:55:28,339 --> 01:55:29,908
- Yeah, or other people.
- (CELL PHONE VIBRATING)
2410
01:55:30,008 --> 01:55:31,743
- That sounds nice. I would like that.
- Yeah.
2411
01:55:31,843 --> 01:55:33,136
Finally.
2412
01:55:33,511 --> 01:55:34,846
Mark, hey.
2413
01:55:35,138 --> 01:55:36,414
VINNIE: It's a bloodbath up here.
2414
01:55:36,514 --> 01:55:37,999
Morgan stock has lost half its value.
2415
01:55:38,099 --> 01:55:40,376
It's down to 23. 10. It's in freefall.
2416
01:55:40,476 --> 01:55:43,479
Clients want to talk to you
about pulling their money.
2417
01:55:43,688 --> 01:55:47,191
It's now or never, Mark. We got to sell.
2418
01:55:50,486 --> 01:55:51,654
Mark.
2419
01:55:53,031 --> 01:55:54,198
Mark, you hear me?
2420
01:55:54,532 --> 01:55:55,992
MALE AUTOMATED VOICE: Mailbox one.
2421
01:55:56,159 --> 01:55:58,870
You have 15 messages.
2422
01:55:59,203 --> 01:56:00,230
(BEEPING)
2423
01:56:00,330 --> 01:56:01,940
WOMAN: Mike, I can't seem
to get ahold of you.
2424
01:56:02,040 --> 01:56:04,500
Will you please call me
at your earliest convenience.
2425
01:56:05,835 --> 01:56:08,671
It's Jack. You're buying stocks?
2426
01:56:08,880 --> 01:56:11,841
The market's at an all-time low.
This is crazy!
2427
01:56:12,091 --> 01:56:14,427
MIKE: I met my wife on Match.com.
2428
01:56:14,844 --> 01:56:16,179
My profile said,
2429
01:56:16,387 --> 01:56:18,706
"I am a medical student with only one eye,
2430
01:56:18,806 --> 01:56:20,708
"an awkward social manner,
2431
01:56:20,808 --> 01:56:24,395
"and $145,000 in student loans."
2432
01:56:25,063 --> 01:56:26,522
She wrote back,
2433
01:56:26,814 --> 01:56:28,399
"You're just what I've been looking for."
2434
01:56:29,359 --> 01:56:31,027
She meant honest.
2435
01:56:31,235 --> 01:56:32,904
So let me be honest.
2436
01:56:33,071 --> 01:56:37,308
The housing crisis represents
the greatest financial opportunity of...
2437
01:56:37,408 --> 01:56:40,203
MIKE: Making money is not
like I thought it would be.
2438
01:56:40,536 --> 01:56:45,108
This business kills
the part of life that is essential.
2439
01:56:45,208 --> 01:56:48,252
The part that has nothing
to do with business.
2440
01:56:48,378 --> 01:56:50,088
- (APPLAUDING)
- (MAN TALKING INDISTINCTLY)
2441
01:56:50,546 --> 01:56:52,574
For the past two years, my insides...
2442
01:56:52,674 --> 01:56:53,658
(SQUEALS)
2443
01:56:53,758 --> 01:56:56,135
...have felt like
they're eating themselves.
2444
01:56:56,260 --> 01:56:58,554
All the people I respected
2445
01:56:59,055 --> 01:57:01,557
won't talk to me anymore
2446
01:57:01,808 --> 01:57:03,643
except through lawyers.
2447
01:57:07,397 --> 01:57:08,773
- (BABY CRYING)
- People
2448
01:57:09,565 --> 01:57:13,236
want an authority to tell them
how to value things...
2449
01:57:13,611 --> 01:57:18,700
...but they choose this authority not
based on facts or results.
2450
01:57:19,158 --> 01:57:23,813
They choose it because it
seems authoritative and familiar.
2451
01:57:23,913 --> 01:57:26,357
And I am not
2452
01:57:26,457 --> 01:57:29,502
and never have been "familiar".
2453
01:57:31,462 --> 01:57:32,463
So...
2454
01:57:33,339 --> 01:57:36,451
So, I've come to the sullen realization
2455
01:57:36,551 --> 01:57:39,329
that I must close down the fund.
2456
01:57:39,429 --> 01:57:42,515
Sincerely, Michael J. Burry, M.D.
2457
01:58:42,241 --> 01:58:44,327
CHARLIE: This isn't how I pictured it.
2458
01:58:46,329 --> 01:58:47,480
JAMIE: What did you think we'd find?
2459
01:58:47,580 --> 01:58:48,623
I don't know.
2460
01:58:50,500 --> 01:58:52,001
Grownups.
2461
01:58:55,922 --> 01:58:57,423
Mark, you there?
2462
01:59:00,092 --> 01:59:01,344
VINNIE: Mark?
2463
01:59:01,594 --> 01:59:04,514
Paulson and Bernanke
just left the White House.
2464
01:59:09,852 --> 01:59:12,021
There's going to be a bailout.
2465
01:59:13,606 --> 01:59:17,026
Well, they had to. Right?
2466
01:59:17,360 --> 01:59:18,511
Paper markets would've collapsed.
2467
01:59:18,611 --> 01:59:19,779
They knew.
2468
01:59:20,029 --> 01:59:21,514
Cash would've stopped coming out of ATMs.
2469
01:59:21,614 --> 01:59:23,157
They had to backstop this.
2470
01:59:23,449 --> 01:59:25,768
They knew the taxpayers
would bail them out.
2471
01:59:25,868 --> 01:59:28,287
They weren't being stupid.
They just didn't care.
2472
01:59:28,454 --> 01:59:30,623
Yeah. 'Cause they're fucking crooks.
2473
01:59:32,542 --> 01:59:35,086
But at least we're going to
see some of them go to jail.
2474
01:59:36,295 --> 01:59:39,549
Right? I mean, they're gonna
have to break up the banks.
2475
01:59:40,633 --> 01:59:41,951
I mean, the party's over.
2476
01:59:42,051 --> 01:59:44,720
I don't know. I don't know, Vinnie.
2477
01:59:47,473 --> 01:59:48,958
I have a feeling
2478
01:59:49,058 --> 01:59:50,918
that in a few years
people are gonna be doing
2479
01:59:51,018 --> 01:59:54,021
what they always do
when the economy tanks.
2480
01:59:54,480 --> 01:59:57,692
They will be blaming
immigrants and poor people.
2481
01:59:57,984 --> 01:59:59,318
JARED: But Mark was wrong.
2482
02:00:00,444 --> 02:00:02,388
In the years that followed,
hundreds of bankers
2483
02:00:02,488 --> 02:00:05,116
and rating agencies executives
went to jail.
2484
02:00:05,283 --> 02:00:07,326
The SEC was completely overhauled.
2485
02:00:07,493 --> 02:00:10,204
And Congress had no choice
but to break up the big banks
2486
02:00:10,621 --> 02:00:13,082
and regulate the mortgage
and derivatives industries.
2487
02:00:14,500 --> 02:00:16,252
(GLASS SHATTERING)
2488
02:00:17,879 --> 02:00:19,213
Just kidding.
2489
02:00:19,463 --> 02:00:21,657
The banks took the money
the American people gave them
2490
02:00:21,757 --> 02:00:24,035
and used it to pay themselves huge bonuses
2491
02:00:24,135 --> 02:00:26,387
and lobby Congress to kill big reform.
2492
02:00:26,554 --> 02:00:28,790
And then they blamed
immigrants and poor people.
2493
02:00:28,890 --> 02:00:31,058
And this time, even teachers.
2494
02:00:32,435 --> 02:00:35,479
And when all was said and done,
only one single banker went to jail.
2495
02:00:36,397 --> 02:00:37,507
This poor schmuck.
2496
02:00:37,607 --> 02:00:40,067
Kareem Serageldin from Credit Suisse.
2497
02:00:40,401 --> 02:00:42,720
He hid a few billion
in mortgage bond losses,
2498
02:00:42,820 --> 02:00:46,073
something most of the big banks did
on a good day during the crisis.
2499
02:00:47,700 --> 02:00:49,702
Mark, can we sell now?
2500
02:00:51,495 --> 02:00:53,981
The fund will make almost $1 billion.
2501
02:00:54,081 --> 02:00:55,708
You'll clear $200 mil, Mark.
2502
02:00:56,876 --> 02:00:59,128
You know, once we sell,
2503
02:00:59,879 --> 02:01:01,739
we'll be just like the rest of them.
2504
02:01:01,839 --> 02:01:02,965
You know that.
2505
02:01:03,299 --> 02:01:04,867
No, we're not.
We're not the bad guys here.
2506
02:01:04,967 --> 02:01:08,454
We didn't defraud the American people
and prey on their dreams
2507
02:01:08,554 --> 02:01:10,122
of owning a home. All right?
2508
02:01:10,222 --> 02:01:11,415
They did.
2509
02:01:11,515 --> 02:01:12,542
(HORN HONKING)
2510
02:01:12,642 --> 02:01:14,477
And now we get to kick them in the teeth.
2511
02:01:19,899 --> 02:01:21,901
A billion dollars.
2512
02:01:23,569 --> 02:01:24,804
That's right.
2513
02:01:24,904 --> 02:01:27,740
But we got to close out our position
or it could be zero.
2514
02:01:28,240 --> 02:01:31,077
I mean, it's now or never, Mark.
2515
02:01:40,252 --> 02:01:41,671
Okay.
2516
02:01:45,424 --> 02:01:46,842
Sell it all.
2517
02:03:45,586 --> 02:03:47,630
(ROCK MUSIC PLAYING)
2517
02:03:48,305 --> 02:03:54,715
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