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Would you like to inspect the original subtitles? These are the user uploaded subtitles that are being translated: 1 00:00:06,000 --> 00:00:12,074 Advertise your product or brand here contact www.OpenSubtitles.org today 2 00:00:37,956 --> 00:00:39,457 (BIRDS CHIRPING) 3 00:01:18,872 --> 00:01:20,290 (TELEPHONE RINGING) 4 00:01:20,957 --> 00:01:23,276 MAN: Hiya, Frank. How are the wife and kids? 5 00:01:23,376 --> 00:01:25,487 You know, for you, I'm considering treasury bonds 6 00:01:25,587 --> 00:01:28,365 and utility stocks. Smoke? 7 00:01:28,465 --> 00:01:30,533 JARED: In the late '70s, banking wasn't a job 8 00:01:30,633 --> 00:01:33,136 you went into to make large sums of money. 9 00:01:34,053 --> 00:01:35,747 It was a fucking snooze. 10 00:01:35,847 --> 00:01:37,624 (CHUCKLES) How about those Mets? 11 00:01:37,724 --> 00:01:40,377 JARED: Filled with losers. Like selling insurance or 12 00:01:40,477 --> 00:01:41,795 accounting. 13 00:01:41,895 --> 00:01:43,021 And if banking was boring, 14 00:01:43,146 --> 00:01:45,815 then the bond department at the bank was straight-up comatose. 15 00:01:46,649 --> 00:01:48,009 We all know about bonds. 16 00:01:48,109 --> 00:01:50,178 You give them to your snot-nosed kid when he turns 15. 17 00:01:50,278 --> 00:01:52,263 Maybe when he's 30 he makes a hundred bucks. 18 00:01:52,363 --> 00:01:53,640 Boring. 19 00:01:53,740 --> 00:01:55,517 That is, until Lewis Ranieri came on the scene 20 00:01:55,617 --> 00:01:56,659 at Salomon Brothers. 21 00:02:02,624 --> 00:02:04,818 You might not know who he is, but he changed your life 22 00:02:04,918 --> 00:02:08,613 more than Michael Jordan, the iPod and YouTube put together. 23 00:02:08,713 --> 00:02:10,448 - (CHUCKLING) - (MAN LAUGHING) 24 00:02:10,548 --> 00:02:12,283 All right, gentlemen! Let's get some money in here! 25 00:02:12,383 --> 00:02:14,052 Let's make some money! What do you say? 26 00:02:14,219 --> 00:02:15,870 (ALL CHEERING) 27 00:02:15,970 --> 00:02:17,789 JARED: You see, Lewis didn't know it yet, 28 00:02:17,889 --> 00:02:19,791 but he had already changed banking forever 29 00:02:19,891 --> 00:02:21,100 with one simple idea. 30 00:02:21,893 --> 00:02:26,564 The mortgage-backed security. Or private-label MBS. 31 00:02:27,398 --> 00:02:29,217 LEWIS: You've got your average person's mortgage. 32 00:02:29,317 --> 00:02:30,719 Fixed rate, 30 years. 33 00:02:30,819 --> 00:02:34,155 Boring, safe, small payoff, right? But, 34 00:02:35,448 --> 00:02:38,143 when you have thousands of them all bundled together, 35 00:02:38,243 --> 00:02:41,771 suddenly the yield goes up but the risk is still small because, 36 00:02:41,871 --> 00:02:42,814 well, they're mortgages! 37 00:02:42,914 --> 00:02:44,315 And who the hell doesn't pay their mortgage? 38 00:02:44,415 --> 00:02:46,776 What exactly is the credit rating on this bond? 39 00:02:46,876 --> 00:02:49,712 This bond, gentlemen, is AAA-rated. 40 00:02:50,255 --> 00:02:52,924 This is exactly what the Michigan state pension fund has been looking for. 41 00:02:53,424 --> 00:02:54,909 I'll buy $20 million. 42 00:02:55,009 --> 00:02:56,177 Oh, come on, live a little. 43 00:02:56,302 --> 00:02:57,912 - $25 million. - (ALL LAUGHING) 44 00:02:58,012 --> 00:03:00,957 JARED: The money came raining down, 45 00:03:01,057 --> 00:03:02,542 and for the first time, 46 00:03:02,642 --> 00:03:05,436 the banker went from the country club to the strip club. 47 00:03:08,064 --> 00:03:11,276 Pretty soon, stocks and savings were almost inconsequential. 48 00:03:11,442 --> 00:03:13,595 - They were doing $50, $100, $200 billion - Whoo! 49 00:03:13,695 --> 00:03:16,322 In mortgage bonds and dozens of other securities a year. 50 00:03:16,447 --> 00:03:17,657 (MEN CHEERING) 51 00:03:25,957 --> 00:03:28,234 And America barely noticed as its number one industry 52 00:03:28,334 --> 00:03:30,420 became boring old banking. 53 00:03:34,090 --> 00:03:37,594 And then one day, almost 30 years later, in 2008, 54 00:03:38,803 --> 00:03:40,555 it all came crashing down. 55 00:03:43,683 --> 00:03:46,419 FEMALE REPORTER: March. Bear Stearns was in a death spiral 56 00:03:46,519 --> 00:03:47,921 and the Fed brokered its sale. 57 00:03:48,021 --> 00:03:51,065 BRIAN WILLIAMS: It's been called the worst financial crisis in modern times. 58 00:03:51,399 --> 00:03:55,637 Certainly the largest financial disaster in decades in this country, 59 00:03:55,737 --> 00:03:58,406 and perhaps the end of an era in American business. 60 00:03:58,865 --> 00:04:01,100 JARED: In the end, Lewis Ranieri's mortgage-backed security 61 00:04:01,200 --> 00:04:04,662 mutated into a monstrosity that collapsed the whole world economy. 62 00:04:05,330 --> 00:04:08,666 And none of the experts or leaders or talking heads had a clue it was coming. 63 00:04:10,168 --> 00:04:13,129 I'm guessing most of you still don't really know what happened. 64 00:04:13,630 --> 00:04:16,407 Yeah, you got a soundbite you repeat so you don't sound dumb, but come on. 65 00:04:16,507 --> 00:04:18,927 Our financial institutions are strong. 66 00:04:20,178 --> 00:04:22,580 But there were some who saw it coming. 67 00:04:22,680 --> 00:04:24,749 While the whole world was having a big old party, 68 00:04:24,849 --> 00:04:28,086 a few outsiders and weirdos saw what no one else could. 69 00:04:28,186 --> 00:04:31,756 Not me. I'm not a weirdo. I'm pretty fucking cool. 70 00:04:31,856 --> 00:04:33,858 But we'll meet again later. 71 00:04:34,359 --> 00:04:37,095 These outsiders saw the giant lie at the heart of the economy. 72 00:04:37,195 --> 00:04:38,596 And they saw it by doing something 73 00:04:38,696 --> 00:04:41,491 the rest of the suckers never thought to do. 74 00:04:42,408 --> 00:04:43,743 They looked. 75 00:04:49,999 --> 00:04:52,001 (TAPPING) 76 00:04:56,547 --> 00:04:58,883 MIKE: During the 1930s, 77 00:05:00,510 --> 00:05:05,181 the housing market collapsed nationwide 78 00:05:06,557 --> 00:05:08,668 by roughly 80%. 79 00:05:08,768 --> 00:05:13,882 I mean, half of all mortgage debt was in default. 80 00:05:13,982 --> 00:05:16,651 And, I mean, there were very 81 00:05:17,777 --> 00:05:21,280 specific identifiers, extremely recognizable. 82 00:05:24,200 --> 00:05:25,243 I mean, for instance, 83 00:05:25,368 --> 00:05:28,579 (STAMMERING) one of the hallmarks of mania 84 00:05:28,913 --> 00:05:30,248 is the rapid rise 85 00:05:30,373 --> 00:05:32,400 in complexity and the rates of fraud. 86 00:05:32,500 --> 00:05:35,920 And did you know that they're going up? 87 00:05:36,462 --> 00:05:38,756 (CHEERLEADERS CHEERING) 88 00:05:39,757 --> 00:05:40,758 MAN: Whoo! 89 00:05:45,596 --> 00:05:47,098 (INAUDIBLE) 90 00:05:55,440 --> 00:05:57,342 MIKE: I've always been 91 00:05:57,442 --> 00:05:59,444 more comfortable alone. 92 00:05:59,569 --> 00:06:00,778 (GIRLS TALKING INDISTINCTLY) 93 00:06:00,903 --> 00:06:02,113 (GIRLS LAUGHING) 94 00:06:06,743 --> 00:06:11,372 I believe maybe it's because of my glass eye. 95 00:06:13,791 --> 00:06:16,586 I lost the eye in a childhood illness. 96 00:06:20,923 --> 00:06:23,259 It separates me from people. 97 00:06:27,305 --> 00:06:29,666 And did you know that they are going 98 00:06:29,766 --> 00:06:30,875 up? 99 00:06:30,975 --> 00:06:34,462 The highest fraud rates since the 1930s. 100 00:06:34,562 --> 00:06:36,881 MIKE'S MOM: Hey, hey, it's okay. It's okay. 101 00:06:36,981 --> 00:06:38,441 No, I didn't know that. 102 00:06:38,566 --> 00:06:40,026 (MIKE STUTTERING) 103 00:06:40,735 --> 00:06:42,653 (MIKE CHUCKLING) 104 00:06:43,154 --> 00:06:47,325 In 1933, the fourth year of the Great Depression. 105 00:06:47,492 --> 00:06:49,143 Let's wash it off and put it back in. 106 00:06:49,243 --> 00:06:51,204 MIKE'S DAD: You were playing so great, son. 107 00:06:51,329 --> 00:06:53,331 I even heard the coach say it. 108 00:06:54,499 --> 00:06:56,734 Can we just go home? 109 00:06:56,834 --> 00:07:00,989 MIKE: Most social interactions are awkward for me and for the person. 110 00:07:01,089 --> 00:07:04,575 Even when I try to compliment someone, 111 00:07:04,675 --> 00:07:06,052 it comes out wrong. 112 00:07:06,969 --> 00:07:10,556 You have a very nice haircut. Did you do it yourself? 113 00:07:10,973 --> 00:07:12,625 (CHUCKLES) What? 114 00:07:12,725 --> 00:07:15,228 (STAMMERING) No. No, I... 115 00:07:16,229 --> 00:07:17,563 (SPLASHING) 116 00:07:20,608 --> 00:07:21,734 (TELEPHONE RINGING IN DISTANCE) 117 00:07:23,861 --> 00:07:25,696 I'm sorry. I'm just... 118 00:07:28,908 --> 00:07:30,201 (SIGHS) 119 00:07:31,410 --> 00:07:32,578 I'm going on and on. 120 00:07:32,703 --> 00:07:34,313 My wife told me I need to share more. 121 00:07:34,413 --> 00:07:35,414 Mmm. 122 00:07:36,374 --> 00:07:38,192 - That seems healthy. - Yeah. 123 00:07:38,292 --> 00:07:39,293 Mmm-hmm. 124 00:07:43,631 --> 00:07:44,799 (CHUCKLES) 125 00:07:48,803 --> 00:07:49,804 Uh... 126 00:07:51,013 --> 00:07:52,390 So do I get the job? 127 00:07:52,515 --> 00:07:54,851 I really think I could help your fund. 128 00:07:56,227 --> 00:07:57,587 Yeah. 129 00:07:57,687 --> 00:07:59,313 Yeah, sure. Go on. 130 00:07:59,981 --> 00:08:01,149 (BOTH CHUCKLING) 131 00:08:02,024 --> 00:08:05,261 - You're... - David. Great. 132 00:08:05,361 --> 00:08:07,180 I guess I'll go find a desk. 133 00:08:07,280 --> 00:08:09,866 Is there anything you want me to work on for start... 134 00:08:10,366 --> 00:08:11,367 Uh... 135 00:08:12,910 --> 00:08:14,270 Yeah. 136 00:08:14,370 --> 00:08:16,080 DAVID: You could let me know later. I could come back. 137 00:08:16,372 --> 00:08:18,332 (STUTTERING) 138 00:08:18,791 --> 00:08:23,321 Did you think it was strange when, um, 139 00:08:23,421 --> 00:08:25,907 the tech bubble burst in 2001 140 00:08:26,007 --> 00:08:28,785 and the housing market in San Jose, 141 00:08:28,885 --> 00:08:31,095 the tech capital of the world, 142 00:08:32,597 --> 00:08:34,332 went up? 143 00:08:34,432 --> 00:08:35,458 Wasn't that strange? 144 00:08:35,558 --> 00:08:36,501 DAVID: No. 145 00:08:36,601 --> 00:08:39,170 No, it's housing. Housing is always stable. 146 00:08:39,270 --> 00:08:40,296 Low risk. It's solid. 147 00:08:40,396 --> 00:08:42,340 That's the idea, yeah. 148 00:08:42,440 --> 00:08:44,175 I want you to get me 149 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? 151 00:08:50,489 --> 00:08:54,827 No, no, no, I want to know what mortgages are in each one. 152 00:08:56,245 --> 00:08:57,830 (CHUCKLING) Okay, aren't those mortgages made up of... 153 00:08:57,955 --> 00:08:59,190 (ROCK MUSIC PLAYING) 154 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. 157 00:09:08,466 --> 00:09:09,967 DAVID: Right away, Dr. Burry. 158 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. 160 00:09:38,037 --> 00:09:42,375 But the second my son screws up, I am... 161 00:09:43,042 --> 00:09:45,544 ...yelling at him just like my dad did to me. 162 00:09:48,589 --> 00:09:50,241 I hear the words that are coming out of my mouth and... 163 00:09:50,341 --> 00:09:51,576 (DOOR OPENS) 164 00:09:51,676 --> 00:09:54,470 - MARK: Sorry I'm late! No cabs. - (DOOR CLOSES) 165 00:09:55,179 --> 00:09:56,180 Oh... 166 00:09:56,639 --> 00:09:58,224 So, get this. 167 00:09:58,975 --> 00:10:01,477 I met with this retail banker yesterday. 168 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. 173 00:10:13,030 --> 00:10:16,934 And this creep is making billions off screwing over people this way. 174 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, 176 00:10:22,373 --> 00:10:24,208 "How can you sleep at night 177 00:10:24,709 --> 00:10:28,154 "knowing that you are ripping off working people?" 178 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? 182 00:10:36,345 --> 00:10:38,789 Or is this douchebag, who leaves me hanging? 183 00:10:38,889 --> 00:10:40,124 Is he the fucked up one? 184 00:10:40,224 --> 00:10:43,002 We have talked about this numerous times. 185 00:10:43,102 --> 00:10:46,214 You can't come in late and hijack the entire session. 186 00:10:46,314 --> 00:10:47,757 MARK: What do you mean? I didn't hijack the meeting. 187 00:10:47,857 --> 00:10:48,941 Did I hijack the session? 188 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. 192 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 AmericasCardroom.com brings poker back with the Million Dollar Sunday Tournament 190688

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