1
00:01:20,956 --> 00:01:23,300
Hiya, Frank.
How are the wife and kids?

2
00:01:23,375 --> 00:01:25,503
You know, for you,
I'm considering treasury bonds

3
00:01:25,586 --> 00:01:28,385
and utility stocks. Smoke?

4
00:01:28,463 --> 00:01:30,557
In the late '70s,
banking wasn't a job

5
00:01:30,632 --> 00:01:33,135
you went into
to make large sums of money.

6
00:01:34,052 --> 00:01:35,770
It was a fucking snooze.

7
00:01:35,846 --> 00:01:37,644
How about those Mets?

8
00:01:37,723 --> 00:01:40,397
Filled with losers.
Like selling insurance or

9
00:01:40,475 --> 00:01:41,818
accounting.

10
00:01:41,893 --> 00:01:43,019
And if banking was boring,

11
00:01:43,145 --> 00:01:45,819
then the bond department at the
bank was straight-up comatose.

12
00:01:46,648 --> 00:01:48,025
We all know about bonds.

13
00:01:48,108 --> 00:01:50,202
You give them to your
snot-nosed kid when he turns 15.

14
00:01:50,277 --> 00:01:52,279
Maybe when he's 30
he makes a hundred bucks.

15
00:01:52,362 --> 00:01:53,659
Boring.

16
00:01:53,739 --> 00:01:55,537
That is, until Lewis Ranieri
came on the scene

17
00:01:55,616 --> 00:01:56,663
at Salomon Brothers.

18
00:02:02,623 --> 00:02:04,842
You might not know who he is,
but he changed your life

19
00:02:04,916 --> 00:02:08,637
more than Michael Jordan,
the iPod and YouTube put together.

20
00:02:10,547 --> 00:02:12,299
All right, gentlemen!
Let's get some money in here!

21
00:02:12,382 --> 00:02:14,055
Let's make some money!
What do you say?

22
00:02:15,969 --> 00:02:17,812
You see,
Lewis didn't know it yet,

23
00:02:17,888 --> 00:02:19,811
but he had already
changed banking forever

24
00:02:19,890 --> 00:02:21,107
with one simple idea.

25
00:02:21,892 --> 00:02:26,568
The mortgage-backed security.
Or private-label MBS.

26
00:02:27,397 --> 00:02:29,240
You've got your
average person's mortgage.

27
00:02:29,316 --> 00:02:30,738
Fixed rate, 3O years.

28
00:02:30,817 --> 00:02:34,162
Boring, safe, small payoff, right? But,

29
00:02:35,447 --> 00:02:38,166
when you have thousands
of them all bundled together,

30
00:02:38,241 --> 00:02:41,791
suddenly the yield goes up
but the risk is still small because,

31
00:02:41,870 --> 00:02:42,837
well, they're mortgages!

32
00:02:42,913 --> 00:02:44,335
And who the hell
doesn't pay their mortgage?

33
00:02:44,414 --> 00:02:46,792
What exactly is the credit
rating on this bond?

34
00:02:46,875 --> 00:02:49,719
This bond, gentlemen, is AAA-rated.

35
00:02:50,253 --> 00:02:52,927
This is exactly what the Michigan state
pension fund has been looking for.

36
00:02:53,423 --> 00:02:54,925
I'll buy $20 million.

37
00:02:55,008 --> 00:02:56,180
Oh, come on, live a little.

38
00:02:56,301 --> 00:02:57,928
$25 million.

39
00:02:58,011 --> 00:03:00,981
The money came raining down,

40
00:03:01,056 --> 00:03:02,558
and for the first time,

41
00:03:02,641 --> 00:03:05,440
the banker went from the country club
to the strip club.

42
00:03:08,063 --> 00:03:11,283
Pretty soon, stocks and savings
were almost inconsequential.

43
00:03:11,441 --> 00:03:13,614
- They were doing $50, $100, $200 billion
- Whoo!

44
00:03:13,694 --> 00:03:16,322
In mortgage bonds and dozens of other
securities a year.

45
00:03:25,956 --> 00:03:28,254
And America barely noticed
as its number one industry

46
00:03:28,333 --> 00:03:30,427
became boring old banking.

47
00:03:34,089 --> 00:03:37,593
And then one day,
almost 30 years later, in 2008,

48
00:03:38,802 --> 00:03:40,554
it all came crashing down.

49
00:03:43,682 --> 00:03:46,435
March.
Bear Stearns was in a death spiral

50
00:03:46,518 --> 00:03:47,940
and the Fed brokered its sale.

51
00:03:48,019 --> 00:03:51,068
It's been called the
worst financial crisis in modern times.

52
00:03:51,398 --> 00:03:55,653
Certainly the largest financial disaster
in decades in this country,

53
00:03:55,736 --> 00:03:58,410
and perhaps the end of an era
in American business.

54
00:03:58,864 --> 00:04:01,117
In the end, Lewis Ranierfs
mortgage-backed security

55
00:04:01,199 --> 00:04:02,872
mutated into a monstrosity that

56
00:04:02,993 --> 00:04:04,666
collapsed the whole world economy.

57
00:04:05,328 --> 00:04:07,296
And none of the experts
or leaders or talking heads

58
00:04:07,372 --> 00:04:08,669
had a clue it was coming.

59
00:04:10,167 --> 00:04:13,137
I'm guessing most of you
still don't really know what happened.

60
00:04:13,628 --> 00:04:16,427
Yeah, you got a soundbite you repeat
so you don't sound dumb, but come on.

61
00:04:16,506 --> 00:04:18,929
Our financial institutions are strong.

62
00:04:20,177 --> 00:04:22,600
But there were some who saw it coming.

63
00:04:22,679 --> 00:04:24,773
While the whole world
was having a big old party,

64
00:04:24,848 --> 00:04:28,102
a few outsiders and weirdos
saw what no one else could.

65
00:04:28,185 --> 00:04:31,780
Not me. I'm not a weirdo.
I'm pretty fucking cool.

66
00:04:31,855 --> 00:04:33,857
But we'll meet again tater.

67
00:04:34,357 --> 00:04:37,110
These outsiders saw the giant lie
at the heart of the economy.

68
00:04:37,194 --> 00:04:38,616
And they saw it by doing something

69
00:04:38,695 --> 00:04:41,494
the rest of the suckers
never thought to do.

70
00:04:42,407 --> 00:04:43,750
They looked.

71
00:04:56,546 --> 00:04:58,890
During the 1930s,

72
00:05:00,509 --> 00:05:05,185
the housing market collapsed nationwide

73
00:05:06,556 --> 00:05:08,684
by roughly 80%.

74
00:05:08,767 --> 00:05:13,898
I mean, half of all mortgage debt
was in default.

75
00:05:13,980 --> 00:05:16,654
And, I mean, there were very

76
00:05:17,776 --> 00:05:21,280
specific identifiers,
extremely recognizable.

77
00:05:24,199 --> 00:05:25,246
I mean, for instance,

78
00:05:25,367 --> 00:05:28,587
one of
the hallmarks of mania

79
00:05:28,912 --> 00:05:30,255
is the rapid rise

80
00:05:30,372 --> 00:05:32,420
in complexity and the rates of fraud.

81
00:05:32,499 --> 00:05:35,924
And did you know that they're going up?

82
00:05:39,756 --> 00:05:40,757
Whoo!

83
00:05:55,438 --> 00:05:57,361
I've always been

84
00:05:57,440 --> 00:05:59,442
more comfortable alone.

85
00:06:06,741 --> 00:06:11,372
I believe maybe
it's because of my glass eye.

86
00:06:13,790 --> 00:06:16,589
I lost the eye in a childhood illness.

87
00:06:20,922 --> 00:06:23,266
It separates me from people.

88
00:06:27,304 --> 00:06:29,682
And did you know that they are going

89
00:06:29,764 --> 00:06:30,890
up?

90
00:06:30,974 --> 00:06:34,478
The highest fraud rates since the 1930s.

91
00:06:34,561 --> 00:06:36,905
Hey, hey, it's okay. It's okay.

92
00:06:36,980 --> 00:06:38,448
No, I didn't know that.

93
00:06:43,153 --> 00:06:47,329
In 1933, the fourth year
of the Great Depression.

94
00:06:47,490 --> 00:06:49,163
Let's wash it off and put it back in.

95
00:06:49,242 --> 00:06:51,210
You were
playing so great, son.

96
00:06:51,328 --> 00:06:53,330
I even heard the coach say it.

97
00:06:54,497 --> 00:06:56,750
Can we just go home?

98
00:06:56,833 --> 00:07:01,009
Most social interactions
are awkward for me and for the person.

99
00:07:01,087 --> 00:07:04,591
Even when I try to compliment someone,

100
00:07:04,674 --> 00:07:06,051
it comes out wrong.

101
00:07:06,968 --> 00:07:10,563
You have a very nice haircut.
Did you do it yourself?

102
00:07:10,972 --> 00:07:12,645
What?

103
00:07:12,724 --> 00:07:15,227
No. No, I...

104
00:07:23,860 --> 00:07:25,703
I'm sorry. I'm just...

105
00:07:31,409 --> 00:07:32,581
I'm going on and on.

106
00:07:32,702 --> 00:07:34,329
My wife told me I need to share more.

107
00:07:34,412 --> 00:07:35,413
Mmm.

108
00:07:36,373 --> 00:07:38,216
- That seems healthy.
- Yeah.

109
00:07:38,291 --> 00:07:39,292
Mmm-hmm.

110
00:07:48,802 --> 00:07:49,803
Uh...

111
00:07:51,012 --> 00:07:52,389
So do I get the job?

112
00:07:52,514 --> 00:07:54,858
I really think I could help your fund.

113
00:07:56,226 --> 00:07:57,603
Yeah.

114
00:07:57,686 --> 00:07:59,313
Yeah, sure. Go on.

115
00:08:02,023 --> 00:08:05,277
- You're. ..
- David. Great.

116
00:08:05,360 --> 00:08:07,203
I guess I'll go find a desk.

117
00:08:07,278 --> 00:08:09,872
Is there anything you want me
to work on for start...

118
00:08:10,365 --> 00:08:11,366
Uh...

119
00:08:12,909 --> 00:08:14,286
Yeah.

120
00:08:14,369 --> 00:08:16,087
You could let me know later.
I could come back.

121
00:08:18,790 --> 00:08:23,341
Did you think it was strange when, um,

122
00:08:23,420 --> 00:08:25,923
the tech bubble burst in 2001

123
00:08:26,006 --> 00:08:28,805
and the housing market in San Jose,

124
00:08:28,883 --> 00:08:31,102
the tech capital of the world,

125
00:08:32,595 --> 00:08:34,347
went up?

126
00:08:34,431 --> 00:08:35,478
Wasn't that strange?

127
00:08:35,557 --> 00:08:36,524
No.

128
00:08:36,599 --> 00:08:39,193
No, it's housing.
Housing is always stable.

129
00:08:39,269 --> 00:08:40,316
Low risk. It's solid.

130
00:08:40,395 --> 00:08:42,363
That's the idea, yeah.

131
00:08:42,439 --> 00:08:44,191
I want you to get me

132
00:08:44,274 --> 00:08:47,494
the top 20 selling mortgage bonds.

133
00:08:47,569 --> 00:08:50,413
So you want to know what
the top 20 selling mortgage bonds are?

134
00:08:50,488 --> 00:08:54,834
No, no, no, I want to know
what mortgages are in each one.

135
00:08:56,244 --> 00:08:57,837
Okay, aren't those
mortgages made up of...

136
00:08:59,289 --> 00:09:00,757
Wait, aren't those bonds made up

137
00:09:00,832 --> 00:09:02,880
of thousands and thousands
of mortgages'?

138
00:09:02,959 --> 00:09:04,427
Yeah.

139
00:09:08,465 --> 00:09:09,967
Right away, Dr. Burry.

140
00:09:29,027 --> 00:09:33,373
I am a nice guy all daylong.

141
00:09:33,448 --> 00:09:36,122
Ask anyone, I'm a pleasure to work with.

142
00:09:38,036 --> 00:09:42,382
But the second my son screws up, I am...

143
00:09:43,041 --> 00:09:45,544
yelling at him
just like my dad did to me.

144
00:09:48,588 --> 00:09:50,261
I hear the words that are
coming out of my mouth and...

145
00:09:51,674 --> 00:09:54,473
Sorry I'm late! No cabs.

146
00:09:55,178 --> 00:09:56,179
Oh...

147
00:09:56,638 --> 00:09:58,231
So, get this.

148
00:09:58,973 --> 00:10:01,476
I met with this retail banker yesterday.

149
00:10:01,726 --> 00:10:04,149
I'm supposed to be getting him
to invest in a fund,

150
00:10:04,229 --> 00:10:05,572
but instead

151
00:10:05,647 --> 00:10:08,526
I start grilling him about
overdraft penalties

152
00:10:08,608 --> 00:10:11,612
and how his bank will let
a customer write 10-12 checks

153
00:10:11,694 --> 00:10:12,946
before they tell them they're overdrawn.

154
00:10:13,029 --> 00:10:16,954
And this creep is making billions
off screwing over people this way.

155
00:10:17,033 --> 00:10:18,831
And I'm getting madder and madder.

156
00:10:18,910 --> 00:10:22,289
And I ask him,
I look him in the face and I say,

157
00:10:22,372 --> 00:10:24,215
"How can you sleep at night

158
00:10:24,707 --> 00:10:28,177
"knowing that you are
ripping off working people?"

159
00:10:28,253 --> 00:10:29,971
And you know what he did? He left.

160
00:10:30,046 --> 00:10:32,765
He just walks out of the lunch,
doesn't say a word.

161
00:10:32,841 --> 00:10:33,842
What the fuck is that?

162
00:10:33,925 --> 00:10:36,269
Who's fucked up in that scenario? Am I?

163
00:10:36,344 --> 00:10:38,813
Or is this douchebag,
who leaves me hanging?

164
00:10:38,888 --> 00:10:40,140
Is he the fucked up one?

165
00:10:40,223 --> 00:10:43,022
We have talked about this
numerous times.

166
00:10:43,101 --> 00:10:46,230
You can't come in late
and hijack the entire session.

167
00:10:46,312 --> 00:10:47,780
What do you mean?
I didn't hijack the meeting.

168
00:10:47,856 --> 00:10:48,948
Did I hijack the session?

169
00:10:49,065 --> 00:10:50,191
Yeah.

170
00:10:50,650 --> 00:10:51,822
What do you do?

171
00:10:51,943 --> 00:10:53,115
I'm in commodities.

172
00:10:53,194 --> 00:10:54,491
Good luck with that.

173
00:10:54,571 --> 00:10:58,166
Mark, I know
you suffered a terrible loss.

174
00:10:58,241 --> 00:10:59,618
Maybe you want to talk about that.

175
00:10:59,701 --> 00:11:00,793
I don't talk about that.

176
00:11:00,869 --> 00:11:02,291
Hold on.

177
00:11:02,370 --> 00:11:03,713
Hold on...

178
00:11:03,788 --> 00:11:06,632
Shit, I have to take this. Sorry. Sorry.

179
00:11:07,542 --> 00:11:09,670
No... I don't care, Porter.

180
00:11:09,752 --> 00:11:11,345
This guy's whole business
is built on ripping people off.

181
00:11:11,421 --> 00:11:13,014
How long can that last?

182
00:11:14,465 --> 00:11:15,637
Bye, everybody!

183
00:11:16,718 --> 00:11:18,391
95...

184
00:11:18,636 --> 00:11:20,764
That's 30 days late... Sixty days late...

185
00:11:23,224 --> 00:11:25,693
They pay on time...

186
00:11:28,605 --> 00:11:30,232
These FICO scores...

187
00:11:36,821 --> 00:11:38,949
Late. And they caught up
on their payments...

188
00:11:39,032 --> 00:11:40,534
Another 30 days late...

189
00:11:40,617 --> 00:11:43,871
LTV, 95... LTV, 90...
They caught up on their payments...

190
00:11:43,953 --> 00:11:45,500
Sixty days late? Jesus!

191
00:11:45,580 --> 00:11:47,708
LTV, 110? I've never heard of that!

192
00:11:47,790 --> 00:11:49,133
Thirty days late, rate adjusts...

193
00:11:50,126 --> 00:11:51,378
In '07 rate adjusts...

194
00:11:51,461 --> 00:11:52,633
In '06 rate adjusts...

195
00:11:52,754 --> 00:11:55,052
95... 90... Jesus!

196
00:11:56,758 --> 00:11:58,385
He hasn't moved all day.

197
00:11:58,468 --> 00:12:00,812
He does this every few days.

198
00:12:00,887 --> 00:12:02,560
He hasn't spoken to me
since he hired me.

199
00:12:02,639 --> 00:12:04,061
Maybe the LTV's at... High-risk,

200
00:12:04,140 --> 00:12:06,393
interest-only... t never heard
of that mortgage history,

201
00:12:06,476 --> 00:12:09,229
I never heard of that... How?

202
00:12:09,312 --> 00:12:10,609
Michael, how are you, guy?

203
00:12:10,688 --> 00:12:13,737
Lawrence, lfound
something really interesting.

204
00:12:13,816 --> 00:12:15,739
Great, Michael. Whenever you
find something interesting,

205
00:12:15,818 --> 00:12:17,035
we all tend to make money.

206
00:12:17,111 --> 00:12:18,488
What stock are you valuing?

207
00:12:18,613 --> 00:12:19,956
No, no, no, no. No stocks.

208
00:12:20,031 --> 00:12:22,079
I want to short the housing market.

209
00:12:23,493 --> 00:12:26,167
Really? But the housing market
is rock solid.

210
00:12:26,663 --> 00:12:28,085
Greenspan just said

211
00:12:28,164 --> 00:12:30,713
bubbles are regional, defaults are rare.

212
00:12:30,833 --> 00:12:32,961
Tell them I'll be there in a minute.

213
00:12:33,044 --> 00:12:34,842
- Say again?
- Look, look...

214
00:12:34,921 --> 00:12:36,764
Greenspan's wrong.

215
00:12:36,839 --> 00:12:40,264
I don't think you mean to do this,
but sometimes you sound very

216
00:12:40,343 --> 00:12:42,641
dismissive and superior.

217
00:12:42,720 --> 00:12:43,892
It's a fact. Greenspan's wrong.

218
00:12:43,972 --> 00:12:46,316
I don't know
how else you want me to say...

219
00:12:46,391 --> 00:12:47,768
Look, Michael.

220
00:12:47,850 --> 00:12:49,477
Metro Capital backed you four years ago

221
00:12:49,560 --> 00:12:51,358
when you were a doctor with a

222
00:12:51,437 --> 00:12:53,781
dinky webpage
and some inheritance money.

223
00:12:53,856 --> 00:12:54,857
We've all done very welt.

224
00:12:54,941 --> 00:12:56,067
Why don't you just stick with stocks?

225
00:12:56,150 --> 00:12:58,278
Look. You know me. I, I, I...

226
00:12:58,361 --> 00:13:02,116
I look for value wherever it can be found.

227
00:13:02,198 --> 00:13:03,290
And the fact is

228
00:13:03,366 --> 00:13:06,586
that these mortgage-backed
securities are filled

229
00:13:06,703 --> 00:13:10,128
with extremely risky
subprime adjustable-rate loans.

230
00:13:10,206 --> 00:13:12,709
And when the majority
of the adjustable rates

231
00:13:12,792 --> 00:13:15,045
kick in, in '07,

232
00:13:15,211 --> 00:13:16,383
they will begin to fail.

233
00:13:16,462 --> 00:13:19,807
And if they fail above 15%,
the whole bond is worthless.

234
00:13:19,882 --> 00:13:22,055
Michael, just take a beat.

235
00:13:22,135 --> 00:13:23,352
We'll talk about this later, okay?

236
00:13:23,428 --> 00:13:26,477
Lawrence, please,
don't patronize me. Listen...

237
00:13:26,556 --> 00:13:28,024
Mortgage-backed securities.

238
00:13:28,099 --> 00:13:29,396
It, it, it...

239
00:13:29,517 --> 00:13:31,315
Subprime loans- Trenches.

240
00:13:31,394 --> 00:13:33,067
It's pretty confusing, right?

241
00:13:33,146 --> 00:13:35,774
Does it make you feel bored?
Or stupid?

242
00:13:35,857 --> 00:13:38,155
Well, it's supposed to.

243
00:13:38,234 --> 00:13:39,827
Wall Street loves to use confusing terms

244
00:13:39,902 --> 00:13:42,576
to make you think only they
can do what they do.

245
00:13:42,905 --> 00:13:44,122
Or, even better,

246
00:13:44,198 --> 00:13:46,576
for you to just leave them the fuck atone.

247
00:13:46,659 --> 00:13:48,627
So here's Margot Robbie
in a bubble bath to explain.

248
00:13:49,871 --> 00:13:52,875
Basically, Lewis Ranieri's
mortgage bonds

249
00:13:52,957 --> 00:13:55,255
were amazingly profitable
for the big banks.

250
00:13:55,335 --> 00:13:59,306
They made billions and billions
on their 2% fee

251
00:13:59,380 --> 00:14:01,599
they got for selling each of these bonds.

252
00:14:01,674 --> 00:14:03,472
But then they started
running out of mortgages

253
00:14:03,551 --> 00:14:05,098
to put in them.

254
00:14:05,178 --> 00:14:07,852
After all, there are only so many homes

255
00:14:07,930 --> 00:14:11,685
and so many people with
good enough jobs to buy them, right?

256
00:14:11,768 --> 00:14:13,862
So the banks started filling these bonds

257
00:14:13,936 --> 00:14:16,109
with riskier and riskier mortgages.

258
00:14:16,189 --> 00:14:17,361
Thank you' Banter.

259
00:14:17,440 --> 00:14:21,991
That way they can keep
that profit machine churning, right?

260
00:14:22,070 --> 00:14:26,450
By the way, these risky mortgages
are called subprime.

261
00:14:26,532 --> 00:14:28,910
So whenever you hear "subprime", think

262
00:14:28,993 --> 00:14:30,461
"shit".

263
00:14:30,536 --> 00:14:34,086
Our friend Michael Burry found out
that these mortgage bonds

264
00:14:34,165 --> 00:14:37,385
that were supposedly 65% AAA

265
00:14:37,460 --> 00:14:40,213
were actually just mostly full of shit.

266
00:14:40,797 --> 00:14:43,550
So now he's going to "short" the bonds.

267
00:14:43,633 --> 00:14:45,635
Which means to "bet against".

268
00:14:46,469 --> 00:14:47,516
Got it?

269
00:14:48,221 --> 00:14:49,473
Good.

270
00:14:52,558 --> 00:14:53,855
Now fuck off.

271
00:14:53,935 --> 00:14:56,279
It's only a matter of time before
someone else sees this investment.

272
00:14:56,354 --> 00:14:58,072
We have to act now!

273
00:14:58,147 --> 00:15:00,400
How do you know
the bonds are worthless?

274
00:15:00,483 --> 00:15:02,702
Aren't they filled with fucking thousands

275
00:15:02,777 --> 00:15:03,903
of pages of mortgages?

276
00:15:03,986 --> 00:15:06,239
I read them.

277
00:15:06,322 --> 00:15:08,245
- You read them?
- I read... Yes.

278
00:15:08,324 --> 00:15:11,544
No one reads them. Only the lawyers
who put them together read them.

279
00:15:11,619 --> 00:15:16,341
Look, I don't think that they
even know what they've made.

280
00:15:16,457 --> 00:15:19,711
The housing market
is propped up on these

281
00:15:20,002 --> 00:15:22,676
bad loans, and I'm...

282
00:15:22,755 --> 00:15:24,803
It's a time bomb, and I want to short it.

283
00:15:24,882 --> 00:15:27,180
Through what instrument, Michael?

284
00:15:27,260 --> 00:15:30,264
There are no insurance contracts
or options for mortgage bonds.

285
00:15:30,346 --> 00:15:31,598
The bonds are too stable.

286
00:15:31,722 --> 00:15:33,019
Lawrence...

287
00:15:36,352 --> 00:15:40,198
This is what I'm gonna do.
lam gonna get a bank

288
00:15:40,523 --> 00:15:42,571
to make me one.

289
00:15:43,192 --> 00:15:44,865
And then

290
00:15:45,695 --> 00:15:47,413
I'm gonna buy it.

291
00:15:48,823 --> 00:15:50,575
I don't want that kind of business.

292
00:15:50,658 --> 00:15:53,332
Money is not money.
That's bad money.

293
00:15:53,995 --> 00:15:56,214
Hey! Excuse me!

294
00:15:57,582 --> 00:16:00,506
Let me ask you this.
What company treats its customers

295
00:16:00,585 --> 00:16:03,179
that shittily and succeeds?

296
00:16:04,046 --> 00:16:05,889
Fine. Okay, Goldman. You're right.

297
00:16:05,965 --> 00:16:07,308
Mark Baum had built his career

298
00:16:07,383 --> 00:16:09,431
on never assuming anyone
or any company

299
00:16:09,510 --> 00:16:11,183
was legit without proving it.

300
00:16:11,262 --> 00:16:12,764
When he was a kid
he excelled at studying

301
00:16:12,847 --> 00:16:14,895
the Talmud in Yeshiva. Whatever.

302
00:16:14,974 --> 00:16:16,851
But one day his rabbi told his mom why.

303
00:16:18,060 --> 00:16:21,064
Paul is a fine boy,
and Mark is an excellent student

304
00:16:21,189 --> 00:16:23,783
of the Torah and the Talmud.

305
00:16:23,858 --> 00:16:25,826
Then what's the problem, rabbi?

306
00:16:25,902 --> 00:16:29,076
It's the reason Mark is studying so hard.

307
00:16:29,906 --> 00:16:33,080
He's looking for inconsistencies
in the word of God!

308
00:16:35,828 --> 00:16:38,001
So has he found any?

309
00:16:39,081 --> 00:16:42,335
Later, Baum started
his own fund on Wall Street.

310
00:16:42,418 --> 00:16:43,840
He had an amazing nose for bullshit.

311
00:16:43,920 --> 00:16:45,922
And he wasn't afraid to let
anyone know when and where

312
00:16:46,005 --> 00:16:48,633
the bull had gone number two.

313
00:16:48,716 --> 00:16:50,343
But then a tragedy happened to Mark,

314
00:16:50,426 --> 00:16:51,894
and it turned his world view dark

315
00:16:51,969 --> 00:16:54,313
and ready to believe
the whole system was a lie.

316
00:16:54,388 --> 00:16:55,935
Hold on.

317
00:16:56,015 --> 00:16:58,859
It's Cynthia.
I'll be in the office in 20 minutes.

318
00:16:59,769 --> 00:17:00,941
Hi, honey.

319
00:17:02,438 --> 00:17:06,113
The therapist called. You did it again.

320
00:17:06,526 --> 00:17:09,279
There were no cabs.
What was I supposed to do?

321
00:17:09,362 --> 00:17:11,035
I worry about you, Mark.

322
00:17:11,113 --> 00:17:12,456
At least I went.

323
00:17:13,741 --> 00:17:15,709
You're running around
like you have to right

324
00:17:15,785 --> 00:17:17,628
- every wrong in the world.
- Okay.

325
00:17:17,745 --> 00:17:18,917
You're so angry.

326
00:17:18,996 --> 00:17:20,418
Fine. You know what?

327
00:17:20,498 --> 00:17:23,422
I'm a mean guy and I'm pissed off.

328
00:17:23,501 --> 00:17:25,424
But it is a shit storm out here, sweetie.

329
00:17:25,503 --> 00:17:28,803
You have no idea
the kind of crap people are pulling.

330
00:17:28,881 --> 00:17:31,555
And everyone's walking around like
they're in a goddamn Enya video.

331
00:17:33,261 --> 00:17:34,729
They're all getting screwed, you know.

332
00:17:34,804 --> 00:17:37,398
You know what they care about?
They care about the ballgame.

333
00:17:37,473 --> 00:17:40,352
Or they care about
what actress just went into rehab.

334
00:17:40,434 --> 00:17:42,482
I think you should try medication.

335
00:17:42,562 --> 00:17:45,736
No, no. We agreed.
if it interfered with work.

336
00:17:45,815 --> 00:17:47,658
You hate Wall Street.
Maybe it's time to quit.

337
00:17:48,150 --> 00:17:50,118
- I love my job.
- You hate your job.

338
00:17:50,194 --> 00:17:51,195
I love my job.

339
00:17:51,279 --> 00:17:52,246
You're miserable.

340
00:17:52,321 --> 00:17:54,323
I love my job. I love my job, honey.

341
00:17:55,283 --> 00:17:56,580
Mark...

342
00:17:57,785 --> 00:18:00,880
I am sad every day
about what happened.

343
00:18:00,955 --> 00:18:04,300
I know you must feel the same,
but you never show it.

344
00:18:10,548 --> 00:18:13,051
I know how close you
were to your brother.

345
00:18:16,429 --> 00:18:17,521
Paul.

346
00:18:18,556 --> 00:18:20,183
Where'd you go, Paul?

347
00:18:25,438 --> 00:18:26,690
Paul!

348
00:18:32,361 --> 00:18:35,114
Every day I think you're
gonna talk about it, but you never do.

349
00:18:38,993 --> 00:18:42,748
Will you at least think about the idea
of making a change?

350
00:18:42,830 --> 00:18:45,674
Fine. Fine. Honey, you know what?
I will consider it.

351
00:18:45,750 --> 00:18:49,129
But, honestly, Cynthia.
I'm okay. I really am.

352
00:18:49,211 --> 00:18:51,179
Hey, hey, hey! No, no.

353
00:18:51,255 --> 00:18:54,634
My cab. That's my cab.
That's my cab. That is my cab.

354
00:18:54,717 --> 00:18:56,310
- Schmuck. Fuck you.
- Fuck you.

355
00:18:56,385 --> 00:18:57,887
- Fuck you.
- Fuck you.

356
00:18:59,055 --> 00:19:00,557
I'll call you later.

357
00:19:07,938 --> 00:19:12,034
I want to buy swaps on mortgage bonds.

358
00:19:12,109 --> 00:19:14,453
A credit default swap that will pay off

359
00:19:15,488 --> 00:19:17,991
if the underlying bond fails.

360
00:19:18,824 --> 00:19:20,326
You want to bet against
the housing market?

361
00:19:20,409 --> 00:19:22,377
- Yes.
- Why?

362
00:19:22,453 --> 00:19:23,625
Those bonds only fail

363
00:19:23,704 --> 00:19:26,173
if millions of Americans
don't pay their mortgages.

364
00:19:26,248 --> 00:19:28,671
That's never happened in history.

365
00:19:28,751 --> 00:19:31,675
If you'll excuse me, Dr. Burry,
it seems like a foolish investment.

366
00:19:31,754 --> 00:19:34,507
Well, based on prevailing sentiment

367
00:19:34,590 --> 00:19:36,638
of the market and banks
in popular culture,

368
00:19:36,717 --> 00:19:39,015
yes, it's a foolish investment.

369
00:19:39,095 --> 00:19:41,598
But, uh... Everyone's wrong.

370
00:19:43,182 --> 00:19:44,684
That's a good one.

371
00:19:47,019 --> 00:19:48,692
This is Wall Street, Dr. Burry.

372
00:19:48,771 --> 00:19:50,739
If you offer us free money,
we are going to take it.

373
00:19:50,815 --> 00:19:55,446
My one concern is that
when the bonds fail,

374
00:19:56,570 --> 00:20:00,120
uh, I want to be certain, um, of payment

375
00:20:00,199 --> 00:20:02,952
um, in case of solvency issues
with your bank.

376
00:20:03,953 --> 00:20:06,331
I'm sorry, are you for real?

377
00:20:06,414 --> 00:20:08,041
You wanna bet against
the housing market

378
00:20:08,124 --> 00:20:09,467
and you're worried we won't pay you?

379
00:20:09,542 --> 00:20:11,135
Yes, that's correct.

380
00:20:22,471 --> 00:20:24,348
unless the market crashes.

381
00:20:24,473 --> 00:20:26,692
The market
on housing's never gonna crash

382
00:20:26,767 --> 00:20:29,566
because it's so solid right now.

383
00:20:29,645 --> 00:20:32,398
I mean, who doesn't
pay their mortgages?

384
00:20:36,318 --> 00:20:37,319
Mmm-hmm.

385
00:20:39,613 --> 00:20:40,660
Dr. Burry,

386
00:20:40,740 --> 00:20:43,084
we could work out
a pay-as-we-go structure

387
00:20:43,159 --> 00:20:45,161
that would pay out if the bonds fail.

388
00:20:45,244 --> 00:20:46,746
But it would also apply to your payments

389
00:20:46,829 --> 00:20:48,797
if the value of the mortgage bond
goes up.

390
00:20:48,873 --> 00:20:51,592
You'd have to pay us monthly premiums.

391
00:20:51,667 --> 00:20:54,386
Is that acceptable, Dr. Burry?

392
00:20:56,839 --> 00:20:58,182
Yes. Yes.

393
00:20:59,049 --> 00:21:01,598
Um, I have prospectuses on six

394
00:21:01,677 --> 00:21:04,556
mortgage-backed securities
I want to short.

395
00:21:09,018 --> 00:21:10,770
Majority of the mortgages...

396
00:21:22,072 --> 00:21:24,621
I don't see us
losing any money on these at all.

397
00:21:38,088 --> 00:21:40,762
Dr. Burry, these should be fine.

398
00:21:40,841 --> 00:21:42,764
Yeah. We're prepared
to sell you $5 million

399
00:21:42,843 --> 00:21:44,720
in credit default swaps
on these mortgage bonds.

400
00:21:45,930 --> 00:21:47,352
Can we make it $100 million?

401
00:21:50,226 --> 00:21:52,604
Uh, absolutely,
we can make it $100 million.

402
00:21:54,188 --> 00:21:57,408
We'll be in touch,
send some paperwork over.

403
00:21:58,234 --> 00:21:59,235
Um...

404
00:22:00,361 --> 00:22:01,738
I like these cups.

405
00:22:01,821 --> 00:22:03,494
Can I take one for my son?

406
00:22:03,572 --> 00:22:05,324
Have... Yes. Yes.

407
00:22:05,407 --> 00:22:06,909
Thank you.

408
00:22:06,992 --> 00:22:08,369
Have two.

409
00:22:28,347 --> 00:22:31,351
ls there any way to do $200 million?

410
00:22:32,810 --> 00:22:35,438
I mean, we can. But are you sure?

411
00:22:36,355 --> 00:22:39,529
Absolutely. Absolutely, we can do that.

412
00:22:53,247 --> 00:22:56,626
We do different projects.
We do gardening.

413
00:22:56,709 --> 00:22:59,963
The bonds I'd like to bet against.

414
00:23:00,170 --> 00:23:01,672
It's not bad seeing yourself
on the big screen.

415
00:23:01,755 --> 00:23:02,756
It's very cool.

416
00:23:03,799 --> 00:23:07,474
I ordered the 24-ounce T-bone,
which was choice.

417
00:23:07,553 --> 00:23:09,021
- I went for volume...
- Yeah.

418
00:23:09,096 --> 00:23:10,723
rather than prime.

419
00:23:10,806 --> 00:23:13,480
I went for subprime, and the gist was...

420
00:23:20,816 --> 00:23:23,319
Can I have like, lettuce,
tomato, no onions'?

421
00:23:23,944 --> 00:23:27,244
So, no onions.
Lettuce, tomato, Thousand Island okay?

422
00:23:27,323 --> 00:23:28,324
Yeah.

423
00:23:35,372 --> 00:23:37,090
Hey, Randall! What's with the Dom?

424
00:23:37,166 --> 00:23:39,043
Bonuses aren't for three months.

425
00:23:39,126 --> 00:23:43,097
We just sold $200 million
in credit swaps for mortgage bonds.

426
00:23:43,172 --> 00:23:45,345
Some fund manager from California.

427
00:23:45,466 --> 00:23:46,809
It's fucking crazy, right?

428
00:23:46,884 --> 00:23:47,976
A whole new way to make money, Doug.

429
00:23:48,052 --> 00:23:50,305
Wait, wait. I didn't know
there were swaps on mortgages.

430
00:23:50,387 --> 00:23:52,981
There are now.
We made it for him.

431
00:23:53,057 --> 00:23:54,730
He must have gone off
his Zoloft or something.

432
00:23:54,808 --> 00:23:56,151
I don't know.

433
00:23:56,226 --> 00:23:57,978
- Want to join? No?
- Just a second.

434
00:23:58,062 --> 00:23:59,063
Oh...

435
00:23:59,229 --> 00:24:00,651
Hey, Jared.

436
00:24:00,731 --> 00:24:02,199
Did you hear about the deal
that Randall just did

437
00:24:02,274 --> 00:24:03,491
with some fund manager?

438
00:24:03,567 --> 00:24:05,365
Randall? Bullshit.

439
00:24:05,819 --> 00:24:07,662
He's a foot soldier.
I'm sure it's a shit deal.

440
00:24:07,738 --> 00:24:08,990
No, it's for real.

441
00:24:10,199 --> 00:24:11,621
I told you we'd meet later.

442
00:24:11,700 --> 00:24:14,123
Unfortunately, it's in a place like this
which I would never be.

443
00:24:14,203 --> 00:24:16,877
I never hung out with
these idiots after work, ever.

444
00:24:16,956 --> 00:24:18,754
I had fashion friends.

445
00:24:19,166 --> 00:24:22,511
Apparently, this guy wanted $200 mil
in credit default swaps.

446
00:24:22,586 --> 00:24:24,338
Randall made the sale.
Can you believe it?

447
00:24:24,421 --> 00:24:26,640
Somebody shorted $200 mil
on mortgage bonds?

448
00:24:26,715 --> 00:24:30,140
That was just with Deutsche.
Word is he hit half the town.

449
00:24:31,011 --> 00:24:32,137
How much in total?

450
00:24:32,221 --> 00:24:33,939
$1.3 billion.

451
00:24:34,014 --> 00:24:37,860
What? That's pretty much
ail of Scion's liquidity.

452
00:24:37,935 --> 00:24:40,029
Michael, this is highly distressing.

453
00:24:40,104 --> 00:24:41,526
Lawrence, that is not

454
00:24:41,605 --> 00:24:44,154
all of our liquidity.

455
00:24:44,233 --> 00:24:45,450
And I'm not certain

456
00:24:45,526 --> 00:24:47,745
that you really understand this trade.

457
00:24:47,861 --> 00:24:48,908
This is a certainty.

458
00:24:48,988 --> 00:24:52,083
Mike, I consider myself a mentor to you.

459
00:24:52,157 --> 00:24:56,003
But our company is not comfortable
with this investment. Am I being clear?

460
00:24:56,078 --> 00:24:58,331
Lawrence, I have full autonomy

461
00:24:58,414 --> 00:25:01,338
when it comes to investment strategy.

462
00:25:01,417 --> 00:25:02,543
You can read our agreement.

463
00:25:02,626 --> 00:25:05,971
Do not throw our inception agreement
in my face, Michael.

464
00:25:06,046 --> 00:25:08,424
- We had an underlying understanding

465
00:25:08,590 --> 00:25:09,807
you wouldn't act like
a goddamn crazy man.

466
00:25:09,883 --> 00:25:11,476
This is not crazy.

467
00:25:11,552 --> 00:25:13,020
It's all very logical.

468
00:25:13,095 --> 00:25:15,314
So, now we pay up premiums
on these swaps

469
00:25:15,889 --> 00:25:18,642
against the housing market
until the mortgages fail?

470
00:25:18,726 --> 00:25:20,399
In other words, we lose millions

471
00:25:20,519 --> 00:25:23,193
until something that's
never happened before happens?

472
00:25:27,067 --> 00:25:28,068
That's correct.

473
00:26:01,602 --> 00:26:02,854
Hello, Mark Baum.

474
00:26:02,936 --> 00:26:05,030
Oh, hey, Kathy, you busted me.

475
00:26:05,105 --> 00:26:06,072
I had a personal thing this afternoon.

476
00:26:06,148 --> 00:26:07,149
I'm not your babysitter.

477
00:26:07,232 --> 00:26:09,860
If FrontPoint makes money
for Morgan Stanley, I'm happy.

478
00:26:09,943 --> 00:26:12,241
Okay. Hey, did I hear you're expecting?

479
00:26:12,321 --> 00:26:13,698
We're expecting to be expecting.

480
00:26:13,781 --> 00:26:15,454
LVF's are cleaning us out
but we're staying positive...

481
00:26:15,532 --> 00:26:17,034
That's exciting!

482
00:26:21,163 --> 00:26:24,167
lump on my ball.
And I go in for a scan.

483
00:26:24,291 --> 00:26:25,292
Mmm-hmm.

484
00:26:25,375 --> 00:26:29,096
Turns out that I have a very large thing
called an epididymis.

485
00:26:29,171 --> 00:26:31,720
Which is a thing
that goes around the ball

486
00:26:31,799 --> 00:26:33,517
and is like a sac underneath.

487
00:26:33,592 --> 00:26:34,639
I have an extremely

488
00:26:34,718 --> 00:26:36,561
- pronounced epididymis.
- I'm riveted...

489
00:26:36,637 --> 00:26:38,685
I'm riveted by this.
Do you have any pictures?

490
00:26:38,764 --> 00:26:42,314
It's almost as large
as another testicle unto itself.

491
00:26:42,392 --> 00:26:44,486
So get this. Cynthia...

492
00:26:44,561 --> 00:26:47,610
Guys. Cynthia wants me to quit
and open a B&B in Vermont.

493
00:26:48,899 --> 00:26:52,278
That sounds great. I'd love to see
Mark Baum run a bed and breakfast.

494
00:26:52,361 --> 00:26:54,329
Like, "Here's your
steel-cut oatmeal, asshole."

495
00:26:54,404 --> 00:26:56,998
Mark refused to kiss the ring
of the people with the checkbooks,

496
00:26:57,074 --> 00:27:00,123
so he had to set up his fund
under Morgan Stanley's umbrella.

497
00:27:01,370 --> 00:27:03,919
His small team reflected
his distrust of the system.

498
00:27:03,997 --> 00:27:05,419
You guys are sick. You're sick.

499
00:27:05,541 --> 00:27:07,669
She says this job is making me unhappy.

500
00:27:07,751 --> 00:27:08,798
But you're happy
when you're unhappy.

501
00:27:08,877 --> 00:27:10,379
I am happy when I'm unhappy.

502
00:27:10,462 --> 00:27:11,463
Vinnie Daniel.

503
00:27:11,547 --> 00:27:12,673
You know how to make a muffin?

504
00:27:12,756 --> 00:27:14,474
- Mark's numbers guy.
- Do you even know how

505
00:27:14,550 --> 00:27:16,018
- to do laundry? Make a bed?
- Okay...

506
00:27:16,093 --> 00:27:18,721
Vinnie lost his father to a violent crime
when he was young.

507
00:27:18,804 --> 00:27:20,647
Just like Mark, he didn't talk about it.

508
00:27:20,722 --> 00:27:21,974
I don't talk about that.

509
00:27:22,057 --> 00:27:24,401
Cynthia's no joke. She could
actually make him move to Vermont.

510
00:27:24,476 --> 00:27:26,149
I mean, she made me
start wearing a seatbelt.

511
00:27:26,228 --> 00:27:27,946
- Hey, you want me to...
- Porter Collins.

512
00:27:28,063 --> 00:27:30,236
Former Olympic rower
who went to Brown.

513
00:27:30,315 --> 00:27:31,988
He worked with Baum at a previous firm

514
00:27:32,067 --> 00:27:33,990
and couldn't figure out
why no one listened to Baum.

515
00:27:34,069 --> 00:27:36,163
The guy with all the good ideas.

516
00:27:36,238 --> 00:27:38,036
Sorry. I think you have
the wrong FrontPoint.

517
00:27:38,157 --> 00:27:40,910
'Cause there is another FrontPoint
in this same building that is bonds.

518
00:27:40,993 --> 00:27:43,746
And Danny Moses.
The optimist of the bunch.

519
00:27:44,663 --> 00:27:45,880
And a hell of a trader.

520
00:27:45,956 --> 00:27:49,085
Which is the only reason they put up
with his bullshit optimism.

521
00:27:49,168 --> 00:27:50,420
That was a weird call.

522
00:27:50,502 --> 00:27:53,802
You take longer with a wrong number
than anybody else.

523
00:27:53,881 --> 00:27:56,509
It was this guy from Deutsche

524
00:27:56,592 --> 00:27:59,186
who was talking about
shorting housing bonds.

525
00:28:00,554 --> 00:28:01,726
And then in the middle of the call

526
00:28:01,847 --> 00:28:03,019
I realized he had the wrong FrontPoint.

527
00:28:03,098 --> 00:28:05,442
And then... 'Cause he wanted
the one on the 8th floor.

528
00:28:06,101 --> 00:28:08,024
He wanted to short housing bonds?

529
00:28:08,103 --> 00:28:09,150
Uh-huh. That happens
like five times a day

530
00:28:09,229 --> 00:28:10,697
that somebody gets
the wrong FrontPoint.

531
00:28:10,772 --> 00:28:12,945
- We should change our name.
- Wait. Wait.

532
00:28:13,025 --> 00:28:14,993
He wanted to short housing bonds?

533
00:28:15,277 --> 00:28:17,075
Who bets against housing?

534
00:28:18,030 --> 00:28:19,247
What's the ABX at?

535
00:28:19,364 --> 00:28:20,536
What's ABX?

536
00:28:20,616 --> 00:28:23,460
It tracks subprime mortgage bond value.
Go back to sleep.

537
00:28:23,869 --> 00:28:26,167
The ABX is at, uh...

538
00:28:26,288 --> 00:28:29,542
Wow, it's down! It's down
three points since last year.

539
00:28:29,625 --> 00:28:31,878
That's weird. I haven't
heard a peep about that.

540
00:28:31,960 --> 00:28:33,007
What was this guy's name?

541
00:28:33,086 --> 00:28:35,214
Jared Vennett. Vennett.

542
00:28:35,297 --> 00:28:37,550
That's right.
These lucky sons of bitches

543
00:28:37,633 --> 00:28:40,386
caught wind of one of the best trades
in Wall Street history

544
00:28:40,469 --> 00:28:42,062
from a wrong number.

545
00:28:42,137 --> 00:28:44,390
They should have paid 10%
to my fuckstick assistant.

546
00:28:44,473 --> 00:28:46,817
His name was
Jared Vennett. Vennett.

547
00:28:46,892 --> 00:28:48,735
Jared Vennett from Deutsche.
Sounded very sketchy.

548
00:28:48,810 --> 00:28:49,811
Sounds like a douchebag.

549
00:28:50,646 --> 00:28:52,444
Do you smell that?

550
00:28:52,522 --> 00:28:53,865
Do you smell that?

551
00:28:53,982 --> 00:28:55,234
I smell money.

552
00:28:56,026 --> 00:28:57,448
This is your basic mortgage...

553
00:29:01,240 --> 00:29:03,413
Okay, hi. How are you?

554
00:29:03,951 --> 00:29:05,168
Have a seat.

555
00:29:05,244 --> 00:29:07,997
Okay, Mr. Vennett
from Deutsche Bank. What do we have?

556
00:29:12,542 --> 00:29:14,135
There you go.

557
00:29:17,589 --> 00:29:20,138
So, how many people
have you talked to about this trade?

558
00:29:20,217 --> 00:29:22,970
A few. There's definitely some interest.

559
00:29:23,053 --> 00:29:24,475
- No!
- My boss would have my ass...

560
00:29:24,554 --> 00:29:25,976
- N.O.!
- You crazy, Jared?

561
00:29:26,056 --> 00:29:27,603
- Get lost.
- Fuck you.

562
00:29:28,350 --> 00:29:31,149
Which is why you're here talking to us,
a wrong number.

563
00:29:31,228 --> 00:29:32,650
Sounds like there's a lot of interest.

564
00:29:32,729 --> 00:29:35,073
All right. A few people have invited us in

565
00:29:35,148 --> 00:29:37,526
just to laugh at me on this deal.
Is that you?

566
00:29:37,609 --> 00:29:38,610
Is that what this is?

567
00:29:38,694 --> 00:29:39,741
That's not what this is.

568
00:29:39,820 --> 00:29:41,618
That's just how Mark is.

569
00:29:41,697 --> 00:29:42,994
- Let's see what you got.
- I'm sorry.

570
00:29:43,073 --> 00:29:44,746
You smell that? What is that?

571
00:29:44,866 --> 00:29:46,288
- What?
- What's that smell?

572
00:29:46,702 --> 00:29:47,703
Your cologne?

573
00:29:47,786 --> 00:29:48,833
No.

574
00:29:51,081 --> 00:29:52,378
Opportunity.

575
00:29:52,499 --> 00:29:53,796
No. Money.

576
00:29:53,875 --> 00:29:55,172
- Oh...
- Okay.

577
00:29:55,252 --> 00:29:56,799
- I smell money.
- Okay.

578
00:29:57,296 --> 00:29:59,970
- Chris, God damn it.
- Sorry.

579
00:30:03,176 --> 00:30:05,599
This is your
basic mortgage bond.

580
00:30:05,679 --> 00:30:07,932
All right? The originals were simple.

581
00:30:08,015 --> 00:30:11,690
They were just thousands
of AAA mortgages bundled together,

582
00:30:11,768 --> 00:30:13,520
guaranteed by the U.S. government.

583
00:30:13,603 --> 00:30:15,446
The modern ones are different.

584
00:30:15,522 --> 00:30:18,446
They're private. And they're
made up of layers of tranches.

585
00:30:23,697 --> 00:30:26,120
The highest level, AAA,
is getting paid first.

586
00:30:26,199 --> 00:30:29,373
The lowest rated, B, is getting paid last,
taking on defaults first.

587
00:30:29,453 --> 00:30:32,127
Now, obviously, if you're buying B's,
you could make more money.

588
00:30:32,205 --> 00:30:33,377
But they're a little risky.

589
00:30:33,457 --> 00:30:35,630
Sometimes they fail.

590
00:30:36,877 --> 00:30:38,220
Chris?

591
00:30:42,049 --> 00:30:44,302
Somewhere along the line,
these B's and BB's

592
00:30:44,384 --> 00:30:45,852
went from a little risky

593
00:30:45,927 --> 00:30:48,350
to dog shit. Where's the trash?

594
00:30:48,430 --> 00:30:49,431
It's right behind you.

595
00:30:49,806 --> 00:30:52,685
I'm talking rock-bottom FICO scores.

596
00:30:53,894 --> 00:30:55,396
No income verification.

597
00:30:56,605 --> 00:30:59,449
Adjustable rates. Dog shit!

598
00:31:00,901 --> 00:31:03,745
The default rates are already up
from 1% to 4%, fellas.

599
00:31:03,820 --> 00:31:06,039
And if they rise to 8%, and they will,

600
00:31:06,823 --> 00:31:09,076
a lot of these BBB's
are going to zero, too.

601
00:31:09,159 --> 00:31:10,581
And that... You're too close.

602
00:31:12,329 --> 00:31:13,330
is an opportunity.

603
00:31:13,413 --> 00:31:14,380
Okay.

604
00:31:14,456 --> 00:31:18,086
You're saying that at 8% the bonds fail
and we are already at 4%?

605
00:31:18,168 --> 00:31:19,169
That's right.

606
00:31:19,252 --> 00:31:21,050
If they go to 8%, it's Armageddon?

607
00:31:21,129 --> 00:31:22,130
Yeah. That's right.

608
00:31:22,255 --> 00:31:23,973
How come nobody's talking about this?

609
00:31:24,091 --> 00:31:26,219
You're completely sure of the math?

610
00:31:26,301 --> 00:31:28,895
Look at him. That's my quant.

611
00:31:28,970 --> 00:31:30,017
Your what?

612
00:31:30,097 --> 00:31:31,895
My quantitative!

613
00:31:31,973 --> 00:31:34,647
My math specialist. Look at him.

614
00:31:34,768 --> 00:31:37,112
You notice anything different about him?
Look at his face.

615
00:31:37,187 --> 00:31:38,234
That's pretty racist.

616
00:31:38,313 --> 00:31:40,816
Look at his eyes!
I'll give you a hint.

617
00:31:40,899 --> 00:31:42,446
His name's Yang!

618
00:31:43,610 --> 00:31:46,910
He won a national
math competition in China!

619
00:31:46,988 --> 00:31:49,491
He doesn't even speak English!

620
00:31:49,574 --> 00:31:51,247
Yeah, I'm sure of the math.

621
00:31:52,953 --> 00:31:56,753
Actually, my name's Jiang
and I do speak English.

622
00:31:56,832 --> 00:31:58,300
Jared likes to say I don't
because he thinks

623
00:31:58,375 --> 00:32:00,218
it makes me seem more authentic.

624
00:32:00,293 --> 00:32:02,842
And I got second in that
national math competition.

625
00:32:03,422 --> 00:32:08,303
So you're offering us a chance
to short this pile of blocks? How?

626
00:32:08,385 --> 00:32:10,854
With something called
a credit default swap.

627
00:32:12,139 --> 00:32:14,642
It's like insurance on the bond,
and if it goes bust

628
00:32:14,724 --> 00:32:17,898
you can make 10-to-1,
even 20-to-1 return.

629
00:32:17,978 --> 00:32:20,106
And it's already slowly going bust!

630
00:32:20,355 --> 00:32:22,449
10-to-1? 20-to-1? No way.

631
00:32:22,524 --> 00:32:24,492
And no one's paying attention.

632
00:32:24,985 --> 00:32:27,408
No one is paying attention!

633
00:32:27,487 --> 00:32:30,957
Because the banks are too busy
getting paid obscene fees

634
00:32:31,032 --> 00:32:32,329
to sell these bonds.

635
00:32:32,409 --> 00:32:35,162
But wait. You are the bank.
You work for the bank.

636
00:32:35,245 --> 00:32:37,293
I bet your margins are pretty nice and fat.

637
00:32:37,372 --> 00:32:39,670
Let's not talk about
my margins, by the way.

638
00:32:39,749 --> 00:32:41,797
Being nice and fat, that's a nice shirt.
Do they make it for men?

639
00:32:43,170 --> 00:32:44,137
Aren't you the bank?

640
00:32:44,212 --> 00:32:47,136
I work for the bank.
I don't think like a bank.

641
00:32:47,215 --> 00:32:51,095
Big bank, small bank,
I like to make money. All right?

642
00:32:51,178 --> 00:32:53,897
Let me put it this way.
I'm standing in front of a burning house...

643
00:32:54,014 --> 00:32:56,767
And I'm offering you fire insurance on it.

644
00:32:56,850 --> 00:32:59,353
How can these underlying bonds
be as bad as you say?

645
00:32:59,478 --> 00:33:00,695
It wouldn't be legal.

646
00:33:00,770 --> 00:33:02,738
Nobody knows what's in them.

647
00:33:02,814 --> 00:33:04,316
Nobody knows what's in the bonds.

648
00:33:04,399 --> 00:33:07,494
I've seen some that are 65% AAA-rated

649
00:33:07,569 --> 00:33:10,539
that I know for a fact are filled with 95%

650
00:33:10,614 --> 00:33:13,413
subprime shit with FICOs below 550!

651
00:33:13,867 --> 00:33:14,993
Get the fuck out of here.

652
00:33:15,076 --> 00:33:16,453
You want me to really blow your mind?

653
00:33:16,536 --> 00:33:18,083
When the market deems
a bond too risky to buy,

654
00:33:18,163 --> 00:33:20,382
what do you think we do with it?

655
00:33:20,457 --> 00:33:21,583
Take a guess.

656
00:33:21,666 --> 00:33:23,088
I don't know. You tell me.

657
00:33:23,168 --> 00:33:27,093
All right. You think we just
warehouse it on the books? No.

658
00:33:27,172 --> 00:33:29,095
We just repackage it
with a bunch of other shit

659
00:33:29,174 --> 00:33:31,268
that didn't sell and put it into a CDO.

660
00:33:32,093 --> 00:33:34,141
- A CDC)?
- Yes. A CDO.

661
00:33:34,930 --> 00:33:36,682
- What is that?
- This is where we take a bunch of B's,

662
00:33:36,765 --> 00:33:38,938
BB's and BBB's that haven't sold,

663
00:33:39,017 --> 00:33:40,690
and we put them in a pile.

664
00:33:42,229 --> 00:33:44,197
And when the pile
gets large enough,

665
00:33:44,314 --> 00:33:46,863
the whole thing is suddenly
considered diversified

666
00:33:46,942 --> 00:33:51,664
and the whores at the rating agency
give it a 92%-93% AAA rating,

667
00:33:51,738 --> 00:33:53,740
no questions asked.

668
00:33:55,408 --> 00:33:57,911
Hold it. What? Say that again.

669
00:33:58,203 --> 00:34:00,456
A collateralized debt obligation.

670
00:34:00,539 --> 00:34:02,041
It's important to understand
because it's what allowed

671
00:34:02,123 --> 00:34:06,253
a housing crisis to become
a nationwide economic disaster.

672
00:34:06,336 --> 00:34:09,556
Here's world-famous chef
Anthony Bourdain to explain.

673
00:34:14,135 --> 00:34:15,808
Okay, I'm a chef
on a Sunday afternoon

674
00:34:15,971 --> 00:34:17,644
setting the menu at a big restaurant.

675
00:34:17,806 --> 00:34:19,228
I ordered my fish on Friday,

676
00:34:19,307 --> 00:34:22,026
which is the mortgage bond
that Michael Burry shorted.

677
00:34:22,227 --> 00:34:24,229
But some of the fresh fish doesn't sell.

678
00:34:24,312 --> 00:34:25,939
I don't know why.
Maybe it just came out

679
00:34:26,064 --> 00:34:27,691
halibut has the intelligence of a dolphin.

680
00:34:27,774 --> 00:34:29,492
So, what am I going to do?

681
00:34:29,568 --> 00:34:33,072
Throw all this unsold fish,
which is the BBB level of the bond,

682
00:34:33,154 --> 00:34:35,623
in the garbage and take the loss?

683
00:34:36,575 --> 00:34:37,576
No way.

684
00:34:37,659 --> 00:34:40,082
Being the crafty
and morally onerous chef that I am,

685
00:34:40,161 --> 00:34:42,835
whatever crappy levels
of the bond I don't sell,

686
00:34:42,956 --> 00:34:44,924
I throw into a seafood stew.

687
00:34:45,000 --> 00:34:48,425
See, it's not old fish.
It's a whole new thing!

688
00:34:48,503 --> 00:34:52,224
And the best part is
they're eating 3-day-old halibut.

689
00:34:52,299 --> 00:34:53,972
That is a CDO.

690
00:34:54,092 --> 00:34:56,936
I just need to know,
how could these possibly be collated?

691
00:34:57,012 --> 00:34:59,435
Somehow you're like Dora the Explorer

692
00:34:59,514 --> 00:35:00,766
and you're the first person

693
00:35:00,849 --> 00:35:02,192
- who found this thing.
- Hold on. Hold on.

694
00:35:02,267 --> 00:35:04,144
So mortgage bonds are dog shit,

695
00:35:04,227 --> 00:35:06,446
CDOs are dog shit wrapped in cat shit.

696
00:35:07,981 --> 00:35:09,824
Yeah, that's right.

697
00:35:09,899 --> 00:35:13,403
Institutions treat these CDOs
like they're as solid as treasury bonds,

698
00:35:13,486 --> 00:35:14,738
and they're going to zero.

699
00:35:15,947 --> 00:35:18,166
No. That can't be right.
There were $500 billion

700
00:35:18,241 --> 00:35:20,585
in housing bonds sold last year alone.

701
00:35:20,869 --> 00:35:23,497
The rating agencies, the banks,
the fucking government,

702
00:35:23,580 --> 00:35:25,582
you're saying they're
all asleep at the wheel?

703
00:35:25,665 --> 00:35:29,135
Yeah. My whole department's
long on this stuff.

704
00:35:30,003 --> 00:35:33,883
They call me Chicken Little.
They call me Bubble Boy.

705
00:35:36,551 --> 00:35:39,976
A's, zero. B's, zero.

706
00:35:40,263 --> 00:35:43,517
BB's, zero. BBB's, zero.

707
00:35:45,935 --> 00:35:47,312
And then that happens.

708
00:35:47,395 --> 00:35:49,068
What is that?

709
00:35:50,940 --> 00:35:52,658
That's America's housing market.

710
00:35:55,612 --> 00:35:56,659
Thank you.

711
00:35:56,738 --> 00:35:57,739
Fuckin' A, Jared.

712
00:35:57,822 --> 00:35:59,824
Shut your fucking mouth.

713
00:35:59,908 --> 00:36:02,081
- ... hang out with you.
- Good. Okay.

714
00:36:02,202 --> 00:36:04,330
Sack up, do the deal.
Let's be friends.

715
00:36:04,412 --> 00:36:05,629
We will see. Thank you.

716
00:36:05,705 --> 00:36:06,752
- Don't bullshit me.
- All right.

717
00:36:06,831 --> 00:36:07,923
You're gonna say no, aren't you?

718
00:36:08,041 --> 00:36:10,510
No. No, I'm just
evaluating right now.

719
00:36:10,585 --> 00:36:12,303
Thank you. Thank you for coming in.

720
00:36:13,380 --> 00:36:14,723
Bye, Jared.

721
00:36:20,762 --> 00:36:22,184
I don't like it.

722
00:36:23,139 --> 00:36:24,812
He's playing us.

723
00:36:25,934 --> 00:36:27,777
He's playing us.
He's got too much skin in the game

724
00:36:27,852 --> 00:36:29,525
and he's dumping his position.

725
00:36:30,480 --> 00:36:31,982
What if he's right?

726
00:36:32,065 --> 00:36:33,157
You want him to be right.

727
00:36:33,233 --> 00:36:34,780
Yes, I do.

728
00:36:35,360 --> 00:36:38,455
The banks have given us
25% interest rates on credit cards.

729
00:36:38,530 --> 00:36:40,248
They have screwed us on student loans

730
00:36:40,323 --> 00:36:42,075
that we can never get out from under.

731
00:36:42,158 --> 00:36:45,378
Then this guy walks into
my office and says

732
00:36:45,453 --> 00:36:48,423
those same banks got greedy,
they lost track of the market,

733
00:36:48,498 --> 00:36:50,546
and I can profit off of their stupidity?

734
00:36:50,625 --> 00:36:52,878
Fuck, yeah, I want him to be right!

735
00:36:52,961 --> 00:36:54,213
How come you
don't hate this guy?

736
00:36:54,295 --> 00:36:55,968
He's everything
you taught us not to trust.

737
00:36:56,047 --> 00:36:57,765
I can't hate him.
He is so transparent

738
00:36:57,841 --> 00:37:00,219
in his self-interest
that I kind of respect him.

739
00:37:00,301 --> 00:37:03,396
Would I buy a car from him? No.

740
00:37:03,638 --> 00:37:04,890
Is he right about the mortgage market?

741
00:37:04,973 --> 00:37:07,192
- No.
- Let's find out. Let's find out.

742
00:37:08,768 --> 00:37:10,611
Look. It's two very simple questions.

743
00:37:10,687 --> 00:37:12,189
Is there a housing bubble?

744
00:37:12,272 --> 00:37:14,866
And if there is,
how exposed are the banks?

745
00:37:14,941 --> 00:37:15,988
Yeah. Okay.

746
00:37:16,067 --> 00:37:17,489
Let's get on this quickly too.

747
00:37:17,569 --> 00:37:18,946
Because if he's right,

748
00:37:19,028 --> 00:37:22,498
every loser with a couple million bucks
and a fund is gonna be jumping on this.

749
00:37:23,032 --> 00:37:24,033
Let's go.

750
00:37:26,327 --> 00:37:27,829
Just that morning...

751
00:37:32,000 --> 00:37:35,345
JPMorgan Chase. JPMorgan Chase.

752
00:37:37,172 --> 00:37:39,470
Okay. Stop saying
"JPMorgan Chase".

753
00:37:39,549 --> 00:37:40,971
I got a good feeling about this.

754
00:37:41,050 --> 00:37:42,142
It's just a meeting though, you know?

755
00:37:43,261 --> 00:37:44,763
It's just a meeting. It's something like...

756
00:37:44,846 --> 00:37:46,974
People have meetings
all the time. You know?

757
00:37:47,056 --> 00:37:48,683
People drink their coffee,
they have a meeting.

758
00:37:48,767 --> 00:37:50,110
- Brownfield Fund?
- Yes!

759
00:37:50,185 --> 00:37:52,062
- Hey. Hello.
- Ted.

760
00:37:52,145 --> 00:37:53,488
Chris. I'm on Ted's desk.

761
00:37:53,605 --> 00:37:54,948
Chris. Okay.

762
00:37:55,023 --> 00:37:56,195
- I'm Charlie, Charlie Geller.
- Charlie.

763
00:37:56,274 --> 00:37:57,901
- Jamie Shipley. Hi.
- Jamie.

764
00:37:57,984 --> 00:38:00,954
We're so excited to get set up
on your trading platform.

765
00:38:01,029 --> 00:38:02,155
Cool.

766
00:38:02,238 --> 00:38:04,036
Here, have a seat a second.

767
00:38:04,783 --> 00:38:05,784
All right.

768
00:38:06,868 --> 00:38:09,792
So, I... Ted had asked me
to do some meeting prep.

769
00:38:09,871 --> 00:38:13,250
But I couldn't find
any marketing material on you guys.

770
00:38:13,333 --> 00:38:15,176
We just moved here from Boulder.

771
00:38:15,251 --> 00:38:16,753
- Yeah.
- Got it.

772
00:38:16,836 --> 00:38:19,214
Could we see some
of your offering documents?

773
00:38:19,297 --> 00:38:21,800
Well, Brownfield is its own money.

774
00:38:22,383 --> 00:38:24,101
- It's our money.
- Yeah.

775
00:38:24,177 --> 00:38:25,975
Can you tell us how much you manage?

776
00:38:26,054 --> 00:38:29,524
Of course. We're doing
$30 million right now.

777
00:38:29,599 --> 00:38:30,816
Um, but we started

778
00:38:30,892 --> 00:38:33,645
- four years ago with $110,000.
- Wow.

779
00:38:33,728 --> 00:38:38,359
So, as you can see,
that's pretty phenomenal returns.

780
00:38:38,441 --> 00:38:41,661
We want to get an ISDA agreement
with JPMorgan so we can

781
00:38:41,778 --> 00:38:44,281
deal in long-term options.

782
00:38:44,364 --> 00:38:45,707
- That's really cool.
- Yeah.

783
00:38:58,586 --> 00:39:00,384
That is so cool.

784
00:39:00,463 --> 00:39:01,555
Thank you.

785
00:39:01,631 --> 00:39:05,807
But you guys are under
the capital requirements for an ISDA:

786
00:39:05,927 --> 00:39:06,928
By how much?

787
00:39:07,595 --> 00:39:08,596
Uh...

788
00:39:08,805 --> 00:39:12,184
One billion four hundred
seventy million, so...

789
00:39:13,184 --> 00:39:14,731
a lot.

790
00:39:15,979 --> 00:39:17,447
This makes us look bad, doesn't it,

791
00:39:17,522 --> 00:39:20,696
that we didn't know
what the capital requirements were?

792
00:39:20,775 --> 00:39:21,776
Uh...

793
00:39:22,360 --> 00:39:23,782
It's not great.

794
00:39:24,279 --> 00:39:25,576
But, uh.

795
00:39:25,655 --> 00:39:28,124
Keep up those returns and give us a call

796
00:39:28,199 --> 00:39:29,997
way down the line. You know.

797
00:39:30,076 --> 00:39:31,077
Okay?

798
00:39:31,160 --> 00:39:32,457
- Okay.
- Thanks, Chris.

799
00:39:32,579 --> 00:39:33,546
Have a good one, guys.

800
00:39:33,621 --> 00:39:34,668
Thank you, Chris.

801
00:39:38,960 --> 00:39:39,961
Shit!

802
00:39:41,129 --> 00:39:42,381
Who the fuck schedules a meeting

803
00:39:42,463 --> 00:39:44,591
- at 4:50 in the afternoon?
- Oh, my, God.

804
00:39:44,674 --> 00:39:46,426
That was so painful.

805
00:39:46,509 --> 00:39:50,139
Dude, B ofA and Bear
didn't even return our calls.

806
00:39:50,221 --> 00:39:52,394
And even fucking Wachovia

807
00:39:52,473 --> 00:39:54,146
- blew us off, man!
- I know.

808
00:39:54,309 --> 00:39:56,562
Here's the prospectuses
of all the other losers

809
00:39:56,644 --> 00:39:58,362
who didn't make it past the lobby.

810
00:39:58,438 --> 00:40:00,315
I don't think I can
do this anymore. You know.

811
00:40:00,398 --> 00:40:03,242
I'm young, yet.
I can still do something with my life.

812
00:40:03,318 --> 00:40:05,412
I miss Colorado anyway.
The weed's better.

813
00:40:06,362 --> 00:40:08,364
Gentlemen, I need you to leave.

814
00:40:08,489 --> 00:40:09,866
Yep, yep, we're going. Let's go,

815
00:40:09,991 --> 00:40:11,117
Look at this. Look at this.

816
00:40:11,200 --> 00:40:12,543
This QUY

817
00:40:12,619 --> 00:40:15,543
says that the housing market's
a giant bubble.

818
00:40:17,916 --> 00:40:20,089
Okay, so this part
isn't totally accurate, you know.

819
00:40:20,168 --> 00:40:22,262
We didn't find Jared Vennett's
housing bubble pitch

820
00:40:22,337 --> 00:40:24,260
in the lobby of a bank that rejected us.

821
00:40:24,339 --> 00:40:25,807
The truth is, um,

822
00:40:25,882 --> 00:40:28,761
a friend had told Charlie about it,
and I read about it

823
00:40:28,843 --> 00:40:30,265
in Grant's Interest Rate Observer.

824
00:40:30,345 --> 00:40:31,688
This is crazy.

825
00:40:31,763 --> 00:40:34,266
This is crazy stuff.

826
00:40:34,349 --> 00:40:37,023
Shit, he's saying
that there's 10-to-1 returns

827
00:40:37,101 --> 00:40:40,731
on credit default swaps
for mortgage-backed securities?

828
00:40:40,855 --> 00:40:43,483
And the whole housing market
is about to collapse?

829
00:40:44,192 --> 00:40:45,944
For Jamie and Charlie,
the housing market

830
00:40:46,027 --> 00:40:48,450
doomsday prediction
was music to their ears.

831
00:40:56,079 --> 00:40:58,047
They had started working
out of Jamie's garage

832
00:40:58,122 --> 00:41:00,045
with $110,000 Jamie had saved

833
00:41:00,124 --> 00:41:02,218
taking sailboats up and down
the East Coast.

834
00:41:04,128 --> 00:41:05,926
Our investment strategy was simple.

835
00:41:06,005 --> 00:41:08,053
People hate to think about
bad things happening,

836
00:41:08,132 --> 00:41:10,476
so they always underestimate
their likelihood.

837
00:41:10,551 --> 00:41:13,054
Their strategy
was simple and brilliant.

838
00:41:13,596 --> 00:41:14,688
What he said.

839
00:41:14,764 --> 00:41:17,483
Jamie and Charlie found markets
will sell options very cheaply

840
00:41:17,558 --> 00:41:19,777
on things they think will never happen.

841
00:41:19,852 --> 00:41:21,445
So when they were wrong,
they were wrong small,

842
00:41:21,521 --> 00:41:23,489
but when they were right,
they were right big.

843
00:41:30,321 --> 00:41:34,076
Within a few years they had
turned $110,000 into $30 million.

844
00:41:34,158 --> 00:41:35,831
But then it was time
to go to New York City.

845
00:41:35,910 --> 00:41:38,538
And so far, it wasn't going very welt.

846
00:41:38,621 --> 00:41:40,373
So what if it does seem interesting. No...

847
00:41:40,456 --> 00:41:43,960
No bank will give us our ISDA:
We're dead in the water.

848
00:41:45,461 --> 00:41:47,884
These kind of trades
are totally out of the question.

849
00:41:47,964 --> 00:41:49,591
We got to call Ben.

850
00:41:51,801 --> 00:41:53,303
Let's call Ben!

851
00:41:54,178 --> 00:41:56,272
Ben Rickert was
a former trader in Singapore

852
00:41:56,347 --> 00:41:59,100
for Chase who quit
the whole game in disgust.

853
00:41:59,183 --> 00:42:01,527
He happened to be Jamie's neighbor
when they were in Colorado

854
00:42:01,602 --> 00:42:03,775
and they met walking dogs.

855
00:42:03,855 --> 00:42:05,323
But Ben was dark.

856
00:42:05,440 --> 00:42:07,488
He didn't just think
the whole system would fail.

857
00:42:07,567 --> 00:42:09,786
He thought the whole world
was going down.

858
00:42:11,821 --> 00:42:13,915
Every one of these vegetables
is fresh from my garden.

859
00:42:16,409 --> 00:42:17,706
You guys should
start your own garden.

860
00:42:17,785 --> 00:42:20,129
What you got to do is get
your soil off the petrochemicals.

861
00:42:20,204 --> 00:42:21,251
Hmm.

862
00:42:21,330 --> 00:42:23,549
I used wood ash and urine
to help restore the soil.

863
00:42:23,624 --> 00:42:25,217
It creates ammonium nitrate.

864
00:42:25,293 --> 00:42:27,045
Seeds are gonna be the new currency.

865
00:42:27,170 --> 00:42:29,172
And not those Franken-seeds
from Monsanto.

866
00:42:29,255 --> 00:42:31,849
I'm talking about good,
healthy, organic seeds.

867
00:42:31,924 --> 00:42:33,050
Make yourself a garden.

868
00:42:33,134 --> 00:42:34,602
- Learn to live off the land.
- You're a fucking lunatic.

869
00:42:34,677 --> 00:42:36,896
Ben had real
experience in a big bank.

870
00:42:36,971 --> 00:42:40,646
Jamie and Charlie had never even
been in a Manhattan bank bathroom.

871
00:42:40,767 --> 00:42:42,440
But Ben was done
with the banking world.

872
00:42:42,518 --> 00:42:43,861
He was very clear.

873
00:42:43,936 --> 00:42:45,529
All right,
let's crunch some numbers

874
00:42:45,605 --> 00:42:47,983
and then maybe
we'll talk about calling Ben.

875
00:42:48,066 --> 00:42:49,113
We're always crunching numbers.

876
00:42:49,192 --> 00:42:50,239
When haven't we
crunched the numbers?

877
00:42:50,318 --> 00:42:51,365
We're gonna crunch
the numbers like harder...

878
00:42:51,486 --> 00:42:52,453
I need you out of here.

879
00:42:52,528 --> 00:42:53,575
Of course. One second.

880
00:42:53,654 --> 00:42:54,325
Yes, ma'am. We're going.

881
00:42:57,533 --> 00:42:59,831
Oh, God. I hate this.
This is a total waste of time.

882
00:43:00,036 --> 00:43:02,380
Oh, come on. Would you relax?

883
00:43:03,122 --> 00:43:06,251
There's a housing development
45 minutes outside town.

884
00:43:06,334 --> 00:43:08,211
Mark wants us to check that out first.

885
00:43:08,294 --> 00:43:10,296
Well, I hope there are some
Cuban restaurants on the way there.

886
00:43:10,379 --> 00:43:13,007
Because I heard the Cuban food
is amazing in Miami.

887
00:43:13,091 --> 00:43:15,810
Please don't be chipper
in the face of me being miserable.

888
00:43:15,885 --> 00:43:17,558
It really makes me hate you.

889
00:43:17,637 --> 00:43:20,186
How is wanting to eat good food
being chipper?

890
00:43:21,891 --> 00:43:23,063
Hello?

891
00:43:24,477 --> 00:43:25,729
Hello?

892
00:43:26,521 --> 00:43:27,864
What do these go for?

893
00:43:29,524 --> 00:43:31,242
$425,000 each?

894
00:43:53,089 --> 00:43:54,682
What's up, man?
What do you want?

895
00:43:54,757 --> 00:43:58,102
Hello. I'm surveying mortgage owners
who are over 90 days delinquent.

896
00:43:58,177 --> 00:44:00,726
I'm looking for a Harvey Humpsey.

897
00:44:00,805 --> 00:44:01,977
You want my landlord's dog?

898
00:44:04,142 --> 00:44:05,610
Your landlord filled out
his mortgage application

899
00:44:05,685 --> 00:44:08,154
using his dog's name?

900
00:44:08,229 --> 00:44:09,697
I guess so.

901
00:44:09,772 --> 00:44:12,275
Wait, has that asshole
not been paying his mortgage?

902
00:44:12,358 --> 00:44:13,701
'Cause I've been paying my rent.

903
00:44:13,776 --> 00:44:15,699
Well, yeah, he is over
90 days delinquent.

904
00:44:16,070 --> 00:44:17,663
Seriously, man.

905
00:44:17,738 --> 00:44:19,536
Am I gonna have to leave?

906
00:44:22,076 --> 00:44:24,454
'Cause my kid just got
settled in school, man.

907
00:44:24,537 --> 00:44:26,710
Hey. How are ya?

908
00:44:27,373 --> 00:44:28,545
My name's Ken.

909
00:44:28,666 --> 00:44:29,883
You're Ken?

910
00:44:29,959 --> 00:44:31,757
Um, you should talk
to your landlord about that.

911
00:44:31,836 --> 00:44:33,338
I'm sorry, I don't have
any more information.

912
00:44:33,421 --> 00:44:34,798
But you, um...

913
00:44:35,464 --> 00:44:37,057
You have a great day.
See ya, Ken.

914
00:44:37,133 --> 00:44:38,555
There's books everywhere!

915
00:44:38,634 --> 00:44:40,887
Books everywhere?

916
00:44:40,970 --> 00:44:44,224
Seriously, man,
is everything gonna be okay?

917
00:44:44,307 --> 00:44:47,402
You should...
You should call him.

918
00:44:47,476 --> 00:44:48,523
You should give him a call.

919
00:44:48,603 --> 00:44:50,276
It's not my fault, dude.
I've been paying...

920
00:44:54,150 --> 00:44:55,242
Hello!

921
00:44:59,155 --> 00:45:01,283
Looks like the Mary Celeste.

922
00:45:01,365 --> 00:45:04,118
Look. All they took was the TV.

923
00:45:04,911 --> 00:45:06,879
It's weird.

924
00:45:06,954 --> 00:45:09,298
They didn't even
clean out the cat litter.

925
00:45:17,840 --> 00:45:18,887
Oh, GOG.

926
00:45:30,519 --> 00:45:32,442
It's like Chernobyl.

927
00:45:32,521 --> 00:45:35,946
There's like a hundred houses.
There can't be four people living here.

928
00:45:37,985 --> 00:45:40,158
- Oh, fuck that!
- Shit!

929
00:45:55,044 --> 00:45:56,170
He's been in there for seven hours.

930
00:45:56,295 --> 00:45:57,888
Where does he go to the bathroom?

931
00:45:58,506 --> 00:45:59,598
I heard he had a breakdown.

932
00:45:59,674 --> 00:46:01,642
He's letting the fund tank.

933
00:46:01,717 --> 00:46:03,185
My buddy in Manhattan said...

934
00:46:03,302 --> 00:46:04,849
Dr. Burry's office.

935
00:46:05,179 --> 00:46:06,806
No, he actually prefers
that you email him.

936
00:46:06,889 --> 00:46:08,186
Excuse me.

937
00:46:08,516 --> 00:46:09,517
Mr. Fields, Mr...

938
00:46:13,646 --> 00:46:15,398
- Hi, Lawrence.
- Holy shit!

939
00:46:17,024 --> 00:46:20,574
We have no confidence
in your ability to identify

940
00:46:20,653 --> 00:46:22,246
macroeconomic trends.

941
00:46:24,573 --> 00:46:27,122
You flew here
to tell me that? Why?

942
00:46:27,201 --> 00:46:30,626
Anyone can see
that there is a real estate bubble.

943
00:46:30,705 --> 00:46:32,548
Actually, no one can see a bubble.

944
00:46:32,623 --> 00:46:33,840
That's what makes it a bubble.

945
00:46:33,916 --> 00:46:36,214
That's dumb, Lawrence.

946
00:46:36,294 --> 00:46:37,887
There's always markers.

947
00:46:38,629 --> 00:46:41,098
Mortgage fraud has

948
00:46:41,173 --> 00:46:42,925
quintupled since 2000

949
00:46:43,050 --> 00:46:45,894
and the average take-home pay is flat,

950
00:46:45,970 --> 00:46:47,438
but home prices are soaring.

951
00:46:47,513 --> 00:46:49,607
That means the homes
are debt, not assets.

952
00:46:49,682 --> 00:46:51,901
So Mike Burry of San Jose, a guy who

953
00:46:52,893 --> 00:46:56,272
gets his hair cut at Supercuts
and doesn't wear shoes,

954
00:46:56,397 --> 00:46:59,241
knows more than Alan Greenspan
and Hank Paulson.

955
00:46:59,400 --> 00:47:00,401
Well...

956
00:47:01,110 --> 00:47:03,738
Dr. Mike Burry,
yes, he does.

957
00:47:04,947 --> 00:47:06,745
That's cute. That's cute.

958
00:47:06,824 --> 00:47:09,168
Are you being sarcastic with us, Mike?

959
00:47:12,288 --> 00:47:13,710
Lawrence,

960
00:47:13,789 --> 00:47:16,292
I don't know how to be sarcastic.

961
00:47:16,959 --> 00:47:19,758
I don't know how to be funny.
I don't know how to

962
00:47:20,421 --> 00:47:21,889
work people.

963
00:47:21,964 --> 00:47:23,136
.33-

964
00:47:23,215 --> 00:47:25,559
I just know how to read numbers.

965
00:47:25,634 --> 00:47:28,137
How big is your short position right now?

966
00:47:28,512 --> 00:47:29,559
Urn...

967
00:47:29,638 --> 00:47:31,231
Just $1.3 billion.

968
00:47:31,807 --> 00:47:33,184
And the premiums?

969
00:47:33,309 --> 00:47:34,652
Well, we pay. Uh.

970
00:47:35,102 --> 00:47:38,447
Roughly $80 to 90 million

971
00:47:38,564 --> 00:47:40,032
each year, which is high,

972
00:47:40,107 --> 00:47:42,201
but I was the first to do this trade.

973
00:47:42,276 --> 00:47:45,746
Watch. It will pay. I may have
been early, but I'm not wrong.

974
00:47:45,821 --> 00:47:48,165
It's the same thing.
It's the same thing, Mike!

975
00:47:48,991 --> 00:47:53,121
You're managing a fund of,
what, $555 million?

976
00:47:53,662 --> 00:47:57,166
In six years, it'll all be gone.

977
00:47:57,958 --> 00:47:59,380
On one bet.

978
00:47:59,460 --> 00:48:02,634
No, the second quarter of '07 is
when the adjustable rates kick in.

979
00:48:02,755 --> 00:48:04,257
The defaults will skyrocket.

980
00:48:04,340 --> 00:48:06,058
Yeah. Says you.

981
00:48:06,133 --> 00:48:08,602
How much is eligible
for withdrawal before they do?

982
00:48:08,677 --> 00:48:10,600
Say, in the next two quarters.

983
00:48:11,305 --> 00:48:13,307
If your investors panic.

984
00:48:16,852 --> 00:48:17,899
$302 million?

985
00:48:17,978 --> 00:48:18,979
.33-

986
00:48:19,855 --> 00:48:21,482
My God, Mike.

987
00:48:26,320 --> 00:48:28,243
No one will pull out.
That would be suicide.

988
00:48:28,322 --> 00:48:30,745
I mean, I'm down 17% for the year.

989
00:48:30,866 --> 00:48:33,164
But if they trust me,
and they trust me, because...

990
00:48:33,244 --> 00:48:35,872
No one trusts you! No one!

991
00:48:35,955 --> 00:48:38,378
I sent several emails to my investors

992
00:48:38,499 --> 00:48:40,547
letting them know that the...

993
00:48:42,169 --> 00:48:44,592
the second quarter of '07 is when our

994
00:48:44,713 --> 00:48:47,182
housing positions show returns and...

995
00:48:48,551 --> 00:48:49,803
I've been very clear.

996
00:48:50,594 --> 00:48:53,438
People will withdraw their money.

997
00:48:54,014 --> 00:48:57,484
Lawrence, that would be so stupid.
I mean, the...

998
00:48:57,560 --> 00:49:01,064
if the fund's capitals
drop too much,

999
00:49:01,522 --> 00:49:04,617
then the swaps contracts are voided.

1000
00:49:04,692 --> 00:49:07,946
And then the banks get to
keep all of the collateral.

1001
00:49:08,028 --> 00:49:10,247
- Wait a minute. Wait.
- All of it.

1002
00:49:10,364 --> 00:49:12,492
The contracts are voided?

1003
00:49:12,575 --> 00:49:14,373
The contracts are voided?

1004
00:49:15,077 --> 00:49:16,750
Holy shit!

1005
00:49:17,204 --> 00:49:18,205
Oh, motherfucker!

1006
00:49:18,873 --> 00:49:20,375
Michael?

1007
00:49:20,749 --> 00:49:22,422
Give me my money back.

1008
00:49:25,838 --> 00:49:29,217
Michael, do you hear me?
I want my money back.

1009
00:49:31,719 --> 00:49:34,063
Give me my fucking money back...

1010
00:49:35,097 --> 00:49:36,519
you motherfucker.

1011
00:49:37,433 --> 00:49:40,562
The market's in an itsy-bitsy
little gully right now.

1012
00:49:40,686 --> 00:49:42,939
It's like everybody said,
"Okay, that was crazy.

1013
00:49:43,022 --> 00:49:44,899
"Let's just all calm down."

1014
00:49:46,734 --> 00:49:49,954
I sold that house for $350,000
the year it was built.

1015
00:49:50,613 --> 00:49:52,786
Two years later, $480,000.

1016
00:49:52,907 --> 00:49:56,081
Then $585,000 maybe 18 months ago.

1017
00:49:56,202 --> 00:49:58,751
This couple bought it
for $650,000 last year.

1018
00:49:59,246 --> 00:50:01,089
He'd let it go for that.

1019
00:50:01,165 --> 00:50:02,838
Hi, John.

1020
00:50:02,917 --> 00:50:03,964
No, no, no.

1021
00:50:04,585 --> 00:50:05,962
It will break his heart, but he'll let it go.

1022
00:50:06,086 --> 00:50:07,838
Why is he selling?

1023
00:50:07,922 --> 00:50:09,765
Neither one's
working right now.

1024
00:50:10,758 --> 00:50:13,386
Marlene, you'd say
they're motivated, right?

1025
00:50:13,469 --> 00:50:16,473
As motivated as one can be
in this neighborhood.

1026
00:50:16,555 --> 00:50:19,104
This house on the left,
I would say they're probably motivated.

1027
00:50:19,183 --> 00:50:21,151
Wow, a lot of people
seem very motivated.

1028
00:50:21,227 --> 00:50:22,319
Oh, it's just the gully.

1029
00:50:22,603 --> 00:50:24,355
That's all. Just...

1030
00:50:24,438 --> 00:50:25,860
Just nerves.

1031
00:50:25,940 --> 00:50:27,658
So where do we stand?

1032
00:50:28,817 --> 00:50:31,320
I need to talk to my wife. Um...

1033
00:50:31,403 --> 00:50:32,700
This market won't last.

1034
00:50:32,780 --> 00:50:34,578
Actually, could I talk
to a mortgage broker?

1035
00:50:34,657 --> 00:50:36,500
Anybody you recommend?
Anybody you like.

1036
00:50:36,575 --> 00:50:38,577
Yes, yes, I have
someone. Absolutely.

1037
00:50:38,661 --> 00:50:39,913
Yeah, bitch better like me.

1038
00:50:39,995 --> 00:50:41,247
Sent her ass to Cabo.

1039
00:50:42,873 --> 00:50:45,467
So is Morgan Stanley
recruiting us? Is that it?

1040
00:50:45,751 --> 00:50:48,721
Oh, no. No.
The bank owns our hedge fund,

1041
00:50:48,796 --> 00:50:49,843
but we're not really part of it.

1042
00:50:49,964 --> 00:50:52,433
We invest in financial service companies

1043
00:50:52,508 --> 00:50:55,478
and we're trying to understand
the residential mortgage business.

1044
00:50:55,553 --> 00:50:58,477
How many loans
do you write each month?

1045
00:50:58,597 --> 00:51:00,144
- About 60.
- Yeah.

1046
00:51:00,224 --> 00:51:01,692
What was it four years ago?

1047
00:51:02,643 --> 00:51:03,986
Ten...

1048
00:51:04,061 --> 00:51:05,313
Maybe 15.

1049
00:51:05,396 --> 00:51:07,694
Yeah, I was a bartender.
Now I own a boat.

1050
00:51:07,773 --> 00:51:08,740
You own a...

1051
00:51:08,816 --> 00:51:12,070
So how many of these are
adjustable-rate mortgages?

1052
00:51:12,152 --> 00:51:13,825
- Well, most.
- Oh, yeah.

1053
00:51:13,904 --> 00:51:15,872
Yeah, I'd say about 90%.

1054
00:51:15,948 --> 00:51:19,077
The bonuses on those
skyrocketed a few years ago.

1055
00:51:19,159 --> 00:51:20,456
Adjustable's our bread and honey.

1056
00:51:20,536 --> 00:51:23,085
So do applicants ever get rejected?

1057
00:51:27,418 --> 00:51:28,635
Seriously?

1058
00:51:29,503 --> 00:51:31,597
Look, if they get rejected,
I suck at my job.

1059
00:51:31,672 --> 00:51:33,174
Even if they have no money?

1060
00:51:33,257 --> 00:51:36,136
Well, my firm offers NINJA loans.

1061
00:51:36,218 --> 00:51:38,687
- Okay.
- "No Income, No Job."

1062
00:51:39,013 --> 00:51:41,232
I just leave the income section
blank if I want.

1063
00:51:41,307 --> 00:51:42,559
Corporate doesn't care.

1064
00:51:42,641 --> 00:51:45,941
These people just want homes.
And they go with the flow.

1065
00:51:46,020 --> 00:51:47,021
Good for you.

1066
00:51:47,104 --> 00:51:48,151
Your companies don't verify?

1067
00:51:51,859 --> 00:51:53,861
If I write a loan on Friday afternoon,

1068
00:51:54,737 --> 00:51:56,739
a big bank will buy it by Monday lunch.

1069
00:51:57,281 --> 00:51:58,624
Yeah. Same here.

1070
00:52:00,409 --> 00:52:01,786
Could you hold on a second?

1071
00:52:01,910 --> 00:52:03,287
Yeah.

1072
00:52:08,959 --> 00:52:11,633
I don't get it.
Why are they confessing?

1073
00:52:11,712 --> 00:52:13,680
They're not confessing.

1074
00:52:13,797 --> 00:52:15,470
They're bragging.

1075
00:52:24,224 --> 00:52:28,229
Do people have any idea
what they are buying?

1076
00:52:29,188 --> 00:52:31,441
I focus on
the immigrants, you know.

1077
00:52:31,523 --> 00:52:32,945
Once they find out
they're getting a home,

1078
00:52:33,025 --> 00:52:34,618
they sign where you tell them to sign.

1079
00:52:34,693 --> 00:52:36,821
Don't ask questions.
Don't understand the rates.

1080
00:52:36,904 --> 00:52:38,372
- Fucking idiots.
- Yeah.

1081
00:52:38,447 --> 00:52:39,869
And you target immigrants, too?

1082
00:52:39,948 --> 00:52:42,792
Well, their credit actually
isn't bad enough for him.

1083
00:52:44,703 --> 00:52:46,376
Look, I'm a yield guy.

1084
00:52:46,872 --> 00:52:47,919
Okay...

1085
00:52:48,999 --> 00:52:52,424
I make $2,000
on a fixed-rate prime loan, right?

1086
00:52:52,503 --> 00:52:56,133
But I can make $10,000
on a subprime adjustable.

1087
00:52:56,215 --> 00:52:59,185
Trust me, I'm not driving a 7 Series
without strippers.

1088
00:52:59,259 --> 00:53:02,559
No one on the pole has good credit
and they're all cash rich.

1089
00:53:02,638 --> 00:53:04,982
I think I read Warren Buffett
say something like that.

1090
00:53:05,474 --> 00:53:07,727
What? Who's Warren Buffett?

1091
00:53:08,268 --> 00:53:10,987
Okay, so strippers.
Like exotic dancers?

1092
00:53:11,063 --> 00:53:12,280
Yeah, yeah, yeah.

1093
00:53:12,356 --> 00:53:14,324
Nude, you know, topless.

1094
00:53:14,400 --> 00:53:16,243
- Strippers.
- Yeah.

1095
00:53:19,822 --> 00:53:21,039
Can you introduce us?

1096
00:53:21,115 --> 00:53:23,538
Yes! Yes.

1097
00:53:25,619 --> 00:53:28,543
I always get option-pay adjustables.
I'm a private contractor.

1098
00:53:28,622 --> 00:53:30,295
What? I can't hear you. I'm sorry.

1099
00:53:30,374 --> 00:53:32,217
I always get option-pay adjustables.

1100
00:53:32,292 --> 00:53:34,545
I'm a private contractor.
I need flexibility.

1101
00:53:34,628 --> 00:53:37,222
And you tell the mortgage company
what you do?

1102
00:53:37,297 --> 00:53:39,299
I write "therapist".

1103
00:53:39,383 --> 00:53:40,851
- You can touch me.
- Always?

1104
00:53:41,468 --> 00:53:42,515
Only in V.l.P.

1105
00:53:42,594 --> 00:53:45,222
No, no, no, you say
you always do adjustables.

1106
00:53:45,305 --> 00:53:47,103
And you have more than
one loan on a property?

1107
00:53:47,182 --> 00:53:49,401
Everybody does.
At least down here.

1108
00:53:49,476 --> 00:53:50,477
I'm sorry, what?

1109
00:53:50,561 --> 00:53:53,155
Everybody does.
At least down here.

1110
00:53:53,230 --> 00:53:55,403
That way you only put down, like, 5%.

1111
00:53:55,482 --> 00:53:57,280
Prices have leveled off, though, right?

1112
00:53:57,359 --> 00:53:59,202
Yeah. There's a gully.

1113
00:53:59,278 --> 00:54:02,999
Would you mind not moving anymore?
I'll still pay you.

1114
00:54:06,785 --> 00:54:09,504
Sorry. We're not alone.

1115
00:54:09,580 --> 00:54:12,208
Okay, look. If home prices don't go up,

1116
00:54:12,291 --> 00:54:14,589
you are not going to be able to refinance.

1117
00:54:14,668 --> 00:54:17,797
And you'll be stuck paying
whatever your monthly payment is

1118
00:54:17,880 --> 00:54:20,599
once itjumps up
after your teaser rate expires.

1119
00:54:21,008 --> 00:54:23,056
Your monthlies could go up 200%-300%.

1120
00:54:23,469 --> 00:54:25,517
James says I can always refinance.

1121
00:54:25,596 --> 00:54:27,394
Well, he's a liar.

1122
00:54:27,473 --> 00:54:30,602
Actually, in this particular case,
James probably is wrong.

1123
00:54:30,684 --> 00:54:33,984
200 percent? On all my loans?

1124
00:54:34,062 --> 00:54:35,439
What do you mean "all" your loans?

1125
00:54:35,522 --> 00:54:37,945
We're talking about two loans
on one house, right?

1126
00:54:38,776 --> 00:54:40,744
I have five houses.

1127
00:54:40,861 --> 00:54:42,829
And a condo.

1128
00:54:44,698 --> 00:54:46,200
Hey, there's a bubble.

1129
00:54:46,283 --> 00:54:47,284
How do you know?

1130
00:54:47,367 --> 00:54:50,792
Trust me. Call Vennett,
buy $50 million in swaps on the MBS.

1131
00:54:50,871 --> 00:54:53,795
What do we got? Garibaldi IV, BBB.

1132
00:54:53,874 --> 00:54:55,376
Mark, are you sure?

1133
00:54:55,459 --> 00:54:57,302
Yeah. Yeah, it's time to call bullshit.

1134
00:54:57,377 --> 00:55:00,051
- Bullshit on what?
- Every fucking thing.

1135
00:55:24,238 --> 00:55:25,911
FrontPoint! FrontPoint!

1136
00:55:27,741 --> 00:55:29,539
Is this America's angriest hedge fund?

1137
00:55:29,618 --> 00:55:31,746
All right, listen.
I got one last question for you.

1138
00:55:32,913 --> 00:55:34,756
How are you fucking us?

1139
00:55:36,583 --> 00:55:38,130
There's a nicer way to say that, Vinnie.

1140
00:55:38,210 --> 00:55:39,757
I'm serious.

1141
00:55:39,837 --> 00:55:42,932
We'll buy your swaps,
but only if you say how you're fucking us.

1142
00:55:43,006 --> 00:55:45,509
I'm not fucking you, Vinnie.
I'm kissing you.

1143
00:55:45,592 --> 00:55:48,345
I'm looking deep into your eyes
as I make love to you, Vinnie.

1144
00:55:48,428 --> 00:55:51,773
I'm handing you the deal of the century
on a fucking platter.

1145
00:55:51,849 --> 00:55:54,227
What do I get out of it? Easy.

1146
00:55:54,309 --> 00:55:56,732
I got a $20-million-a-month
negative carry.

1147
00:55:56,812 --> 00:55:58,189
I got bosses trying to pull the plug

1148
00:55:58,272 --> 00:56:00,695
because they think
I'm out of my fucking mind.

1149
00:56:00,774 --> 00:56:01,775
All right?

1150
00:56:01,859 --> 00:56:02,951
We make this trade,

1151
00:56:03,026 --> 00:56:05,370
those problems aren't so big anymore.

1152
00:56:05,445 --> 00:56:09,200
And sure, swaps are a dark market,
so I set the price.

1153
00:56:09,283 --> 00:56:10,785
Whatever price I want.

1154
00:56:10,868 --> 00:56:12,290
And when you come for the payday,

1155
00:56:12,411 --> 00:56:14,630
I'm gonna rip your eyes out,
I'm gonna make a fortune.

1156
00:56:15,747 --> 00:56:17,249
But the good news is, Vinnie,
you're not gonna care

1157
00:56:17,332 --> 00:56:19,551
because you're gonna make
so much fucking money.

1158
00:56:19,626 --> 00:56:20,923
That's what I get out of it.

1159
00:56:21,003 --> 00:56:22,300
Want to know what you get out of it?

1160
00:56:22,379 --> 00:56:25,883
You get the ice cream, the hot fudge,
the banana, and the nuts.

1161
00:56:25,966 --> 00:56:27,718
Right now, I get the sprinkles, and, yeah,

1162
00:56:27,801 --> 00:56:30,429
if this goes through, I get the cherry.

1163
00:56:30,512 --> 00:56:32,731
But you get the sundae, Vinnie.

1164
00:56:32,806 --> 00:56:34,479
You get the sundae.

1165
00:56:36,935 --> 00:56:39,734
All right, I buy that. Thank you.

1166
00:56:39,813 --> 00:56:41,986
So what do you say?

1167
00:56:42,065 --> 00:56:43,942
- You want me to make you a market?
- Yeah.

1168
00:56:44,026 --> 00:56:47,530
We'll take $50 million, Garibaldi IV, BBB.

1169
00:56:48,989 --> 00:56:51,037
Sharpen your pencils.
I'll get the paperwork ready.

1170
00:56:53,744 --> 00:56:55,246
Fuck you, too.

1171
00:56:57,205 --> 00:56:58,707
Yes!

1172
00:57:00,667 --> 00:57:01,668
That's right.

1173
00:57:03,795 --> 00:57:05,718
Oh, man.

1174
00:57:05,797 --> 00:57:10,018
He has so many numbers,
and I always forget

1175
00:57:10,135 --> 00:57:11,762
which one he prefers,
because he's very specific.

1176
00:57:11,845 --> 00:57:13,062
Start with the first one.

1177
00:57:13,138 --> 00:57:14,355
I don't know if it's the first one.

1178
00:57:14,473 --> 00:57:15,770
Just try it.

1179
00:57:15,849 --> 00:57:17,396
Okay. I... Okay.

1180
00:57:35,035 --> 00:57:37,788
- Ben Rickert.
- Hey, Ben. It's Jamie.

1181
00:57:39,331 --> 00:57:41,208
Jamie, you know you're
not supposed to use this line.

1182
00:57:43,669 --> 00:57:44,921
Told you.

1183
00:57:46,296 --> 00:57:48,970
Okay, let's try number two out of 14.

1184
00:58:00,560 --> 00:58:01,561
Ben Rickert.

1185
00:58:01,645 --> 00:58:03,647
Ben, why do you do that, man? I mean...

1186
00:58:03,730 --> 00:58:06,153
You're a retired trader, okay?
No one is listening to your calls.

1187
00:58:06,233 --> 00:58:07,951
The NSA has a $52 billion budget
and the ability

1188
00:58:08,026 --> 00:58:09,403
to monitor tens of millions
of calls a second.

1189
00:58:09,486 --> 00:58:11,830
You think they're not using it?

1190
00:58:11,905 --> 00:58:14,749
Hey, I promise I will refrain from saying

1191
00:58:14,825 --> 00:58:16,998
"Ben Rickert" and "dirty bomb"
in the same sent...

1192
00:58:18,870 --> 00:58:20,543
- Jesus fucking Christ.
- I'm sorry, dude.

1193
00:58:20,622 --> 00:58:22,090
{BEEPS)

1194
00:58:22,165 --> 00:58:23,257
Ben Rickert.

1195
00:58:23,375 --> 00:58:25,753
Did you get a chance to look
at what we sent you, Ben?

1196
00:58:25,836 --> 00:58:28,009
It's Charlie. I'm here, too.

1197
00:58:28,755 --> 00:58:31,099
Hi, Charlie. Yeah, I did. Hold on.

1198
00:58:37,097 --> 00:58:38,189
Ben, you still there?

1199
00:58:38,306 --> 00:58:39,432
Yeah.

1200
00:58:40,183 --> 00:58:42,231
I'll be honest, gentlemen.

1201
00:58:42,310 --> 00:58:44,233
It scared the shit out of me.

1202
00:58:44,354 --> 00:58:45,731
But that's a good thing, right?

1203
00:58:45,814 --> 00:58:48,613
That means this Vennett guy's
not wrong.

1204
00:58:49,317 --> 00:58:50,409
No, he's not.

1205
00:58:53,113 --> 00:58:54,114
Cool.

1206
00:58:54,197 --> 00:58:55,790
Tell me more about these CDOs.

1207
00:58:55,866 --> 00:58:59,621
Yeah, yeah. Okay, so, you know,
Vennett mentions the CDOs,

1208
00:58:59,745 --> 00:59:01,292
but actually, we took a look

1209
00:59:01,371 --> 00:59:02,998
and they're way worse
than even he realizes.

1210
00:59:03,123 --> 00:59:04,545
These things don't make any sense!

1211
00:59:04,624 --> 00:59:05,876
We can't even model them.

1212
00:59:05,959 --> 00:59:08,678
These are 100 times bigger
than the MBS.

1213
00:59:08,754 --> 00:59:10,347
And 90% AAA-rated.

1214
00:59:10,422 --> 00:59:12,174
- Yes! Exactly!
- Over 90%.

1215
00:59:12,299 --> 00:59:13,391
It's incredible.

1216
00:59:13,467 --> 00:59:16,641
I took a good hard look
at the CDOs you want to short.

1217
00:59:17,387 --> 00:59:19,810
They're brilliant. Worthless. Total crap.

1218
00:59:20,474 --> 00:59:22,647
Jamie. Very good.

1219
00:59:22,726 --> 00:59:26,230
What can I say?
I'm good at finding shit.

1220
00:59:26,313 --> 00:59:29,066
So, Ben, we shorted
the BB's and the BBB 's,

1221
00:59:29,149 --> 00:59:31,243
and the risk is relatively low.

1222
00:59:31,318 --> 00:59:33,992
- Payoff is, like, 25-to-1.
- Yeah.

1223
00:59:36,323 --> 00:59:38,417
Okay, so, why are you calling me?
I don't do this anymore.

1224
00:59:38,492 --> 00:59:39,664
Look, Ben'?

1225
00:59:40,994 --> 00:59:44,749
We need you to help us get the ISDA:

1226
00:59:44,831 --> 00:59:47,926
If we get a hunting license,
we can short this crap.

1227
00:59:48,001 --> 00:59:49,173
And we know you hate Wall Street.

1228
00:59:49,294 --> 00:59:50,466
We're not asking you to do the trading.

1229
00:59:50,545 --> 00:59:54,516
We're simply asking you
to help us get a seat

1230
00:59:54,591 --> 00:59:57,765
at the fucking table.

1231
00:59:57,844 --> 00:59:59,767
It's a pretty ugly table, guys.

1232
00:59:59,846 --> 01:00:04,852
Look, Ben, the system fucked up
in a big, big way here, okay?

1233
01:00:04,935 --> 01:00:07,029
And somehow, uh,

1234
01:00:07,354 --> 01:00:10,028
we know before anyone else.

1235
01:00:10,357 --> 01:00:13,281
You know?
This is a once-in-a-lifetime deal.

1236
01:00:15,862 --> 01:00:16,863
I'm thinking.

1237
01:00:21,952 --> 01:00:23,875
Okay. I'll call Deutsche Bank.

1238
01:00:23,954 --> 01:00:26,207
Thank you, Ben. Thank you.

1239
01:00:26,289 --> 01:00:29,884
And Bear. What about Bear?
They have some reprehensible product.

1240
01:00:30,210 --> 01:00:32,554
Okay. Bear will trade with anybody.

1241
01:01:20,677 --> 01:01:23,430
All right.
I'll see if I can push it through.

1242
01:01:23,513 --> 01:01:25,356
Thank you, Noah.
And thank Jared for us.

1243
01:01:27,309 --> 01:01:28,526
Couldn't we go inside?

1244
01:01:28,643 --> 01:01:29,860
Yeah, me, too.

1245
01:02:13,980 --> 01:02:16,324
Hi. It's Mark. I need to
talk to Vinnie right now.

1246
01:02:16,399 --> 01:02:19,824
We're just asking you to explain to us

1247
01:02:19,986 --> 01:02:22,455
just how it is that you are fucking us,

1248
01:02:22,530 --> 01:02:23,782
because what we are seeing...

1249
01:02:26,660 --> 01:02:28,003
Morgan Stanley building, fast.

1250
01:02:28,954 --> 01:02:31,423
Are we hooked up
to the same computer screen?

1251
01:02:31,498 --> 01:02:33,171
It doesn't make any sense.

1252
01:02:36,002 --> 01:02:37,470
Vinnie, you there?

1253
01:02:37,879 --> 01:02:38,880
Mark, you there?

1254
01:02:38,964 --> 01:02:39,931
Yeah, did you hear?

1255
01:02:40,006 --> 01:02:41,758
Mortgage defaults have
gone through the roof.

1256
01:02:41,841 --> 01:02:43,309
Is anybody jumping off of buildings yet?

1257
01:02:43,385 --> 01:02:45,604
Why would they?
Subprime mortgage bond prices are up.

1258
01:02:45,679 --> 01:02:46,726
What?

1259
01:02:46,805 --> 01:02:50,105
Vennett wants $1.9 million more
in collateral by close.

1260
01:02:50,183 --> 01:02:51,480
Vennett's asking us to post collateral.

1261
01:02:51,559 --> 01:02:52,981
What the hell is going on?

1262
01:02:53,061 --> 01:02:55,029
We don't know, but Deutsche's
on the phone demanding payment.

1263
01:02:55,105 --> 01:02:56,948
Call Vennett. Cal! that little shit.

1264
01:02:57,023 --> 01:02:58,991
Call Vennett.
Tell him to get his ass down here.

1265
01:02:59,067 --> 01:03:00,865
So subprime loans go bad,

1266
01:03:00,944 --> 01:03:04,164
but subprime bonds, which are made up
of subprime loans, are more valuable?

1267
01:03:04,239 --> 01:03:06,708
I know. They want another
$1.9 million by market close.

1268
01:03:06,825 --> 01:03:08,953
What about the ratings agencies?
Moody's, S&P...

1269
01:03:09,035 --> 01:03:11,458
Are they downgrading the CDOs
and mortgage bonds?

1270
01:03:11,538 --> 01:03:12,630
Where are the ratings agencies at?

1271
01:03:12,706 --> 01:03:14,208
They're the fucking same.

1272
01:03:14,332 --> 01:03:15,800
No, they're all still AAA.

1273
01:03:15,875 --> 01:03:18,378
What the hell?
Are you fucking kidding me?

1274
01:03:18,461 --> 01:03:20,555
Those fuckers! Those motherfuckers!

1275
01:03:20,630 --> 01:03:23,600
They go public, and all they care about
is their bottom line and their shit.

1276
01:03:23,675 --> 01:03:25,427
Hey, Mark, that's not all.

1277
01:03:25,510 --> 01:03:26,807
The Morgan Stanley risk guys are here.

1278
01:03:26,886 --> 01:03:28,263
They called in Kathy Tao.

1279
01:03:28,346 --> 01:03:30,474
They're trying to convince her
to make us sell our swaps.

1280
01:03:30,557 --> 01:03:32,810
Apparently, tying up six years
of insurance payments

1281
01:03:32,892 --> 01:03:34,644
in hopes of a housing Armageddon

1282
01:03:34,728 --> 01:03:35,980
is not prudent investing.

1283
01:03:36,104 --> 01:03:37,356
What did Kathy say?

1284
01:03:37,439 --> 01:03:40,158
Nothing yet. She keeps asking
if this is one of your crusades.

1285
01:03:40,233 --> 01:03:42,156
Okay, I want you to walk back in there

1286
01:03:42,235 --> 01:03:43,908
and very calmly, very politely,

1287
01:03:43,987 --> 01:03:46,661
tell the risk assessors to fuck off.

1288
01:03:46,781 --> 01:03:48,408
And then meet me over
at Standard & Poofs.

1289
01:03:48,533 --> 01:03:50,035
We're gonna talk to Georgia.

1290
01:03:50,118 --> 01:03:51,165
All right. Okay.

1291
01:03:51,244 --> 01:03:53,167
Get that fuck Jared Vennett in this office.

1292
01:03:53,246 --> 01:03:55,044
I'm gonna bash his fucking head in.

1293
01:04:00,045 --> 01:04:01,638
Uh, gentlemen?

1294
01:04:01,713 --> 01:04:04,762
I spoke with Mark Baum.
He says to fuck off.

1295
01:04:18,563 --> 01:04:20,907
I can't see a damn thing.

1296
01:04:22,275 --> 01:04:24,778
My eye doctor's always busy.

1297
01:04:24,861 --> 01:04:26,659
I end up taking
any appointment they'll give me,

1298
01:04:26,738 --> 01:04:29,082
and then the whole morning
gets shot to hell!

1299
01:04:30,241 --> 01:04:31,743
So...

1300
01:04:32,243 --> 01:04:33,745
All righiy.

1301
01:04:34,120 --> 01:04:36,623
FrontPoint Partners,

1302
01:04:37,165 --> 01:04:39,543
how can Standard & Poor's help you?

1303
01:04:39,626 --> 01:04:40,878
Well, we don't understand why

1304
01:04:40,960 --> 01:04:43,588
the ratings agencies haven't
downgraded subprime bonds

1305
01:04:43,671 --> 01:04:46,720
since the underlying loans
are clearly deteriorating.

1306
01:04:46,800 --> 01:04:49,223
Well, the delinquency rates
do have people worried,

1307
01:04:49,302 --> 01:04:51,100
but they're actually within our models.

1308
01:04:51,179 --> 01:04:53,147
- So...
- Says you.

1309
01:04:54,307 --> 01:04:56,730
you're convinced
the underlying mortgages

1310
01:04:56,810 --> 01:04:59,233
in these bonds are solid loans.

1311
01:04:59,354 --> 01:05:01,231
That is our opinion, yes.

1312
01:05:01,314 --> 01:05:03,408
Have you looked at the loan-level data?

1313
01:05:03,483 --> 01:05:05,235
I mean, they're giving these loans

1314
01:05:05,318 --> 01:05:06,570
to anybody with a credit score
and a pulse.

1315
01:05:06,653 --> 01:05:09,247
Excuse me, sir. What do you think
we do here all day?

1316
01:05:09,322 --> 01:05:10,369
We're not sure.
That's why we're here.

1317
01:05:10,448 --> 01:05:11,574
Here's what I don't understand...

1318
01:05:11,658 --> 01:05:13,376
We check, recheck, recheck again.

1319
01:05:13,493 --> 01:05:14,790
If these mortgage bonds
are so stable...

1320
01:05:14,869 --> 01:05:16,587
Perhaps you could check your friend.

1321
01:05:16,663 --> 01:05:18,665
have you ever refused to rate...

1322
01:05:18,748 --> 01:05:20,091
Ma'am, that's delusional.

1323
01:05:20,166 --> 01:05:21,292
We stand behind them.

1324
01:05:21,376 --> 01:05:22,969
Georgia,
have you ever refused to rate

1325
01:05:23,044 --> 01:05:26,344
any of these bonds upper tranches AAA?

1326
01:05:26,423 --> 01:05:28,016
Can we see the paperwork
on those deals?

1327
01:05:28,091 --> 01:05:30,093
I am under no obligation
to share that information

1328
01:05:30,176 --> 01:05:31,268
with you, whoever you might be.

1329
01:05:31,344 --> 01:05:33,062
Just answer the question, Georgia.

1330
01:05:33,179 --> 01:05:35,147
Can you name one time in the past year

1331
01:05:35,223 --> 01:05:36,566
where you checked the tape

1332
01:05:36,641 --> 01:05:40,862
and you didn't give the banks
the AAA percentage they wanted?

1333
01:05:43,106 --> 01:05:44,278
If we don't give them the ratings,

1334
01:05:44,357 --> 01:05:46,280
they'll go to Moody's,
right down the block.

1335
01:05:47,193 --> 01:05:50,538
If we don't work with them,
they will go to our competitors.

1336
01:05:51,197 --> 01:05:54,371
Not our fault.
Simply the way the world works.

1337
01:05:58,705 --> 01:06:01,208
- Holy shit.
- Yes, now you see.

1338
01:06:02,250 --> 01:06:04,298
And I never said that.

1339
01:06:04,377 --> 01:06:06,800
They're selling ratings for fees.

1340
01:06:06,880 --> 01:06:07,847
A ratings shop.

1341
01:06:07,922 --> 01:06:10,766
You can afford to make less. Make less.

1342
01:06:10,842 --> 01:06:12,719
Nobody said that.

1343
01:06:12,802 --> 01:06:14,975
And it is not my decision.
I have a boss.

1344
01:06:15,054 --> 01:06:16,397
Are you kidding me?

1345
01:06:16,556 --> 01:06:17,853
No, I am not "kidding you".

1346
01:06:17,932 --> 01:06:20,230
How'd your boss do on the IPO?

1347
01:06:20,310 --> 01:06:21,527
Is that the angle you're taking?

1348
01:06:21,603 --> 01:06:25,153
So, now, anyone who has a boss
can't be held responsible

1349
01:06:25,231 --> 01:06:26,653
for doing shitty and illegal things.

1350
01:06:26,733 --> 01:06:28,326
What are you, four?

1351
01:06:28,401 --> 01:06:32,702
No, I am not four, Mr. Baum.
lam not, no.

1352
01:06:32,780 --> 01:06:36,159
And I wonder what
your incentives might be.

1353
01:06:36,284 --> 01:06:37,831
Is it maybe in your best interest

1354
01:06:37,911 --> 01:06:40,915
to have the ratings change?
Is it, perhaps?

1355
01:06:42,707 --> 01:06:45,256
How many credit default swaps
do you own'? Hmm?

1356
01:06:47,295 --> 01:06:49,172
It doesn't make me wrong.

1357
01:06:49,255 --> 01:06:50,381
No.

1358
01:06:50,465 --> 01:06:52,593
It just makes you a hypocrite.

1359
01:07:33,216 --> 01:07:35,218
Fuck!

1360
01:07:35,301 --> 01:07:36,427
BEN". Mortgage delinquencies went up

1361
01:07:36,511 --> 01:07:38,559
and the CDOs got more valuable
Unbelievable.

1362
01:07:38,638 --> 01:07:40,891
- Unbelievable.
- We know. It's completely backwards.

1363
01:07:40,974 --> 01:07:42,567
I just called an old friend at Bear.

1364
01:07:42,642 --> 01:07:44,315
He didn't even know what a CDO is.

1365
01:07:44,394 --> 01:07:48,740
Yeah, I just had to wire
Bear and Deutsche $70,000.

1366
01:07:48,815 --> 01:07:51,159
It's like two plus two equals

1367
01:07:51,651 --> 01:07:52,823
fish.

1368
01:07:52,902 --> 01:07:55,576
It's rigged.
We bought into a rigged game.

1369
01:07:55,655 --> 01:07:57,453
We're gonna lose everything.

1370
01:07:57,532 --> 01:08:00,001
I'm gonna have to move
back in with my mom.

1371
01:08:00,535 --> 01:08:01,912
Can't do that.

1372
01:08:01,995 --> 01:08:04,168
AH right.
Well, I got a colonic appointment.

1373
01:08:04,247 --> 01:08:05,920
Wait a minute. Hold on, Ben.

1374
01:08:05,999 --> 01:08:07,342
Ben, look.

1375
01:08:07,417 --> 01:08:09,795
Either the banks are clueless

1376
01:08:09,877 --> 01:08:12,175
and they don't know
how to value these CDOs,

1377
01:08:12,255 --> 01:08:17,261
or they're such crooks
that the CDOs are worth shit

1378
01:08:17,427 --> 01:08:19,020
and they're hiding it.

1379
01:08:21,347 --> 01:08:22,815
I think we should buy more swaps.

1380
01:08:23,349 --> 01:08:24,396
What?

1381
01:08:24,475 --> 01:08:26,477
Suck it up and pay up, fellas.
We made a deal.

1382
01:08:26,561 --> 01:08:28,609
No way! No!

1383
01:08:28,688 --> 01:08:30,110
Are you fucking kidding me?

1384
01:08:30,189 --> 01:08:32,533
Are you serious?
You think this is a game?

1385
01:08:32,609 --> 01:08:33,861
No. No. No. No. No.

1386
01:08:34,027 --> 01:08:35,279
Yeah. Yeah.

1387
01:08:41,826 --> 01:08:43,499
No! No! No!

1388
01:08:43,620 --> 01:08:45,293
No, seriously,
a colonic once a year.

1389
01:08:45,371 --> 01:08:46,372
Ass!

1390
01:08:46,456 --> 01:08:48,800
And you got a matching
little butler boy, you buttfuck!

1391
01:08:53,129 --> 01:08:54,972
- Are you done?
- I think so, yeah.

1392
01:08:55,048 --> 01:08:57,801
God! I pulled a muscle
in my back from yelling.

1393
01:08:58,718 --> 01:08:59,719
Ow!

1394
01:09:00,386 --> 01:09:03,731
Mortgage defaults
have done nothing but go up.

1395
01:09:04,057 --> 01:09:07,231
Yet you quote us
a higher price on the bonds.

1396
01:09:08,102 --> 01:09:10,230
Please explain that to me.
There's no way that makes sense.

1397
01:09:10,313 --> 01:09:13,317
There's no way you're marking
these swaps appropriately.

1398
01:09:13,983 --> 01:09:15,906
Why shouldn't we back out
of this trade right now?

1399
01:09:18,404 --> 01:09:20,077
Didn't I say when
we made this deal

1400
01:09:20,198 --> 01:09:21,825
that the ratings agencies, the SEC

1401
01:09:21,908 --> 01:09:24,411
and the big banks were clueless?
Didn't I say that?

1402
01:09:24,494 --> 01:09:25,791
- Yes.
- Didn't I say it?

1403
01:09:25,870 --> 01:09:27,713
Yes, you did. You did.

1404
01:09:27,830 --> 01:09:29,298
Shut up.

1405
01:09:29,374 --> 01:09:30,717
Now their foot's on fire, they think

1406
01:09:30,792 --> 01:09:32,339
their steak is done,
and you're surprised?

1407
01:09:32,418 --> 01:09:35,217
That's not stupidity. That's fraud.

1408
01:09:35,296 --> 01:09:37,014
Tell me the difference
between stupid and illegal,

1409
01:09:37,090 --> 01:09:39,092
and I'll have my wife's brother arrested.

1410
01:09:40,968 --> 01:09:41,969
That was funny.

1411
01:09:42,095 --> 01:09:45,770
I guess you just don't realize
how clueless the system really is.

1412
01:09:45,848 --> 01:09:48,192
Yes, there's some
shady shit going down,

1413
01:09:48,267 --> 01:09:51,612
but trust me, it's fueled by stupidity!

1414
01:09:52,814 --> 01:09:54,157
Look at yourselves.

1415
01:09:54,941 --> 01:09:58,411
You know,
you pass yourself off as cynical people

1416
01:09:58,486 --> 01:10:00,864
but you still have some faith
in the system, don't you?

1417
01:10:00,947 --> 01:10:02,244
I don't.

1418
01:10:02,323 --> 01:10:05,202
Well, except for Vinnie.
And who gives a shit?

1419
01:10:05,284 --> 01:10:07,036
- No way!
- Look...

1420
01:10:07,120 --> 01:10:10,294
Either we're right or we're wrong
in a giant, giant way.

1421
01:10:10,373 --> 01:10:12,250
And if we're wrong,
then we got to find someone

1422
01:10:12,333 --> 01:10:13,960
to help us get out of this trade.

1423
01:10:14,043 --> 01:10:16,796
I'm not feeling remotely confident
that we're right.

1424
01:10:16,879 --> 01:10:20,304
And if we're wrong,
who's gonna tell us?

1425
01:10:20,383 --> 01:10:23,808
Who understands this stuff?
It makes no sense!

1426
01:10:26,264 --> 01:10:28,062
BEN". I think we need to go to Vegas.

1427
01:10:28,141 --> 01:10:30,314
- What's in Vegas?
- Vegas?

1428
01:10:30,393 --> 01:10:32,270
What the hell's in Las Vegas?

1429
01:10:33,354 --> 01:10:36,574
The American Securitization Forum
is there next week.

1430
01:10:36,649 --> 01:10:39,072
Every bond and CDO salesman,
subprime lender

1431
01:10:39,152 --> 01:10:41,246
and swap trader is gonna be there.

1432
01:10:41,320 --> 01:10:44,073
I'm telling you,
your bet is against dumb money.

1433
01:10:44,157 --> 01:10:47,001
It's about time you find out
just how dumb that money really is.

1434
01:10:47,076 --> 01:10:48,202
God, I hate Vegas.

1435
01:10:48,327 --> 01:10:49,749
I hear the food has gotten
really good in Vegas.

1436
01:10:49,829 --> 01:10:51,331
They have a Nobu now.

1437
01:10:51,414 --> 01:10:52,791
Would you fucking stop it?

1438
01:11:39,378 --> 01:11:40,379
Any sense?

1439
01:11:40,546 --> 01:11:42,048
And if a bond is "rich" it is...

1440
01:11:42,381 --> 01:11:45,476
- I don't know, loaded with assets?
- "Rich" just means overpriced.

1441
01:11:45,551 --> 01:11:47,519
I can't sleep on planes,
so I did my homework.

1442
01:11:47,595 --> 01:11:50,018
Okay, let's focus. What's our goal?

1443
01:11:50,097 --> 01:11:52,441
To figure out if this is a deal of a lifetime

1444
01:11:52,517 --> 01:11:54,315
or if everyone here
knows something we don't

1445
01:11:54,393 --> 01:11:56,236
and we're gonna get royally screwed.

1446
01:11:56,312 --> 01:11:59,065
Right. Remember that
when you meet with the guys from Bear.

1447
01:11:59,232 --> 01:12:00,984
I set you up with a face-to-face.

1448
01:12:01,067 --> 01:12:02,364
- Awesome.
- Where is that?

1449
01:12:02,443 --> 01:12:06,789
Holy shit. Five years ago,
Securitization was a loser convention.

1450
01:12:06,864 --> 01:12:08,958
100, maybe 200 people would show.

1451
01:12:09,075 --> 01:12:11,203
$500 billion a year later, you get this.

1452
01:12:11,285 --> 01:12:12,958
There's a lot of
smug-looking people in here, huh?

1453
01:12:13,037 --> 01:12:16,507
It's like someone hit a pifiata
filled with white people who suck at golf.

1454
01:12:16,582 --> 01:12:18,084
I mean, who are all these clowns?

1455
01:12:18,167 --> 01:12:19,544
Oh, come on.
I think it looks fun.

1456
01:12:19,627 --> 01:12:23,097
Certainly. Vennett says these
are the people we're betting against.

1457
01:12:23,172 --> 01:12:25,049
- Yeah, here we go. Here we go.
- There he is.

1458
01:12:25,132 --> 01:12:26,884
Chris, on my left. Chris, on my left.

1459
01:12:27,343 --> 01:12:28,469
Gentlemen.

1460
01:12:28,553 --> 01:12:32,148
When do we get a chance to face time
with some of these lovely folks?

1461
01:12:32,223 --> 01:12:33,645
Chris, give him the keycards.

1462
01:12:33,766 --> 01:12:34,983
Do you even know which keycards
you're giving out?

1463
01:12:35,059 --> 01:12:36,060
- You're just giving them out?
- Thank you.

1464
01:12:36,143 --> 01:12:38,862
First of all, how was your travel?
How are you? Uneventful?

1465
01:12:38,938 --> 01:12:40,155
- Uneventful.
- Okay.

1466
01:12:40,231 --> 01:12:41,949
I've been here for six hours.
I've already been to the gym,

1467
01:12:42,024 --> 01:12:43,367
I had two poached eggs

1468
01:12:43,442 --> 01:12:45,069
and I played blackjack
with Harry Dean Stanton.

1469
01:12:45,152 --> 01:12:46,620
Thank you for your diary.

1470
01:12:47,071 --> 01:12:48,698
Face time. I'd like some face time.

1471
01:12:48,781 --> 01:12:50,249
Just remember.
We're here to gather information.

1472
01:12:50,324 --> 01:12:51,746
We're gathering information, okay?

1473
01:12:51,826 --> 01:12:54,204
We're not advertising
our short position. All right?

1474
01:12:54,287 --> 01:12:55,914
We don't want to spook everybody.
Can you do that'?

1475
01:12:55,997 --> 01:12:57,544
I know you got a big mouth,
you like to run it.

1476
01:12:57,623 --> 01:12:59,375
Can you just keep it shut for a few days?

1477
01:12:59,458 --> 01:13:00,584
Okay. Okay.

1478
01:13:00,668 --> 01:13:02,511
Yeah, don't worry. We'll play nice.

1479
01:13:02,628 --> 01:13:03,925
Ladies and gentlemen.

1480
01:13:04,005 --> 01:13:06,224
Business is good.

1481
01:13:06,299 --> 01:13:07,721
Profits are strong

1482
01:13:07,800 --> 01:13:10,724
and the mortgage continues
to be the bedrock

1483
01:13:10,803 --> 01:13:13,147
on which this economy is built.

1484
01:13:17,810 --> 01:13:19,403
And, yes, we had to take some losses

1485
01:13:19,478 --> 01:13:22,778
in our subprime department last year,
but those losses

1486
01:13:22,857 --> 01:13:25,485
will be contained at only 5%.

1487
01:13:25,651 --> 01:13:27,779
Now, in our residential sector...

1488
01:13:27,862 --> 01:13:29,034
Mark, it's not a Q and A.

1489
01:13:29,155 --> 01:13:30,828
our rollout of those
variable rate packages

1490
01:13:30,907 --> 01:13:32,534
were gobbled up by the consumers!

1491
01:13:32,658 --> 01:13:34,706
I have a question, please.

1492
01:13:36,495 --> 01:13:37,496
Uh...

1493
01:13:37,663 --> 01:13:39,757
Sir, the Q and A is after my statements.

1494
01:13:39,832 --> 01:13:42,255
But you know what? You seem anxious.
How can I help you?

1495
01:13:42,335 --> 01:13:44,258
- Thank you. How are you?
- Fine, thank you.

1496
01:13:44,337 --> 01:13:47,466
Would you say that it is a possibility

1497
01:13:47,548 --> 01:13:52,179
or a probability that
subprime losses stop at 5%?

1498
01:13:52,386 --> 01:13:53,478
Thank you.

1499
01:13:53,554 --> 01:13:58,355
I would say it is a very
strong probability, indeed.

1500
01:13:58,851 --> 01:14:01,400
So back to the residential sector.

1501
01:14:01,520 --> 01:14:03,614
When we rolled out the new
variable rates package...

1502
01:14:03,689 --> 01:14:06,192
- Excuse me.
- Um...

1503
01:14:07,693 --> 01:14:08,785
Yes, sir.

1504
01:14:08,861 --> 01:14:12,240
Zero! Zero!

1505
01:14:12,365 --> 01:14:15,118
There is a 0% chance

1506
01:14:15,201 --> 01:14:19,001
that your subprime losses
will stop at 5%.

1507
01:14:19,080 --> 01:14:20,172
Zero.

1508
01:14:20,247 --> 01:14:21,794
Excuse me.

1509
01:14:21,874 --> 01:14:22,921
I have to take this.

1510
01:14:23,000 --> 01:14:24,968
He must be from Bank of America.

1511
01:14:26,671 --> 01:14:29,345
- Our subprime department is fine.
- No, I'm not doing anything right now.

1512
01:14:29,423 --> 01:14:30,970
As I was saying,
our residential department...

1513
01:14:31,050 --> 01:14:32,222
How are the kids?

1514
01:14:32,343 --> 01:14:34,721
consumers
reacted to our packages...

1515
01:14:34,804 --> 01:14:36,477
Mark Baum really did that.

1516
01:14:36,555 --> 01:14:37,807
When we were in Vegas, he did that.

1517
01:14:37,890 --> 01:14:40,063
He said that, he took the call.

1518
01:14:40,518 --> 01:14:42,236
Now you see what I had to deal with?

1519
01:14:55,908 --> 01:14:58,036
Yeah, the Beretta... Meh.

1520
01:14:58,119 --> 01:15:00,338
But this Uzi is fucking awesome!

1521
01:15:00,413 --> 01:15:03,007
I need this CDO machine
to run for another two years.

1522
01:15:03,082 --> 01:15:06,336
And then I'm rich as fuck
and I got my house in Aspen.

1523
01:15:06,419 --> 01:15:09,639
But do you have any concerns
about the performance

1524
01:15:09,714 --> 01:15:11,307
of the underlying securitizations?

1525
01:15:11,382 --> 01:15:13,180
It's easy to see that delinquencies

1526
01:15:13,259 --> 01:15:16,138
and default rates
are on the rise right now.

1527
01:15:16,220 --> 01:15:18,393
Could you please stop
being such a buzzkill, dude?

1528
01:15:18,764 --> 01:15:21,313
We didn't bring you out here
to talk about work, bro.

1529
01:15:21,392 --> 01:15:22,860
Why did you bring us out here?

1530
01:15:22,935 --> 01:15:26,155
Because we need to be able
to expense the ammo to a client.

1531
01:15:26,230 --> 01:15:29,234
I'm gonna go shoot some terrorists.
Watch how it's done, boys!

1532
01:15:29,442 --> 01:15:30,694
These guys are morons.

1533
01:15:30,818 --> 01:15:32,445
- Fucking tool.
- Whoo!

1534
01:15:32,778 --> 01:15:33,825
These guys are morons.

1535
01:15:34,947 --> 01:15:36,119
Fuck, yes! Boom!

1536
01:15:36,282 --> 01:15:37,408
Yeah, man!

1537
01:15:37,491 --> 01:15:39,869
We need to be buying up every swap
we can get our hands on here.

1538
01:15:39,952 --> 01:15:42,250
Just hold on, okay? Hold on.

1539
01:15:42,329 --> 01:15:44,627
My brother's ex-girlfriend
works for the SEC.

1540
01:15:44,749 --> 01:15:46,592
She just told me she's in town, okay?

1541
01:15:46,667 --> 01:15:48,795
So, if we're missing something,
maybe she can tell me.

1542
01:15:48,919 --> 01:15:50,546
You know, give me some insight.

1543
01:15:50,629 --> 01:15:52,381
In the meantime, you go to the main floor

1544
01:15:52,465 --> 01:15:54,183
and price some swaps.

1545
01:15:54,633 --> 01:15:56,055
Well, actually, we're

1546
01:15:56,135 --> 01:15:58,638
about to invest in housing bonds, and...

1547
01:15:58,721 --> 01:16:01,395
I was wondering if the SEC
is worried about them at all.

1548
01:16:01,474 --> 01:16:04,227
I know you're not allowed
to tell me specifics, but just generally.

1549
01:16:04,310 --> 01:16:06,529
Oh, we don't
investigate mortgage bonds.

1550
01:16:06,604 --> 01:16:09,949
Truth is, since we got our budget cut,
we don't investigate much.

1551
01:16:11,984 --> 01:16:14,954
- Then why are you here? I thought...
- I'm not here for the SEC.

1552
01:16:15,029 --> 01:16:16,702
I'm here on my own dime.

1553
01:16:17,656 --> 01:16:20,876
I'm floating my resume
to some big banks.

1554
01:16:20,951 --> 01:16:22,544
How's your brother, by the way?

1555
01:16:22,620 --> 01:16:24,497
How are you floating
your resume to big banks?

1556
01:16:24,580 --> 01:16:25,957
I mean, you're supposed to be the ones,

1557
01:16:26,082 --> 01:16:27,425
you know, policing the big banks.

1558
01:16:27,500 --> 01:16:28,922
Grow up, Jamie.

1559
01:16:29,001 --> 01:16:32,756
There must be some kind of law against
working for a financial institution

1560
01:16:32,838 --> 01:16:36,058
right after you've been working
in financial regulation, right?

1561
01:16:36,133 --> 01:16:38,227
No. No.

1562
01:16:39,303 --> 01:16:41,852
Hey! Dougie!

1563
01:16:42,681 --> 01:16:45,651
Hey! Come over here.
What are you doing at Caesars?

1564
01:16:45,726 --> 01:16:47,228
He's at Goldman.

1565
01:16:47,853 --> 01:16:48,900
See you.

1566
01:16:48,979 --> 01:16:54,031
We can do BBB-level swaps
at 500 basis points. Maybe.

1567
01:16:54,110 --> 01:16:57,910
You're pricing the swaps
like the bond is gonna collapse

1568
01:16:57,988 --> 01:17:00,366
even though the bond value's
going up? Really?

1569
01:17:00,908 --> 01:17:02,000
Sign of the times.

1570
01:17:02,076 --> 01:17:03,077
What the hell
is going on'?

1571
01:18:01,969 --> 01:18:05,769
Lewis, can you come in
early tomorrow, please?

1572
01:18:05,848 --> 01:18:08,146
I need to unload the AIG
and Countrywide

1573
01:18:08,225 --> 01:18:09,693
and Freddie Mac positions

1574
01:18:09,768 --> 01:18:12,271
so that we can afford
the premiums on the...

1575
01:18:13,522 --> 01:18:16,446
core mortgage shorts on the swaps.

1576
01:18:16,901 --> 01:18:18,403
No problem, Dr. Burry.

1577
01:18:20,446 --> 01:18:21,618
"Dr. Burry?
'Hmm?

1578
01:18:25,201 --> 01:18:26,248
if the investors withdraw,

1579
01:18:26,327 --> 01:18:29,080
what's going to happen here?
Are we done?

1580
01:18:29,205 --> 01:18:31,128
Honestly, I don't know.

1581
01:18:38,797 --> 01:18:41,050
The bonds aren't going down.

1582
01:18:42,301 --> 01:18:44,975
They won't move. It's possible

1583
01:18:45,387 --> 01:18:49,984
that we are in a completely
fraudulent system.

1584
01:18:51,393 --> 01:18:54,067
Or... You're wrong.

1585
01:18:58,817 --> 01:18:59,909
Sure.

1586
01:19:00,653 --> 01:19:04,658
It's possible I'm wrong.
I just don't know how.

1587
01:19:09,370 --> 01:19:13,546
I guess when someone's wrong,
they never...

1588
01:19:13,916 --> 01:19:16,169
They never know how.

1589
01:19:20,464 --> 01:19:21,511
See you in the morning.

1590
01:19:21,632 --> 01:19:22,679
Yeah.

1591
01:19:24,468 --> 01:19:26,470
Even Bear upped their prices.

1592
01:19:27,054 --> 01:19:29,557
And they keep calling us Brownhole.

1593
01:19:29,640 --> 01:19:31,267
You just don't have the money
or the reputation.

1594
01:19:31,350 --> 01:19:32,693
Don't take it personally.

1595
01:19:32,810 --> 01:19:34,107
I don't think I have
the strip club in me tonight.

1596
01:19:34,186 --> 01:19:37,861
I'm just gonna get some ginger ale
and watch some pay-per-view.

1597
01:19:37,940 --> 01:19:40,318
I'll book us some flights out
for the morning.

1598
01:19:41,735 --> 01:19:44,363
A deal.
We need a deal, right? A deal.

1599
01:19:44,446 --> 01:19:46,244
We need a deal we can afford.

1600
01:19:46,365 --> 01:19:48,663
We need a deal
that they're not gonna refuse.

1601
01:19:48,742 --> 01:19:52,087
So... What can we do? We can...

1602
01:19:53,372 --> 01:19:56,296
The AA tranches. What if we
bet against the AA tranches?

1603
01:19:56,375 --> 01:19:57,718
Who's not gonna take that bet?

1604
01:19:58,419 --> 01:20:01,343
We know they say
they're 95% AAA-rated,

1605
01:20:01,422 --> 01:20:03,424
but in reality they're more like 25%.

1606
01:20:03,507 --> 01:20:05,930
Some of them are 0%!

1607
01:20:06,010 --> 01:20:08,638
We also know that if
the bottom tranches fail at over 8%,

1608
01:20:08,721 --> 01:20:09,893
the upper tranches are affected.

1609
01:20:09,972 --> 01:20:11,189
They go to zero.

1610
01:20:11,432 --> 01:20:14,402
I'll bet you right now
that those AA's are actually like B's.

1611
01:20:14,852 --> 01:20:17,947
I rarely ever say these words,
but I think Charlie's right.

1612
01:20:18,272 --> 01:20:19,945
Look, Ben.

1613
01:20:21,608 --> 01:20:23,030
The payoff

1614
01:20:23,527 --> 01:20:24,949
is 200 to 1.

1615
01:20:25,029 --> 01:20:27,077
But they're all taking
the ratings at face value.

1616
01:20:27,197 --> 01:20:30,576
So they're charging pennies
on the dollar a bet against the AA's.

1617
01:20:32,202 --> 01:20:35,046
Just when I start thinking
you guys are clowns...

1618
01:20:35,122 --> 01:20:37,625
No one on the planet's
betting against AA's.

1619
01:20:37,708 --> 01:20:40,632
The banks will think we're either high
or having a stroke.

1620
01:20:40,711 --> 01:20:43,055
They'll take every dime we have to offer.

1621
01:20:45,632 --> 01:20:46,975
Kinda brilliant.

1622
01:20:48,761 --> 01:20:50,855
This is what we did
that no one else thought of.

1623
01:20:50,929 --> 01:20:53,853
Not even Baum or Bum]
thought to short the AA's.

1624
01:20:53,932 --> 01:20:55,309
But we did.

1625
01:20:55,392 --> 01:20:56,939
Little Brown hole Capital.

1626
01:20:57,269 --> 01:21:02,196
We're interested in shorting
some of the AA tranche of CDOs.

1627
01:21:02,274 --> 01:21:04,072
Come on, guys, what's the angle?

1628
01:21:04,151 --> 01:21:06,449
Oh, got no angle.
We're new to this. We're just excited.

1629
01:21:06,570 --> 01:21:10,291
We want to do $15 million
in swaps on the AA tranche.

1630
01:21:10,741 --> 01:21:11,833
I don't understand.

1631
01:21:11,909 --> 01:21:14,537
You can buy as much
AA tranche as you want.

1632
01:21:16,747 --> 01:21:18,875
$40 million against the AA.

1633
01:21:18,957 --> 01:21:21,176
Brother, I will sell you
as much as you want.

1634
01:21:21,460 --> 01:21:23,679
You understand perfectly, Bob.
You want the deal?

1635
01:21:25,839 --> 01:21:27,841
That's cool. That's all right with me.

1636
01:21:30,052 --> 01:21:31,269
Pleasure.

1637
01:21:36,100 --> 01:21:37,977
On!

1638
01:21:39,478 --> 01:21:41,401
Don't do that. Stop. Stop.

1639
01:21:42,106 --> 01:21:43,323
- Stop that.
- Charlie.

1640
01:21:44,024 --> 01:21:45,492
Stop it! Stop.

1641
01:21:47,903 --> 01:21:48,995
What?

1642
01:21:50,406 --> 01:21:51,783
Do you have any idea what you just did?

1643
01:21:52,199 --> 01:21:53,872
Come on. We just made
the deal of our lifetimes!

1644
01:21:53,951 --> 01:21:55,123
We should celebrate.

1645
01:21:55,202 --> 01:21:57,125
You just bet against
the American economy.

1646
01:21:57,204 --> 01:21:58,706
Fuck, yeah, we did!

1647
01:21:58,789 --> 01:22:00,757
- Fuck, yeah!
- Which means...

1648
01:22:00,833 --> 01:22:03,507
Which means if we're right...

1649
01:22:04,545 --> 01:22:07,924
if we're right, people lose homes.
People lose jobs.

1650
01:22:08,006 --> 01:22:11,180
People lose retirement savings.
People lose pensions.

1651
01:22:11,301 --> 01:22:12,473
You know what I hate
about fucking banking?

1652
01:22:12,553 --> 01:22:14,100
It reduces people to numbers.
Here's a number.

1653
01:22:14,179 --> 01:22:17,023
Every 1% unemployment goes up,
40,000 people die. Did you know that?

1654
01:22:17,099 --> 01:22:18,601
- No.
- Did you know that?

1655
01:22:18,684 --> 01:22:20,277
No, I didn't know that.

1656
01:22:21,728 --> 01:22:23,401
We were just excited.

1657
01:22:25,816 --> 01:22:27,818
Just don't fucking dance.

1658
01:22:28,485 --> 01:22:30,328
- All right.
- Where are you going?

1659
01:22:34,700 --> 01:22:36,873
Whoa, I just got really scared.

1660
01:22:38,412 --> 01:22:40,335
First of all, great show today.

1661
01:22:40,414 --> 01:22:41,882
- You were terrific.
- Thank you.

1662
01:22:41,957 --> 01:22:43,584
Your big mouth was a revelation.

1663
01:22:43,667 --> 01:22:45,385
I appreciate that.

1664
01:22:45,502 --> 01:22:47,254
You worried you and your swaps
are getting played?

1665
01:22:47,337 --> 01:22:50,466
Well, this is an opportunity for you
to meet who you're betting against.

1666
01:22:50,549 --> 01:22:52,347
Try not to get too righteous
and listen a little.

1667
01:22:52,426 --> 01:22:53,803
Okay, fine. Who is this guy?

1668
01:22:53,927 --> 01:22:55,600
A real solid-gold asshole.

1669
01:22:55,762 --> 01:22:56,854
I'm a CDO manager.

1670
01:22:56,972 --> 01:22:58,019
A "CDO manager"?

1671
01:22:58,098 --> 01:22:59,520
Yeah, at Harding Advisors.

1672
01:23:00,100 --> 01:23:03,229
I didn't realize that there was
anything to manage with CDOs.

1673
01:23:04,188 --> 01:23:05,189
MR. CHAUI Oh.

1674
01:23:05,939 --> 01:23:08,488
We select the securities
that go into the CDO portfolio

1675
01:23:08,567 --> 01:23:09,944
and monitor the assets.

1676
01:23:10,027 --> 01:23:11,825
I do most of Merrill Lynch's CDOs.

1677
01:23:11,904 --> 01:23:14,874
Do you represent the investors
or Merrill Lynch?

1678
01:23:14,948 --> 01:23:15,995
The investors.

1679
01:23:16,074 --> 01:23:17,121
You do.

1680
01:23:17,201 --> 01:23:18,544
- Yeah.
- But...

1681
01:23:18,744 --> 01:23:20,621
Merrill Lynch isn't gonna
send you any customers

1682
01:23:20,704 --> 01:23:24,254
unless you put Merrill Lynch's bonds
in your CDO.

1683
01:23:25,375 --> 01:23:28,094
Good question. Let's just say
Merrill and I have, um...

1684
01:23:28,712 --> 01:23:30,806
We have a good relationship.

1685
01:23:30,923 --> 01:23:33,142
You have a good relationship
with Merrill Lynch.

1686
01:23:33,217 --> 01:23:34,890
We've been doing business
together for a long time.

1687
01:23:34,968 --> 01:23:37,437
And so the CDOs that you create

1688
01:23:37,554 --> 01:23:41,479
are of the highest quality
and the highest value.

1689
01:23:41,558 --> 01:23:43,481
- Absolutely. Yep.
- Absolutely.

1690
01:23:43,560 --> 01:23:47,110
Are you at all concerned
about the rising default rates?

1691
01:23:49,066 --> 01:23:52,240
I assume no risk for these
products myself, Mark.

1692
01:23:54,905 --> 01:23:56,077
Okay.

1693
01:23:57,658 --> 01:24:00,832
So let me get this straight.
The bank calls you up.

1694
01:24:01,411 --> 01:24:02,958
They give you the bonds
they want to sell.

1695
01:24:03,038 --> 01:24:04,381
They give you clients,

1696
01:24:04,456 --> 01:24:06,834
they give you money
to run your business.

1697
01:24:06,917 --> 01:24:08,635
Give you fat fees for doing so.

1698
01:24:08,710 --> 01:24:10,712
But you represent the investors?

1699
01:24:12,256 --> 01:24:13,303
Is that right?

1700
01:24:13,423 --> 01:24:14,470
Yeah.

1701
01:24:14,550 --> 01:24:16,018
But we're not
in the Merrill Lynch building.

1702
01:24:16,093 --> 01:24:17,686
- Okay. Where are you?
- We're in New Jersey.

1703
01:24:17,761 --> 01:24:19,855
You're 20 minutes away.

1704
01:24:19,930 --> 01:24:21,853
Well, five if you use a helicopter.

1705
01:24:23,725 --> 01:24:24,851
That's funny, huh?

1706
01:24:24,977 --> 01:24:26,149
That's hilarious.

1707
01:24:29,356 --> 01:24:30,403
Oh, boy.

1708
01:24:30,774 --> 01:24:32,993
Your boss is about to explode.

1709
01:24:33,068 --> 01:24:34,695
No, he's too curious to explode.

1710
01:24:34,778 --> 01:24:36,246
Hold on. Say that again.

1711
01:24:36,321 --> 01:24:38,449
CDO "A" has parts of CDO

1712
01:24:38,532 --> 01:24:40,455
And CDO "B" has parts of CDO

1713
01:24:40,534 --> 01:24:42,787
But then they both
get put inside CDO

1714
01:24:42,869 --> 01:24:44,621
Yeah, that one's called CDO squared.

1715
01:24:44,705 --> 01:24:46,799
A CDO of a CDO.

1716
01:24:47,207 --> 01:24:48,208
All right?

1717
01:24:48,375 --> 01:24:50,343
And then there's CDOs
made up of the opposite side

1718
01:24:50,419 --> 01:24:51,966
of the bet you made with your swaps.

1719
01:24:52,212 --> 01:24:54,510
We call them synthetic CDOs.

1720
01:24:54,631 --> 01:24:56,804
What did you say? Synthetic CDOs.

1721
01:24:56,883 --> 01:24:58,601
That is fucking crazy.

1722
01:24:58,719 --> 01:25:00,392
It's not. It's awesome.

1723
01:25:01,805 --> 01:25:05,309
His face is starting to boil.
He looks like the bad guy from Dune.

1724
01:25:09,396 --> 01:25:11,319
All right, let's say

1725
01:25:11,815 --> 01:25:15,160
you have a pool of $50 million
in subprime loans.

1726
01:25:15,485 --> 01:25:18,079
How much money could be
out there betting on it,

1727
01:25:18,155 --> 01:25:20,954
in your synthetic CDOs and swaps

1728
01:25:21,033 --> 01:25:22,626
right now, tonight?

1729
01:25:22,701 --> 01:25:25,329
Let's see, $50 million... Hmm...

1730
01:25:26,330 --> 01:25:27,297
A billion dollars.

1731
01:25:27,372 --> 01:25:28,373
What?

1732
01:25:29,499 --> 01:25:31,422
If the mortgage bonds
that Michael Burry discovered

1733
01:25:31,501 --> 01:25:32,844
were the match...

1734
01:25:34,254 --> 01:25:36,677
How much bigger is the market
for insuring mortgage bonds

1735
01:25:36,757 --> 01:25:38,225
than actual mortgages?

1736
01:25:39,384 --> 01:25:40,556
About 20 times.

1737
01:25:40,719 --> 01:25:42,813
If the mortgage bonds
were the match

1738
01:25:42,888 --> 01:25:45,607
and the CDOs were
the kerosene-soaked rags,

1739
01:25:45,682 --> 01:25:47,730
then the synthetic CDO
was the atomic bomb

1740
01:25:47,809 --> 01:25:50,779
with the drunk President
holding his finger over the button.

1741
01:25:50,854 --> 01:25:53,107
It was at that moment
in that dumb restaurant

1742
01:25:53,190 --> 01:25:56,364
with that stupid look on his face
that Mark Baum realized

1743
01:25:56,443 --> 01:25:58,866
that the whole world economy
might collapse.

1744
01:26:02,491 --> 01:26:04,414
And I know what you're thinking.

1745
01:26:04,493 --> 01:26:06,837
"What the fuck is a synthetic CDO?"

1746
01:26:09,206 --> 01:26:12,836
Well, here's Dr. Richard Thaler,
father of behavioral economics

1747
01:26:12,918 --> 01:26:15,546
and Selena Gomez to explain.

1748
01:26:15,879 --> 01:26:19,053
Okay. So here's how
a synthetic CDO works.

1749
01:26:19,132 --> 01:26:22,011
Let's say I bet $10 million
on a blackjack hand.

1750
01:26:22,094 --> 01:26:24,597
$10 million because this hand
is meant to represent

1751
01:26:24,971 --> 01:26:27,224
a single mortgage bond.

1752
01:26:30,185 --> 01:26:33,610
Okay, Selena has a pretty good
hand here, showing 18.

1753
01:26:33,730 --> 01:26:34,731
Dealer showing seven.

1754
01:26:34,815 --> 01:26:36,863
That's a really good hand for Selena.

1755
01:26:36,942 --> 01:26:38,364
Good odds. In fact,
her chances of winning

1756
01:26:38,443 --> 01:26:40,821
this hand are 87%.

1757
01:26:40,904 --> 01:26:44,283
So, my odds are good.
I'm on a winning streak.

1758
01:26:44,366 --> 01:26:47,040
Everybody in this place
wants to get in on the action.

1759
01:26:47,119 --> 01:26:48,496
How could I lose, right?

1760
01:26:48,578 --> 01:26:50,080
Now, this is a classic error.

1761
01:26:50,163 --> 01:26:53,133
In basketball it's called
the Hot Hand Fallacy.

1762
01:26:53,208 --> 01:26:55,757
A player makes a bunch
of shots in a row.

1763
01:26:55,836 --> 01:26:58,134
People are sure they're
gonna make the next one.

1764
01:26:58,213 --> 01:27:00,181
People think that whatevefs
happening now

1765
01:27:00,257 --> 01:27:03,010
is gonna continue to
happen into the future.

1766
01:27:03,093 --> 01:27:06,438
During the real estate boom,
markets were going up and up

1767
01:27:06,513 --> 01:27:08,186
and people thought
they would never go down.

1768
01:27:08,265 --> 01:27:10,814
So people who are watching
and think that I won't lose

1769
01:27:10,892 --> 01:27:12,360
will make a side bet.

1770
01:27:12,436 --> 01:27:14,689
Now, this is the first synthetic CDO.

1771
01:27:14,771 --> 01:27:16,364
I love Selena Gomez.

1772
01:27:16,440 --> 01:27:17,942
I bet you $50 million she wins.

1773
01:27:18,024 --> 01:27:20,118
And I'll give you 3-to-1 odds.

1774
01:27:20,193 --> 01:27:24,039
3-to-1 odds? Okay, I'll take that bet.

1775
01:27:24,114 --> 01:27:27,459
Now, somebody else
is gonna want to make a bet

1776
01:27:27,534 --> 01:27:28,660
on the outcome of their bet.

1777
01:27:28,827 --> 01:27:29,953
Bet you 50 million she wins.

1778
01:27:30,036 --> 01:27:33,006
That will lead to synthetic
CDO number two.

1779
01:27:33,081 --> 01:27:36,255
Hey, I bet you $200 million
that lady in the glasses

1780
01:27:36,418 --> 01:27:37,920
wins that bet.

1781
01:27:38,086 --> 01:27:41,181
She probably will win.
So I want a great payoff.

1782
01:27:41,339 --> 01:27:42,431
How about 20-to-1?

1783
01:27:42,549 --> 01:27:43,675
Deal.

1784
01:27:44,009 --> 01:27:48,310
And this will go on and on with more
and more synthetic CDOs.

1785
01:27:48,388 --> 01:27:52,438
And we can transform an original
$10 million investment

1786
01:27:52,601 --> 01:27:54,524
into billions of dollars.

1787
01:27:55,437 --> 01:27:56,780
You Okay?

1788
01:27:58,190 --> 01:27:59,191
No.

1789
01:28:00,567 --> 01:28:02,410
I actually feel pretty sick.

1790
01:28:07,616 --> 01:28:09,539
So I'm going to leave.

1791
01:28:11,119 --> 01:28:13,372
You think I'm a parasite,
don't you, Mr. Baum?

1792
01:28:14,080 --> 01:28:18,005
But, apparently,
society values me very much.

1793
01:28:19,044 --> 01:28:20,796
In fact, let's do this.

1794
01:28:22,839 --> 01:28:25,843
I'll tell you how much I'm worth.

1795
01:28:26,384 --> 01:28:27,886
You tell me how much you're worth.

1796
01:28:29,095 --> 01:28:34,192
God, you are an incredibly
big piece of shit.

1797
01:28:39,940 --> 01:28:41,817
Short everything that guy has touched.

1798
01:28:41,900 --> 01:28:43,527
I want half a billion more in swaps.

1799
01:28:44,069 --> 01:28:46,288
You sure about that?
The collateral calls could bankrupt you.

1800
01:28:46,363 --> 01:28:47,330
Yeah. Yeah.

1801
01:28:47,405 --> 01:28:48,406
Where are you going?

1802
01:28:48,490 --> 01:28:51,494
I am going to try to find
moral redemption

1803
01:28:51,576 --> 01:28:53,419
at the roulette table.

1804
01:29:57,601 --> 01:29:58,978
Hey, hey, hey!

1805
01:30:03,064 --> 01:30:04,532
Things are worse than I thought.

1806
01:30:06,651 --> 01:30:08,574
I honestly think
the economy might collapse.

1807
01:30:08,987 --> 01:30:10,113
But you've been saying

1808
01:30:10,196 --> 01:30:13,291
that the system's broken
for years, Mark. So...

1809
01:30:13,742 --> 01:30:15,665
Why are you so shocked?

1810
01:30:18,163 --> 01:30:21,588
It's more twisted
than I could have imagined.

1811
01:30:21,666 --> 01:30:23,543
You love to be the virtuous one.

1812
01:30:24,002 --> 01:30:25,595
I'm a banker. I'm a part of it.

1813
01:30:25,670 --> 01:30:27,968
You always have, Mark.
Like you're untainted.

1814
01:30:28,048 --> 01:30:31,518
It changed me.
it changed me into a person

1815
01:30:32,093 --> 01:30:33,936
who is not able to
reach out to someone...

1816
01:30:34,012 --> 01:30:35,935
He was in pain.
My brother was in real pain.

1817
01:30:36,514 --> 01:30:38,858
There's no perfect way to help.

1818
01:30:41,853 --> 01:30:44,322
It's sad. It's scary.

1819
01:30:44,439 --> 01:30:47,613
So stop trying to fix the world.

1820
01:30:47,692 --> 01:30:48,784
He told me...

1821
01:30:48,860 --> 01:30:50,203
You're not a saint.

1822
01:30:50,278 --> 01:30:52,030
Saints don't live on Park Avenue.

1823
01:30:52,238 --> 01:30:53,865
that he was having bad thoughts.

1824
01:30:53,949 --> 01:30:56,748
Just feel the feelings
like the rest of us.

1825
01:30:57,077 --> 01:31:01,253
My first response
was to offer him some money.

1826
01:31:01,581 --> 01:31:04,084
I offered him fucking money!

1827
01:31:09,756 --> 01:31:12,384
His face was so smashed.

1828
01:31:31,444 --> 01:31:32,787
That's right.

1829
01:32:39,471 --> 01:32:40,814
MIKE'S WIFEI Michael?

1830
01:32:40,889 --> 01:32:42,232
- Michael?
- Yes. Yes.

1831
01:32:42,307 --> 01:32:44,401
- Is everything okay?
- Yes, honey.

1832
01:32:44,476 --> 01:32:46,604
- You sure?
- Yeah, baby.

1833
01:32:48,396 --> 01:32:49,693
I'm fine.

1834
01:32:58,656 --> 01:33:00,329
To all investors.

1835
01:33:00,408 --> 01:33:01,500
As you may know,

1836
01:33:02,494 --> 01:33:06,089
our agreement allows me
to take extraordinary measures

1837
01:33:06,539 --> 01:33:09,463
when markets
aren't functioning properly.

1838
01:33:09,542 --> 01:33:13,263
I currently have reason to
believe the mortgage bond market

1839
01:33:13,922 --> 01:33:15,674
is fraudulent.

1840
01:33:17,842 --> 01:33:22,598
So, in order to protect investors
from this fraudulent market,

1841
01:33:22,680 --> 01:33:25,934
I've decided to restrict
investors' withdrawals

1842
01:33:26,017 --> 01:33:27,690
until further notice.

1843
01:33:28,019 --> 01:33:31,694
Sincerely, Dr. Michael J. Burry.

1844
01:34:39,257 --> 01:34:40,850
I never would have guessed my life

1845
01:34:40,925 --> 01:34:43,428
could change as much
as it has since I moved to L.A.

1846
01:34:43,511 --> 01:34:45,889
It's not just, like,
that easy to, like, not see you.

1847
01:34:45,972 --> 01:34:49,067
He lashed out at rumors
he used performance enhancing drugs.

1848
01:34:49,267 --> 01:34:50,689
This record is not tainted.

1849
01:34:50,768 --> 01:34:51,940
Oh, my God, dude.

1850
01:34:52,020 --> 01:34:53,738
Will you please stop
changing the channels?

1851
01:34:53,813 --> 01:34:55,440
- You're driving me crazy.
- All right.

1852
01:34:55,523 --> 01:34:57,491
- Fine.
- Just put the business news on.

1853
01:34:58,443 --> 01:34:59,615
and the S&P
picked up three points.

1854
01:34:59,694 --> 01:35:00,695
Jesus!

1855
01:35:00,778 --> 01:35:02,530
Mortgage meltdown continued today.

1856
01:35:02,614 --> 01:35:05,333
Subprime mortgage lender
New Century Financial,

1857
01:35:05,450 --> 01:35:08,078
once the industry leader, by the way,
filed for bankruptcy.

1858
01:35:08,161 --> 01:35:09,253
- The company immediately...
- Whoa, whoa, whoa.

1859
01:35:10,705 --> 01:35:11,877
Good time for my voice to go...

1860
01:35:11,956 --> 01:35:14,209
Fired 3,200 workers.

1861
01:35:14,292 --> 01:35:16,636
The manufacturing index also
fell in the month of March...

1862
01:35:16,711 --> 01:35:17,803
It's starting.

1863
01:35:17,879 --> 01:35:19,472
a warning that
economic growth could slow.

1864
01:35:19,547 --> 01:35:21,015
The Institute of Supply Management

1865
01:35:21,132 --> 01:35:22,554
also reported a rise in prices...

1866
01:35:22,634 --> 01:35:24,261
I'm gonna call my mom.

1867
01:35:26,512 --> 01:35:29,391
The principal source
of the slowdown in economic growth...

1868
01:35:29,474 --> 01:35:31,522
Time and time and time again,

1869
01:35:31,643 --> 01:35:33,771
I have gone to bat for you, Mark!

1870
01:35:33,853 --> 01:35:35,150
We've known each other
for seven years...

1871
01:35:35,230 --> 01:35:37,574
She's got some lungs on her.
I'm impressed.

1872
01:35:38,733 --> 01:35:40,576
I can't help but enjoy it.

1873
01:35:41,486 --> 01:35:43,113
There's no fucking way.
There's no fucking way

1874
01:35:43,196 --> 01:35:44,664
that the big banks are that stupid.

1875
01:35:45,657 --> 01:35:47,500
Bye. Kathy!

1876
01:35:52,163 --> 01:35:53,164
Well?

1877
01:35:54,374 --> 01:35:56,376
Kathy thinks
that it would be a good idea

1878
01:35:56,459 --> 01:35:58,006
if we sold our shorts.

1879
01:35:58,086 --> 01:35:59,087
What else is new?

1880
01:35:59,170 --> 01:36:01,047
And she said that
Morgan Stanley will buy them.

1881
01:36:01,130 --> 01:36:02,131
Holy shit!

1882
01:36:02,840 --> 01:36:04,092
What did you say?

1883
01:36:04,175 --> 01:36:05,848
I told her we're not selling shit.

1884
01:36:12,016 --> 01:36:15,862
Uh, if you need the files for 2005...

1885
01:36:16,020 --> 01:36:19,024
Mr. Fields' suit is very specific
to files from the past year.

1886
01:36:19,774 --> 01:36:22,527
Good. Then get out.
Say hi to Lawrence for me.

1887
01:36:22,610 --> 01:36:23,782
Will do.

1888
01:36:26,823 --> 01:36:28,496
You can't call me back for a week?

1889
01:36:28,574 --> 01:36:30,417
I am so sorry, Mike.

1890
01:36:30,785 --> 01:36:33,959
Goldman had a systems failure.
I lost a ton of messages.

1891
01:36:34,038 --> 01:36:36,086
Yeah, B of A said
they had a power outage,

1892
01:36:36,207 --> 01:36:39,381
and Morgan Stanley
said their server crashed.

1893
01:36:39,502 --> 01:36:40,628
Huh. That's weird.

1894
01:36:40,712 --> 01:36:43,261
Well, I would call it improbable.

1895
01:36:43,339 --> 01:36:46,889
So where do you have
our position marked?

1896
01:36:47,719 --> 01:36:49,471
I think it's the same, Mike.

1897
01:36:49,554 --> 01:36:51,431
What? Can you explain
that to me, please,

1898
01:36:51,514 --> 01:36:54,814
because how can the value
of an insurance contract

1899
01:36:54,892 --> 01:36:59,113
not be affected by the demise
of the very thing it insures?

1900
01:36:59,188 --> 01:37:01,987
They're independent markets.
They're not always correlated.

1901
01:37:02,066 --> 01:37:03,067
I know it sounds odd,

1902
01:37:03,151 --> 01:37:05,620
but these are very complicated products.

1903
01:37:06,446 --> 01:37:08,323
They are correlated.

1904
01:37:08,406 --> 01:37:10,408
They're gonna lose their houses,
they're gonna lose theirjobs,

1905
01:37:10,491 --> 01:37:11,492
they're gonna lose their...

1906
01:37:14,370 --> 01:37:16,213
Will you listen to me?

1907
01:37:16,414 --> 01:37:19,042
This is like the end of capitalism.

1908
01:37:19,167 --> 01:37:22,512
This is like the Dark Ages all over again.

1909
01:37:23,546 --> 01:37:24,672
I don't want to talk to Dad.

1910
01:37:24,756 --> 01:37:27,305
Okay, I love you, too.
Save your money.

1911
01:37:28,009 --> 01:37:32,014
She says I need to be on Xanax
and double my dose of Zoloft.

1912
01:37:32,180 --> 01:37:34,148
I asked Bear Stearns to price our shorts.

1913
01:37:34,223 --> 01:37:35,816
They tell me the CDOs
still haven't moved.

1914
01:37:35,892 --> 01:37:37,690
This is fucking insane!

1915
01:37:37,769 --> 01:37:39,271
You realize that?
These people are crooks

1916
01:37:39,354 --> 01:37:41,402
and they should be in prison.

1917
01:37:41,564 --> 01:37:42,690
Look at the TABX:

1918
01:37:42,774 --> 01:37:44,617
You can see that the CDOs
are worth zero!

1919
01:37:44,692 --> 01:37:45,693
So you know what they're doing, huh?

1920
01:37:45,818 --> 01:37:46,865
You know what they're doing, right?

1921
01:37:46,986 --> 01:37:48,659
Yeah. They're unloading them.

1922
01:37:48,738 --> 01:37:52,038
They're selling their dog shit CDOs,
then they go to another bank

1923
01:37:52,116 --> 01:37:54,164
and short the shit they just fucking sold!

1924
01:37:54,327 --> 01:37:55,920
Let's go to the press, man!

1925
01:37:55,995 --> 01:37:59,295
This is a massive story.
Who wouldn't publish it?

1926
01:38:00,249 --> 01:38:01,592
Robert Redford!

1927
01:38:02,001 --> 01:38:03,469
No, you don't understand!

1928
01:38:03,544 --> 01:38:05,091
I got it, guys. I got it.

1929
01:38:06,839 --> 01:38:08,432
What am I supposed to do?

1930
01:38:08,508 --> 01:38:10,181
Do you want me to write a piece called
"We're All Fucked"?

1931
01:38:10,301 --> 01:38:12,178
Yes! That's a perfect title!

1932
01:38:12,261 --> 01:38:16,437
Casey, right now every bank in town
is unloading these shit bonds

1933
01:38:16,599 --> 01:38:18,317
onto unsuspecting customers.

1934
01:38:18,393 --> 01:38:21,397
And they won't devalue them
until they get them off their books.

1935
01:38:21,479 --> 01:38:23,948
This level of criminality
is unprecedented,

1936
01:38:24,023 --> 01:38:26,276
even on fucking Wall Street.

1937
01:38:27,402 --> 01:38:30,246
Jamie... And this is me
being honest here, okay?

1938
01:38:30,530 --> 01:38:33,079
It took me years to build
my relationships on Wall Street.

1939
01:38:33,157 --> 01:38:37,333
No bank or ratings agency is going
to confirm a story like this

1940
01:38:37,412 --> 01:38:39,915
just because it comes
from two guys in a...

1941
01:38:40,039 --> 01:38:43,293
Sorry, garage band hedge fund
that thinks it's the apocalypse.

1942
01:38:44,961 --> 01:38:45,962
Wow.

1943
01:38:46,129 --> 01:38:47,381
I thought you were for real, Casey.

1944
01:38:47,505 --> 01:38:48,802
You know, I'll have to say I really did.

1945
01:38:49,048 --> 01:38:50,049
Really?

1946
01:38:50,299 --> 01:38:52,393
Yeah, Jamie, you try being for real
with a three-year-old

1947
01:38:52,468 --> 01:38:54,311
and a wife getting her master's degree.

1948
01:38:54,554 --> 01:38:57,899
I'm not gonna burn my reputation
on your wild hunch.

1949
01:38:58,724 --> 01:38:59,896
Wow.

1950
01:39:00,059 --> 01:39:01,231
Wow.

1951
01:39:01,394 --> 01:39:02,441
Thanks for coming, guys.

1952
01:39:02,520 --> 01:39:03,692
Totally fucking awesome to see you.

1953
01:39:03,771 --> 01:39:05,773
Yeah, Casey. I've always hated you,

1954
01:39:05,898 --> 01:39:07,900
because you were a prick in college

1955
01:39:07,984 --> 01:39:10,328
and you are a prick today!

1956
01:39:10,778 --> 01:39:13,281
Thanks, Charlie.
Still living with your mom?

1957
01:39:13,823 --> 01:39:15,291
Charlie, come on!

1958
01:39:15,366 --> 01:39:17,289
Mark Baum again. Call me.

1959
01:39:17,869 --> 01:39:19,496
Subprime bonds fell off a cliff.

1960
01:39:19,579 --> 01:39:21,547
Rumor has it
the default numbers are huge.

1961
01:39:21,622 --> 01:39:24,421
Who got the remittance data early?
I bet it's Goldman.

1962
01:39:24,500 --> 01:39:25,843
Yeah, fuck you very much.

1963
01:39:25,918 --> 01:39:28,762
Jared, it's chaos down here.
Where are we?

1964
01:39:29,172 --> 01:39:32,392
"And Caesar wept, for there
were no more worlds to conquer."

1965
01:39:33,968 --> 01:39:35,220
Shane?

1966
01:39:35,595 --> 01:39:36,847
Shane?

1967
01:39:38,431 --> 01:39:41,150
Well, nobody's buying CDO
or mortgage bonds anymore

1968
01:39:41,225 --> 01:39:42,522
and everybody wants swaps.

1969
01:39:42,852 --> 01:39:45,196
Swaps are now the most
popular product on the street.

1970
01:39:45,271 --> 01:39:47,114
- That's good for us.
- Yes and no.

1971
01:39:47,190 --> 01:39:48,612
I heard from somebody
who heard from somebody...

1972
01:39:48,691 --> 01:39:51,410
No, Alex, no. Sorry.

1973
01:39:54,572 --> 01:39:56,415
Bennie Cleager
over at Morgan is taking on

1974
01:39:56,491 --> 01:39:58,084
some heavy losses
in the bond department.

1975
01:39:59,577 --> 01:40:01,124
Your ship might be taking on water.

1976
01:40:01,621 --> 01:40:03,965
It might be time to get
our lifejacket and get out.

1977
01:40:04,707 --> 01:40:06,209
I'm jacked.

1978
01:40:06,751 --> 01:40:09,254
I'm jacked! I'm jacked to the tits!

1979
01:40:09,879 --> 01:40:10,926
Good.

1980
01:40:11,005 --> 01:40:13,099
- Do you feel it?
- No.

1981
01:40:19,263 --> 01:40:20,731
What'd you hear, Tommy?

1982
01:40:22,892 --> 01:40:23,893
It's happening-

1983
01:40:23,976 --> 01:40:25,819
Everybody wants our swaps.

1984
01:40:26,020 --> 01:40:28,022
Kathy's office is looking for you.

1985
01:40:28,356 --> 01:40:30,779
They're singing
a different tune now, aren't they?

1986
01:40:32,109 --> 01:40:33,611
That's not good.

1987
01:40:38,449 --> 01:40:39,826
Maybe later. Not now.

1988
01:40:39,909 --> 01:40:42,287
This is a joke. Never.

1989
01:40:45,790 --> 01:40:46,882
Listening.

1990
01:40:47,291 --> 01:40:48,884
- Dr. Burry?
- Yeah.

1991
01:40:48,960 --> 01:40:50,382
Deeb Winston, Goldman Sachs.

1992
01:40:50,461 --> 01:40:51,963
Listen, I've been reviewing your position.

1993
01:40:52,046 --> 01:40:54,299
I wanted to discuss your marks
and make sure they're fair.

1994
01:40:54,382 --> 01:40:57,226
Yeah,
I think you mean that you've

1995
01:40:57,301 --> 01:41:00,054
secured a net short position yourselves.

1996
01:41:00,221 --> 01:41:02,974
So you're free to mark my swaps
accurately for once

1997
01:41:03,140 --> 01:41:05,814
because it's now
in your interest to do so.

1998
01:41:07,979 --> 01:41:10,073
I'm not sure what you want me to say.

1999
01:41:10,231 --> 01:41:11,733
I think that...

2000
01:41:13,234 --> 01:41:15,328
I think that you've already said it.

2001
01:41:23,160 --> 01:41:25,288
You tell Jeff at Goldman
that I'm not transferring funds.

2002
01:41:25,371 --> 01:41:26,998
This is bullshit!

2003
01:41:34,171 --> 01:41:35,923
Okay, we'll talk later.

2004
01:41:36,424 --> 01:41:37,846
Thank you.

2005
01:41:40,344 --> 01:41:42,221
Thanks for coming so quickly, Mark.

2006
01:41:42,305 --> 01:41:43,648
- Yeah.
- Um...

2007
01:41:43,931 --> 01:41:45,183
I know you've been hearing rumblings

2008
01:41:45,266 --> 01:41:46,768
about some losses Morgan has suffered.

2009
01:41:46,851 --> 01:41:48,819
- Congratulations.
- On what?

2010
01:41:49,437 --> 01:41:50,484
Oh.

2011
01:41:51,188 --> 01:41:52,690
Thanks. Urn...

2012
01:41:52,773 --> 01:41:54,116
Having fun?

2013
01:41:55,151 --> 01:41:56,494
Yes.

2014
01:41:57,695 --> 01:41:59,038
Tons. Urn...

2015
01:41:59,530 --> 01:42:01,874
I just wanted you to know that, um...

2016
01:42:02,450 --> 01:42:04,123
That, yes,
Morgan has suffered some losses,

2017
01:42:04,201 --> 01:42:08,001
but our liquidity is strong
and there's no cause for concern.

2018
01:42:08,205 --> 01:42:11,049
Would Bennie Cleager be concerned?

2019
01:42:11,375 --> 01:42:12,718
Because word on the street

2020
01:42:12,793 --> 01:42:15,637
is that he took some pretty heavy losses.

2021
01:42:16,964 --> 01:42:18,762
Kathy, come on.
We know each other.

2022
01:42:18,841 --> 01:42:21,060
What's going on?

2023
01:42:21,469 --> 01:42:22,971
How bad is this?

2024
01:42:23,137 --> 01:42:24,309
Okay.

2025
01:42:25,097 --> 01:42:28,146
Two years ago, Bennie Cleager
in Morgan's bond department

2026
01:42:28,225 --> 01:42:31,775
also started shorting subprime housing,
$2 billion in BBBs.

2027
01:42:31,854 --> 01:42:33,106
Bennie is smarter than I thought.

2028
01:42:33,189 --> 01:42:34,611
No, he's not smart at all.

2029
01:42:34,690 --> 01:42:37,068
The premiums on the swap
ate into his desk's profit.

2030
01:42:37,151 --> 01:42:39,119
To cover his BBB shorts,

2031
01:42:39,195 --> 01:42:41,698
he sold a lot of A and AA swaps
as protection.

2032
01:42:41,781 --> 01:42:42,782
A lot.

2033
01:42:43,491 --> 01:42:46,665
He believed that there was no way
that they could be affected.

2034
01:42:47,244 --> 01:42:50,589
Tell me Morgan Stanley doesn't hold
the contracts on these swaps.

2035
01:42:53,918 --> 01:42:55,420
Holy shit.

2036
01:42:56,087 --> 01:42:59,512
All this time I've been trying to figure
out who I'm betting against,

2037
01:42:59,757 --> 01:43:01,600
and it's Morgan Stanley.

2038
01:43:02,551 --> 01:43:03,894
Which is me.

2039
01:43:05,596 --> 01:43:07,940
What's your exposure? $3 billion?

2040
01:43:08,849 --> 01:43:10,692
Please, don't tell me it's more than four.

2041
01:43:10,851 --> 01:43:12,478
I can't answer that.
I can't answer that.

2042
01:43:12,561 --> 01:43:15,735
Yes, you can answer that,
because I walk in here

2043
01:43:15,815 --> 01:43:18,910
and people are crying in your hallway.

2044
01:43:19,276 --> 01:43:20,448
Kathy.

2045
01:43:20,945 --> 01:43:22,993
You bring me in to tell me
everything's fine,

2046
01:43:23,072 --> 01:43:24,289
and everything's not fine.

2047
01:43:24,949 --> 01:43:26,826
What, what is happening?

2048
01:43:29,036 --> 01:43:31,209
The long exposure is...

2049
01:43:33,124 --> 01:43:34,626
$15 billion.

2050
01:43:40,589 --> 01:43:41,715
Jesus!

2051
01:43:41,799 --> 01:43:44,177
He kept saying defaults
over 8% were impossible.

2052
01:43:44,260 --> 01:43:45,261
Oh, my God.

2053
01:43:45,344 --> 01:43:46,561
That there would be a million homeless!

2054
01:43:48,013 --> 01:43:50,266
Yeah, but we have nothing
to do with Morgan Stanley.

2055
01:43:53,185 --> 01:43:54,311
Yeah...

2056
01:43:54,645 --> 01:43:56,488
Tell the bankruptcy court.

2057
01:43:56,731 --> 01:43:59,860
Morgan fails, all our accounts
go on their balance sheet.

2058
01:44:00,484 --> 01:44:02,111
It's just crazy.

2059
01:44:02,319 --> 01:44:03,662
Morgan makes the sucker's bet

2060
01:44:03,738 --> 01:44:06,082
and we pay their fucking gambling debt?

2061
01:44:06,574 --> 01:44:09,077
Short the bank stocks. Then we wait.

2062
01:44:12,997 --> 01:44:14,999
Or we sell our swaps
when the market opens.

2063
01:44:16,751 --> 01:44:19,800
We get our bonuses,
our investors get their profits, we get...

2064
01:44:19,879 --> 01:44:22,382
What, 30 cents on the dollar?
It's not bad.

2065
01:44:22,673 --> 01:44:24,175
We're three times that.

2066
01:44:24,258 --> 01:44:25,976
Not if there's
no market left to sell them in.

2067
01:44:26,051 --> 01:44:27,974
Forget it.
We're not giving out any lifeboats.

2068
01:44:28,053 --> 01:44:30,431
If Morgan goes under,
we end up with nothing.

2069
01:44:30,514 --> 01:44:31,515
Vinnie.

2070
01:44:33,267 --> 01:44:36,441
Jesus, come on.
I say when we sell.

2071
01:44:40,566 --> 01:44:42,944
Look, I get that this is personal for you,

2072
01:44:43,027 --> 01:44:45,325
but we have a fiduciary responsibility.

2073
01:44:45,404 --> 01:44:46,906
No. No, we don't.

2074
01:44:47,198 --> 01:44:49,371
Nobody's acting responsible.

2075
01:44:49,533 --> 01:44:52,286
Fuck responsibility. Are you kidding me?

2076
01:44:52,787 --> 01:44:54,881
The assholes at the big banks will take...

2077
01:44:54,955 --> 01:44:56,002
You boys want any appetizers?

2078
01:44:56,081 --> 01:44:57,833
We're talking, please!

2079
01:44:58,584 --> 01:45:00,086
- Excuse us.
- Sorry.

2080
01:45:02,213 --> 01:45:05,012
We are going to wait,
and we are going to wait,

2081
01:45:05,132 --> 01:45:06,634
and we are going to wait

2082
01:45:06,801 --> 01:45:10,556
until they feel the pain,
until they start to bleed.

2083
01:45:10,888 --> 01:45:13,016
- That is what I want.
- But what about our clients

2084
01:45:13,098 --> 01:45:14,395
who've entrusted us with their savings...

2085
01:45:14,475 --> 01:45:15,647
I say when we sell.

2086
01:45:15,726 --> 01:45:16,773
This isn't about you.

2087
01:45:16,852 --> 01:45:18,104
This isn't about you
and your Upper East Side

2088
01:45:18,187 --> 01:45:19,234
- mahogany soapbox.
- Hey! Hey!

2089
01:45:19,396 --> 01:45:20,739
I say when we sell!

2090
01:45:22,316 --> 01:45:24,068
Whatever you say, Mark.

2091
01:45:30,783 --> 01:45:32,581
Dude, did you hear the news?

2092
01:45:34,411 --> 01:45:36,755
Okay. So, not only do
two mortgage hedge funds

2093
01:45:36,831 --> 01:45:38,629
backed by Bear Stearns go belly up,

2094
01:45:38,707 --> 01:45:41,836
but now there's
a class-action lawsuit against Bear.

2095
01:45:41,919 --> 01:45:43,091
Holy shit!

2096
01:45:43,170 --> 01:45:45,673
Let's go! Push! Push!

2097
01:45:45,756 --> 01:45:47,178
So, what?
Bear could really collapse here.

2098
01:45:47,258 --> 01:45:49,056
- This is a risk we really shouldn't take.
- Then what?

2099
01:45:49,134 --> 01:45:51,136
We bought 80%
of our swaps at Bear.

2100
01:45:51,220 --> 01:45:52,813
- We 'd lose everything.
- So what?

2101
01:45:52,888 --> 01:45:54,310
- Hey, sir?
- One second!

2102
01:45:54,431 --> 01:45:55,398
That's my opinion.

2103
01:45:55,474 --> 01:45:56,691
We bought these fucking things.

2104
01:45:56,767 --> 01:45:57,939
We have no clue how to sell them.

2105
01:45:58,018 --> 01:45:59,440
I know. We have to get Ben to do it.

2106
01:45:59,520 --> 01:46:01,522
I've been trying to call him
and he won't get back to me.

2107
01:46:01,605 --> 01:46:03,858
No. He's on vacation
with his wife's family.

2108
01:46:03,941 --> 01:46:05,113
They're in England.

2109
01:46:06,068 --> 01:46:07,069
What?

2110
01:46:14,785 --> 01:46:16,378
- Hello, Ben. Hey.
- Guys?

2111
01:46:16,453 --> 01:46:18,046
Yeah, we're here.
Can you hear us?

2112
01:46:18,122 --> 01:46:19,624
- Guys?
- Yeah, we got you.

2113
01:46:19,790 --> 01:46:22,634
Yeah. I hardly got
cell phone or Wi-Fi service.

2114
01:46:23,752 --> 01:46:26,346
I'm trying to sell $200 million
worth of securities.

2115
01:46:26,672 --> 01:46:29,016
In a pub. It smells like sheep.

2116
01:46:29,300 --> 01:46:30,301
You can do this.

2117
01:46:30,426 --> 01:46:31,552
I don't want
to pressure you, Ben

2118
01:46:31,635 --> 01:46:34,229
but if you don't pull this off,
we lose everything.

2119
01:46:34,471 --> 01:46:37,771
All right. Let's see what
Credit Suisse's appetite is.

2120
01:46:42,938 --> 01:46:44,110
This is Brownfield Fund.

2121
01:46:44,189 --> 01:46:46,112
I want to unload my credit default swaps.

2122
01:46:46,442 --> 01:46:47,989
MAN". All right. What you got?

2123
01:46:48,152 --> 01:46:49,825
Twenty AA tranches of A.B.S. CDOs.

2124
01:46:50,446 --> 01:46:52,824
A.B.S. ? Are these...
These are pretty bad?

2125
01:46:52,990 --> 01:46:54,992
Absolutely. They're complete shit.

2126
01:46:55,284 --> 01:46:56,786
What's your notional value?

2127
01:46:56,869 --> 01:46:59,543
Face value is 205 million. Dollars.

2128
01:46:59,830 --> 01:47:02,424
All right, we could, we could go to forty.

2129
01:47:02,499 --> 01:47:03,796
No. We want at least 100 million.

2130
01:47:03,876 --> 01:47:07,551
100 million? Who are you,
a drug dealer or a banker?

2131
01:47:07,671 --> 01:47:10,174
'Cause if you're a banker,
you can fuck right off!

2132
01:47:10,257 --> 01:47:11,429
I don't know if we can make a market.

2133
01:47:11,508 --> 01:47:12,634
Just give me your best price?

2134
01:47:12,718 --> 01:47:15,267
Yeah. Chuck 100 million in for me, mate.

2135
01:47:15,346 --> 01:47:16,598
I think we're far apart.

2136
01:47:17,097 --> 01:47:19,520
Look, if you don't want the deal,
you can just hang up.

2137
01:47:21,977 --> 01:47:23,524
That's what I thought.

2138
01:47:24,313 --> 01:47:26,315
- 90 million.
- 70.

2139
01:47:27,316 --> 01:47:29,159
as.

2140
01:47:29,360 --> 01:47:31,328
- S4.

2141
01:47:36,367 --> 01:47:37,664
It's Dr. Burry.

2142
01:47:38,243 --> 01:47:41,087
Looks like the collapse
of the financial sector is imminent.

2143
01:47:42,081 --> 01:47:44,049
Let's start to sell my position.

2144
01:47:44,416 --> 01:47:46,259
It's $1.3 billion.

2145
01:47:47,753 --> 01:47:49,596
Sure, I'll hold.

2146
01:48:13,404 --> 01:48:14,906
So, I was right.

2147
01:48:15,739 --> 01:48:18,242
I took a rash of shit for two years, but

2148
01:48:18,659 --> 01:48:20,582
I was right.

2149
01:48:20,911 --> 01:48:22,663
And everyone was wrong.

2150
01:48:23,580 --> 01:48:26,754
And, yeah,
I got a bonus check for it. Sue me.

2151
01:48:27,418 --> 01:48:28,510
You know?

2152
01:48:28,919 --> 01:48:32,549
It's a lot of money. I get it.
I can feel you judging me.

2153
01:48:32,631 --> 01:48:33,928
That's palpable.

2154
01:48:34,633 --> 01:48:38,638
But, hey, I never said
I was the hero of this story.

2155
01:48:39,263 --> 01:48:41,812
Hey, Ben. How are we looking?

2156
01:48:43,017 --> 01:48:44,360
Eight... on...

2157
01:48:45,102 --> 01:48:46,445
Sorry?

2158
01:48:46,812 --> 01:48:48,940
No. Eighty million.

2159
01:48:49,148 --> 01:48:50,775
$80 million, $80 million,
that's good, right?

2160
01:48:50,858 --> 01:48:51,950
- Eighty is great.
- Is that good?

2161
01:48:52,026 --> 01:48:53,198
- Eighty is great, Ben.
- Okay.

2162
01:48:53,277 --> 01:48:55,621
Thank you. Thank you so much.

2163
01:48:55,946 --> 01:48:57,823
Most of it went to UBS.

2164
01:48:57,948 --> 01:48:59,495
You're very lucky. The largest bank

2165
01:48:59,575 --> 01:49:02,795
in France froze customer's money
market accounts today.

2166
01:49:02,911 --> 01:49:04,458
This thing's hitting Europe.

2167
01:49:04,538 --> 01:49:06,381
Greece and Iceland are finished.

2168
01:49:06,457 --> 01:49:07,800
Spain is teetering.

2169
01:49:07,875 --> 01:49:09,468
Are you serious? Fuck.

2170
01:49:09,877 --> 01:49:11,720
Ben, call us
when you get home.

2171
01:49:11,795 --> 01:49:13,092
But, hey, before you go,

2172
01:49:13,172 --> 01:49:15,220
uh, I'm just wondering...

2173
01:49:15,883 --> 01:49:17,135
Urn...

2174
01:49:18,302 --> 01:49:20,350
Why did you do this with us?

2175
01:49:21,305 --> 01:49:23,307
You didn't have to. Uh...

2176
01:49:23,640 --> 01:49:27,315
Thank you. But, uh, why?

2177
01:49:28,228 --> 01:49:31,152
You guys said you wanted to get rich.
Now you're rich.

2178
01:49:31,690 --> 01:49:32,782
Goal!

2179
01:49:32,858 --> 01:49:34,485
Pamplona puts themselves
on the scoreboard.

2180
01:49:38,655 --> 01:49:41,204
As the housing markets
and banks continued to hemorrhage,

2181
01:49:41,283 --> 01:49:43,706
only one of the big shorts refused to sell.

2182
01:49:43,786 --> 01:49:45,003
Mark Baum.

2183
01:49:48,373 --> 01:49:50,421
So it was beyond perfect
when he was asked to speak

2184
01:49:50,501 --> 01:49:52,344
at a conference opposite Bruce Miller,

2185
01:49:52,419 --> 01:49:54,888
the famous bullish investor.

2186
01:49:55,255 --> 01:49:57,474
After he and Mark had their debate,
Alan Greenspan,

2187
01:49:57,549 --> 01:50:01,019
one of the architects of the whole crisis
was scheduled to speak.

2188
01:50:01,261 --> 01:50:03,855
Everyone in Mark's office showed up,
he even invited friends.

2189
01:50:05,349 --> 01:50:08,649
This was the Ali vs. Foreman
of the financial world.

2190
01:50:09,019 --> 01:50:11,021
The realist versus the fools.

2191
01:50:11,480 --> 01:50:15,075
And if it seems almost too perfect,
trust me, this happened.

2192
01:50:17,194 --> 01:50:23,372
Welcome, everyone.
Please give a generous welcome to

2193
01:50:23,700 --> 01:50:27,295
Mr. Bruce Miller and Mark Baum.

2194
01:50:44,471 --> 01:50:45,973
Strap yourself in.

2195
01:50:47,224 --> 01:50:49,397
So as some oi you may know,
Bear Steams

2196
01:50:49,476 --> 01:50:52,070
has just received a loan from JP Morgan.

2197
01:50:52,146 --> 01:50:54,990
Of course, we're gonna have to
wait and see how the markets react,

2198
01:50:55,065 --> 01:50:58,786
but that should lay to rest any
concerns about the bank's health.

2199
01:50:58,861 --> 01:51:03,583
Now, I take it you have no plans to sell
your $200 million in Bear stock?

2200
01:51:03,907 --> 01:51:05,534
No. As a matter of fact,
when we're done here,

2201
01:51:05,617 --> 01:51:07,415
I'll probably go out and buy some more.

2202
01:51:08,912 --> 01:51:12,416
For the opposing view, Mr. Baum.

2203
01:51:14,835 --> 01:51:16,929
I got to stand for this.

2204
01:51:19,673 --> 01:51:21,266
Okay, hi.

2205
01:51:21,675 --> 01:51:24,098
My firm's thesis is pretty simple.

2206
01:51:24,428 --> 01:51:26,271
Wall Street took a good idea,

2207
01:51:26,346 --> 01:51:27,848
Lewis Ranieri's mortgage bond,

2208
01:51:28,098 --> 01:51:30,351
and turned it into an atomic bomb

2209
01:51:30,434 --> 01:51:32,607
of fraud and stupidity

2210
01:51:32,936 --> 01:51:35,610
that's on its way to decimating
the world economy.

2211
01:51:35,689 --> 01:51:36,906
How do you really feel?

2212
01:51:38,358 --> 01:51:40,281
I'm glad you still
have a sense of humor.

2213
01:51:40,360 --> 01:51:42,408
I wouldn't if I were you.

2214
01:51:42,779 --> 01:51:46,829
Now, anyone who knows me knows that

2215
01:51:46,909 --> 01:51:49,378
I have no problem telling
someone they're wrong.

2216
01:51:49,453 --> 01:51:53,549
Bear Stearns
is denying rumors of liquidity problems.

2217
01:51:53,624 --> 01:51:55,922
Holy fuck, it's 39 now!

2218
01:51:58,086 --> 01:52:00,635
We live in an era of fraud in America.

2219
01:52:00,714 --> 01:52:03,092
Not just in banking, but in government,

2220
01:52:03,550 --> 01:52:06,520
education, religion, food,

2221
01:52:06,595 --> 01:52:08,268
even baseball.

2222
01:52:10,140 --> 01:52:11,357
What bothers me isn't that

2223
01:52:11,975 --> 01:52:15,821
fraud is not nice or that fraud is mean.

2224
01:52:16,104 --> 01:52:17,981
It's that for 15,000 years

2225
01:52:18,815 --> 01:52:20,362
fraud and short-sighted thinking

2226
01:52:20,442 --> 01:52:22,820
have never, ever worked.

2227
01:52:22,945 --> 01:52:25,869
- Jesus, Bear at 37...
- Not once.

2228
01:52:25,948 --> 01:52:29,202
Eventually, people get caught,
things go south.

2229
01:52:29,284 --> 01:52:30,661
It's fucking plummeting, man.

2230
01:52:30,827 --> 01:52:33,125
When the hell did we forget all that?

2231
01:52:37,292 --> 01:52:39,795
I thought we were
better than this. I really did.

2232
01:52:40,128 --> 01:52:42,176
And the fact that we're not

2233
01:52:42,297 --> 01:52:45,016
doesn't make me feel
all right and superior.

2234
01:52:45,092 --> 01:52:47,595
It makes me feel... Sad.

2235
01:52:48,011 --> 01:52:50,355
Every time I fucking hit
"refresh" it's dropping, man.

2236
01:52:52,015 --> 01:52:53,688
And as fun as it is to watch

2237
01:52:53,976 --> 01:52:56,274
pompous, dumb Wall Streeters
be wildly wrong,

2238
01:52:56,353 --> 01:52:58,651
and you are wrong, sir,

2239
01:52:59,481 --> 01:53:02,485
I just know, that at the end of the day

2240
01:53:03,151 --> 01:53:05,870
average people are going to be the ones

2241
01:53:05,988 --> 01:53:08,161
that are gonna have to pay for all this.

2242
01:53:08,824 --> 01:53:10,952
Because they always, always do.

2243
01:53:11,034 --> 01:53:12,081
It's 32.

2244
01:53:12,160 --> 01:53:13,537
It's fucking tanked, man.

2245
01:53:13,662 --> 01:53:15,664
That's my two cents. Thank you.

2246
01:53:16,999 --> 01:53:18,342
Let me drop
a deuce at Deutsche.

2247
01:53:18,500 --> 01:53:20,502
Does our bull
have a response?

2248
01:53:21,503 --> 01:53:25,007
Only that, in the entire history
of Wall Street,

2249
01:53:25,132 --> 01:53:27,430
no investment bank has ever failed

2250
01:53:27,509 --> 01:53:29,511
unless caught in criminal activities.

2251
01:53:30,012 --> 01:53:33,516
So, yes, I stand by
my Bear Stearns optimism.

2252
01:53:33,849 --> 01:53:35,851
Mr. Miller, I'm sorry.
Quick question.

2253
01:53:36,351 --> 01:53:38,024
From the time you guys started talking,

2254
01:53:38,186 --> 01:53:41,065
Bear Stearns stock has
fallen more than 38%.

2255
01:53:41,148 --> 01:53:42,525
Would you still buy more?

2256
01:53:42,733 --> 01:53:46,863
Yeah, sure, of course
I'd buy more. Why not'?

2257
01:53:47,321 --> 01:53:48,322
Boom.

2258
01:53:51,575 --> 01:53:52,918
Jesus Christ!

2259
01:53:54,369 --> 01:53:57,543
That concludes
the first part of our presentation.

2260
01:53:58,540 --> 01:54:03,171
Up next, we have the legendary
former chairman of the Fed,

2261
01:54:03,253 --> 01:54:05,051
Alan Greenspan.

2262
01:54:05,130 --> 01:54:06,473
Folks?

2263
01:54:24,608 --> 01:54:25,985
employees
of Lehman Brothers today,

2264
01:54:26,068 --> 01:54:29,413
as the Wall Street giant's stock
went to zero.

2265
01:54:29,738 --> 01:54:31,661
The collapse of the venerable
New York bank

2266
01:54:31,740 --> 01:54:35,370
follows a tumultuous few months
of market volatility

2267
01:54:35,452 --> 01:54:38,080
and fear in the world economy.

2268
01:54:38,413 --> 01:54:40,131
I got to see inside.

2269
01:54:40,916 --> 01:54:42,259
How?

2270
01:54:42,959 --> 01:54:43,960
Come on.

2271
01:54:44,795 --> 01:54:47,890
I left my phone in the office.
I threw my pass out already.

2272
01:54:47,964 --> 01:54:49,386
Do you mind if I take your pass?

2273
01:54:49,466 --> 01:54:52,060
I don't give a shit anymore.
You can do what you want.

2274
01:54:59,935 --> 01:55:01,653
Go directly to your transportation.

2275
01:55:01,728 --> 01:55:03,446
Do not talk to the press.

2276
01:55:03,605 --> 01:55:06,950
After 18 years, I just leave?
That's just fucking great!

2277
01:55:07,150 --> 01:55:10,029
I'll talk to whoever the hell I want!

2278
01:55:10,112 --> 01:55:12,456
Do not talk to the press.

2279
01:55:12,781 --> 01:55:14,749
Go directly to your transportation.

2280
01:55:14,825 --> 01:55:15,917
Do not talk to...

2281
01:55:18,495 --> 01:55:19,667
Hey, look,
you wanna get a bite tonight?

2282
01:55:19,788 --> 01:55:22,211
There's this, uh, new Cuban place

2283
01:55:22,290 --> 01:55:24,292
just opened on the Lower East Side.
It's supposed to be good.

2284
01:55:24,626 --> 01:55:26,299
- Oh, really?
- Yeah.

2285
01:55:26,795 --> 01:55:28,138
You and I?

2286
01:55:28,338 --> 01:55:29,931
Yeah, or other people.

2287
01:55:30,006 --> 01:55:31,758
- That sounds nice. I would like that.
- Yeah.

2288
01:55:31,842 --> 01:55:33,139
Finally.

2289
01:55:33,510 --> 01:55:34,853
Mark, hey.

2290
01:55:35,137 --> 01:55:36,434
It's a bloodbath up here.

2291
01:55:36,513 --> 01:55:38,015
Morgan stock has lost half its value.

2292
01:55:38,098 --> 01:55:40,396
It's down to 23.10. It's in freefaH.

2293
01:55:40,475 --> 01:55:43,479
Clients want to talk to you
about pulling their money.

2294
01:55:43,687 --> 01:55:47,191
It's now or never, Mark.
We got to sell.

2295
01:55:50,485 --> 01:55:51,657
Mark.

2296
01:55:53,029 --> 01:55:54,201
Mark, you hear me?

2297
01:55:54,531 --> 01:55:55,999
Mailbox one.

2298
01:55:56,158 --> 01:55:58,877
You have 15 messages.

2299
01:56:00,328 --> 01:56:01,955
Mike, I can't seem
to get ahold of you.

2300
01:56:02,038 --> 01:56:04,507
Will you please call me
at your earliest convenience.

2301
01:56:05,834 --> 01:56:08,678
It's Jack. You're buying stocks?

2302
01:56:08,879 --> 01:56:11,849
The market's at an all-time low.
This is crazy!

2303
01:56:12,090 --> 01:56:14,434
I met my wife on Match.com.

2304
01:56:14,843 --> 01:56:16,186
My profile said,

2305
01:56:16,386 --> 01:56:18,730
"I am a medical student
with only one eye,

2306
01:56:18,805 --> 01:56:20,728
"an awkward social manner,

2307
01:56:20,807 --> 01:56:24,402
"and $145,000 in student loans."

2308
01:56:25,061 --> 01:56:26,529
She wrote back,

2309
01:56:26,813 --> 01:56:28,406
"You're just what I've been looking for."

2310
01:56:29,357 --> 01:56:31,030
She meant honest.

2311
01:56:31,234 --> 01:56:32,907
So let me be honest.

2312
01:56:33,069 --> 01:56:37,324
The housing crisis represents
the greatest financial opportunity of...

2313
01:56:37,407 --> 01:56:40,206
Making money is not
like I thought it would be.

2314
01:56:40,535 --> 01:56:45,132
This business kills
the part of life that is essential.

2315
01:56:45,207 --> 01:56:48,256
The part that has nothing
to do with business.

2316
01:56:50,545 --> 01:56:52,593
For the past two years, my insides...

2317
01:56:53,757 --> 01:56:56,135
have felt like
they're eating themselves.

2318
01:56:56,259 --> 01:56:58,557
All the people I respected

2319
01:56:59,054 --> 01:57:01,557
won't talk to me anymore

2320
01:57:01,806 --> 01:57:03,649
except through lawyers.

2321
01:57:07,395 --> 01:57:08,772
People

2322
01:57:09,564 --> 01:57:13,239
want an authority to tell them
how to value things...

2323
01:57:13,610 --> 01:57:18,707
but they choose this authority not
based on facts or results.

2324
01:57:19,157 --> 01:57:23,833
They choose it because it
seems authoritative and familiar.

2325
01:57:23,912 --> 01:57:26,381
And I am not

2326
01:57:26,456 --> 01:57:29,505
and never have been "familiar".

2327
01:57:31,461 --> 01:57:32,462
So...

2328
01:57:33,338 --> 01:57:36,467
So, I've come to the sullen realization

2329
01:57:36,550 --> 01:57:39,349
that I must close down the fund.

2330
01:57:39,427 --> 01:57:42,522
Sincerely, Michael J. Burry, M.D.

2331
01:58:42,240 --> 01:58:44,334
This isn't how I pictured it.

2332
01:58:46,328 --> 01:58:47,500
What did you think We'd find?

2333
01:58:47,579 --> 01:58:48,626
I don't know.

2334
01:58:50,498 --> 01:58:52,000
Grownups.

2335
01:58:55,920 --> 01:58:57,422
Mark, you there?

2336
01:59:00,091 --> 01:59:01,343
Mark?

2337
01:59:01,593 --> 01:59:04,517
Paulson and Bernanke
just left the White House.

2338
01:59:09,851 --> 01:59:12,024
There's going to be a bailout.

2339
01:59:13,605 --> 01:59:17,030
Well, they had to. Right?

2340
01:59:17,359 --> 01:59:18,531
Paper markets would've collapsed.

2341
01:59:18,610 --> 01:59:19,782
They knew.

2342
01:59:20,028 --> 01:59:21,530
Cash would've stopped
coming out of ATMs.

2343
01:59:21,613 --> 01:59:23,160
They had to backstop this.

2344
01:59:23,448 --> 01:59:25,792
They knew the taxpayers
would bail them out.

2345
01:59:25,867 --> 01:59:28,290
They weren't being stupid.
They just didn't care.

2346
01:59:28,453 --> 01:59:30,626
Yeah. 'Cause they're fucking crooks.

2347
01:59:32,540 --> 01:59:35,089
But at least we're going to
see some of them go to jail.

2348
01:59:36,294 --> 01:59:39,548
Right? I mean, they're gonna
have to break up the banks.

2349
01:59:40,632 --> 01:59:41,975
I mean, the party's over.

2350
01:59:42,050 --> 01:59:44,724
I don't know. I don't know, Vinnie.

2351
01:59:47,472 --> 01:59:48,974
I have a feeling

2352
01:59:49,057 --> 01:59:50,934
that in a few years
people are gonna be doing

2353
01:59:51,017 --> 01:59:54,021
what they always do
when the economy tanks.

2354
01:59:54,479 --> 01:59:57,699
They will be blaming
immigrants and poor people.

2355
01:59:57,982 --> 01:59:59,325
But Mark was wrong.

2356
02:00:00,443 --> 02:00:02,411
In the years that followed,
hundreds of bankers

2357
02:00:02,487 --> 02:00:05,115
and rating agencies executives
went to jail.

2358
02:00:05,281 --> 02:00:07,329
The SEC was completely overhauled.

2359
02:00:07,492 --> 02:00:10,211
And Congress had no choice
but to break up the big banks

2360
02:00:10,620 --> 02:00:13,089
and regulate the mortgage
and derivatives industries.

2361
02:00:17,877 --> 02:00:19,220
Just kidding.

2362
02:00:19,462 --> 02:00:21,681
The banks took the money
the American people gave them

2363
02:00:21,756 --> 02:00:24,054
and used it to pay themselves
huge bonuses

2364
02:00:24,134 --> 02:00:26,387
and lobby Congress to kill big reform.

2365
02:00:26,553 --> 02:00:28,806
And then they blamed
immigrants and poor people.

2366
02:00:28,888 --> 02:00:31,061
And this time, even teachers.

2367
02:00:32,434 --> 02:00:33,651
And when all was said and done,

2368
02:00:33,727 --> 02:00:35,479
only one single banker went to jail.

2369
02:00:36,396 --> 02:00:37,522
This poor schmuck.

2370
02:00:37,605 --> 02:00:40,074
Kareem Serageldin from Credit Suisse.

2371
02:00:40,400 --> 02:00:42,744
He hid a few billion
in mortgage bond losses,

2372
02:00:42,819 --> 02:00:46,073
something most of the big banks did
on a good day during the crisis.

2373
02:00:47,699 --> 02:00:49,701
Mark, can we sell now?

2374
02:00:51,494 --> 02:00:53,997
The fund will make almost $1 billion.

2375
02:00:54,080 --> 02:00:55,707
You'll clear $200 mil, Mark.

2376
02:00:56,875 --> 02:00:59,128
You know, once we sell,

2377
02:00:59,878 --> 02:01:01,755
we'll be just like the rest of them.

2378
02:01:01,838 --> 02:01:02,964
You know that.

2379
02:01:03,298 --> 02:01:04,891
No, we're not.
We're not the bad guys here.

2380
02:01:04,966 --> 02:01:08,470
We didn't defraud the American people
and prey on their dreams

2381
02:01:08,553 --> 02:01:10,146
of owning a home. All right?

2382
02:01:10,221 --> 02:01:11,438
They did.

2383
02:01:12,640 --> 02:01:14,483
And now we get to
kick them in the teeth.

2384
02:01:19,898 --> 02:01:21,900
A billion dollars.

2385
02:01:23,568 --> 02:01:24,820
That's right.

2386
02:01:24,903 --> 02:01:27,747
But we got to close out our position
or it could be zero.

2387
02:01:28,239 --> 02:01:31,083
I mean, it's now or never, Mark.

2388
02:01:40,251 --> 02:01:41,673
Okay.

2389
02:01:45,423 --> 02:01:46,845
Sell it all.