1
00:01:20,956 --> 00:01:23,293
Hiya, Frank.
How are the wife and kids?

2
00:01:23,376 --> 00:01:24,585
You know, for you, I'm considering

3
00:01:24,668 --> 00:01:28,381
treasury bonds
and utility stocks. Smoke?

4
00:01:28,465 --> 00:01:30,549
<i>In the late '70s, banking wasn't a job</i>

5
00:01:30,632 --> 00:01:33,135
<i>you went into
to make large sums of money.</i>

6
00:01:34,052 --> 00:01:35,764
<i>It was a fucking snooze.</i>

7
00:01:35,847 --> 00:01:37,640
How about those Mets?

8
00:01:37,723 --> 00:01:40,393
<i>Filled with losers.
Like selling insurance or</i>

9
00:01:40,477 --> 00:01:41,811
accounting.

10
00:01:41,895 --> 00:01:43,021
And if banking was boring,

11
00:01:43,146 --> 00:01:45,814
then the bond department at the bank
was straight-up comatose.

12
00:01:46,649 --> 00:01:48,026
<i>We all know about bonds.</i>

13
00:01:48,109 --> 00:01:50,228
<i>You give them to your
snot-nosed kid when he turns 15.</i>

14
00:01:50,277 --> 00:01:52,280
Maybe when he's 30
he makes a hundred bucks.

15
00:01:52,362 --> 00:01:53,656
Boring.

16
00:01:53,740 --> 00:01:55,539
That is, until Lewis Ranieri
came on the scene

17
00:01:55,616 --> 00:01:56,658
at Salomon Brothers.

18
00:02:02,623 --> 00:02:04,834
You might not know who he is,
but he changed your life

19
00:02:04,918 --> 00:02:08,670
<i>more than Michael Jordan, the iPod
and YouTube put together.</i>

20
00:02:10,548 --> 00:02:12,300
All right, gentlemen!
Let's get some money in here!

21
00:02:12,383 --> 00:02:15,887
Let's make some money!
What do you say?

22
00:02:15,969 --> 00:02:17,806
<i>You see, Lewis didn't know it yet,</i>

23
00:02:17,889 --> 00:02:19,807
<i>but he had already
changed banking forever</i>

24
00:02:19,890 --> 00:02:21,099
<i>with one simple idea.</i>

25
00:02:21,893 --> 00:02:26,563
The mortgage-backed security.
Or private-label MBS.

26
00:02:27,397 --> 00:02:29,234
You've got your
average person's mortgage.

27
00:02:29,317 --> 00:02:30,735
Fixed rate, 30 years.

28
00:02:30,818 --> 00:02:34,155
Boring, safe, small payoff, right? But,

29
00:02:35,448 --> 00:02:38,158
when you have thousands
of them all bundled together,

30
00:02:38,242 --> 00:02:41,788
suddenly the yield goes up
but the risk is still small because,

31
00:02:41,871 --> 00:02:42,871
well, they're mortgages!

32
00:02:42,913 --> 00:02:44,331
And who the hell
doesn't pay their mortgage?

33
00:02:44,414 --> 00:02:46,793
What exactly is the credit
rating on this bond?

34
00:02:46,876 --> 00:02:49,711
This bond, gentlemen, is AAA-rated.

35
00:02:50,254 --> 00:02:53,175
This is exactly what the Michigan state
pension fund has been looking for.

36
00:02:53,424 --> 00:02:54,925
I'll buy $20 million.

37
00:02:55,009 --> 00:02:57,469
- Oh, come on, live a little.
- $25 million.

38
00:02:58,012 --> 00:03:00,973
<i>The money came raining down,</i>

39
00:03:01,056 --> 00:03:02,558
<i>and for the first time,</i>

40
00:03:02,641 --> 00:03:05,436
<i>the banker went
from the country club to the strip club.</i>

41
00:03:08,063 --> 00:03:11,276
<i>Pretty soon, stocks and savings
were almost inconsequential.</i>

42
00:03:11,442 --> 00:03:13,610
<i>They were doing $50, $100, $200 billion</i>

43
00:03:13,694 --> 00:03:17,657
<i>in mortgage bonds
and dozens of other securities a year.</i>

44
00:03:25,956 --> 00:03:28,251
<i>And America barely noticed
as its number one industry</i>

45
00:03:28,334 --> 00:03:30,420
<i>became boring old banking.</i>

46
00:03:34,090 --> 00:03:37,593
<i>And then one day,
almost 30 years later, in 2008,</i>

47
00:03:38,802 --> 00:03:40,555
<i>it all came crashing down.</i>

48
00:03:43,682 --> 00:03:46,436
<i>March. Bear Stearns
was in a death spiral</i>

49
00:03:46,519 --> 00:03:47,937
<i>and the Fed brokered its sale.</i>

50
00:03:48,021 --> 00:03:51,064
<i>It's been called the worst financial crisis
in modern times.</i>

51
00:03:51,399 --> 00:03:55,652
<i>Certainly the largest financial disaster
in decades in this country,</i>

52
00:03:55,736 --> 00:03:58,406
<i>and perhaps the end of an era
in American business.</i>

53
00:03:58,865 --> 00:04:01,116
<i>In the end, Lewis Ranieri's
mortgage-backed security</i>

54
00:04:01,199 --> 00:04:04,662
<i>mutated into a monstrosity that
collapsed the whole world economy.</i>

55
00:04:05,204 --> 00:04:07,289
<i>And none of the experts
or leaders or talking heads</i>

56
00:04:07,372 --> 00:04:08,665
<i>had a clue it was coming.</i>

57
00:04:10,168 --> 00:04:13,128
<i>I'm guessing most of you
still don't really know what happened.</i>

58
00:04:13,629 --> 00:04:16,423
<i>Yeah, you got a soundbite you repeat
so you don't sound dumb, but come on.</i>

59
00:04:16,507 --> 00:04:19,218
Our financial institutions are strong.

60
00:04:20,177 --> 00:04:22,596
<i>But there were some
who saw it coming.</i>

61
00:04:22,680 --> 00:04:24,766
<i>While the whole world
was having a big old party,</i>

62
00:04:24,848 --> 00:04:28,101
<i>a few outsiders and weirdos
saw what no one else could.</i>

63
00:04:28,185 --> 00:04:31,773
<i>Not me. I'm not a weirdo.
I'm pretty fucking cool.</i>

64
00:04:31,855 --> 00:04:33,858
<i>But we'll meet again later.</i>

65
00:04:34,358 --> 00:04:37,110
<i>These outsiders saw the giant lie
at the heart of the economy.</i>

66
00:04:37,194 --> 00:04:38,612
<i>And they saw it by doing something</i>

67
00:04:38,696 --> 00:04:41,490
<i>the rest of the suckers
never thought to do.</i>

68
00:04:42,408 --> 00:04:43,742
<i>They looked.</i>

69
00:04:56,547 --> 00:04:58,882
<i>During the 1930s,</i>

70
00:05:00,509 --> 00:05:05,180
the housing market
collapsed nationwide

71
00:05:06,557 --> 00:05:08,685
by roughly 80%.

72
00:05:08,768 --> 00:05:13,898
I mean, half of all mortgage debt
was in default.

73
00:05:13,981 --> 00:05:16,651
And, I mean, there were very

74
00:05:17,776 --> 00:05:21,279
specific identifiers,
extremely recognizable.

75
00:05:24,199 --> 00:05:25,242
I mean, for instance,

76
00:05:25,367 --> 00:05:28,579
one of the hallmarks of mania

77
00:05:28,913 --> 00:05:30,247
is the rapid rise

78
00:05:30,372 --> 00:05:32,417
in complexity and the rates of fraud.

79
00:05:32,500 --> 00:05:35,920
And did you know that they're going up?

80
00:05:55,439 --> 00:05:57,358
<i>I've always been</i>

81
00:05:57,442 --> 00:05:59,444
<i>more comfortable alone.</i>

82
00:06:06,742 --> 00:06:11,372
<i>I believe maybe
it's because of my glass eye.</i>

83
00:06:13,790 --> 00:06:16,586
<i>I lost the eye in a childhood illness.</i>

84
00:06:20,923 --> 00:06:23,259
<i>It separates me from people.</i>

85
00:06:27,305 --> 00:06:29,682
<i>And did you know that they are going</i>

86
00:06:29,766 --> 00:06:30,891
up?

87
00:06:30,975 --> 00:06:34,478
The highest fraud rates since the 1930s.

88
00:06:34,562 --> 00:06:36,898
Hey, hey, it's okay. It's okay.

89
00:06:36,980 --> 00:06:38,941
No, I didn't know that.

90
00:06:43,153 --> 00:06:47,324
In 1933, the fourth year
of the Great Depression.

91
00:06:47,492 --> 00:06:49,159
Let's wash it off and put it back in.

92
00:06:49,242 --> 00:06:51,204
You were playing so great, son.

93
00:06:51,329 --> 00:06:53,331
I even heard the coach say it.

94
00:06:54,499 --> 00:06:56,750
Can we just go home?

95
00:06:56,834 --> 00:07:01,004
<i>Most social interactions
are awkward for me and for the person.</i>

96
00:07:01,088 --> 00:07:04,591
<i>Even when I try
to compliment someone,</i>

97
00:07:04,675 --> 00:07:06,052
<i>it comes out wrong.</i>

98
00:07:06,968 --> 00:07:10,555
You have a very nice haircut.
Did you do it yourself?

99
00:07:11,473 --> 00:07:12,641
What?

100
00:07:12,725 --> 00:07:15,228
No. No, I...

101
00:07:23,860 --> 00:07:25,696
I'm sorry. I'm just...

102
00:07:31,410 --> 00:07:32,577
I'm going on and on.

103
00:07:32,702 --> 00:07:34,413
My wife told me I need to share more.

104
00:07:36,374 --> 00:07:38,209
- That seems healthy.
- Yeah.

105
00:07:51,012 --> 00:07:52,389
So do I get the job?

106
00:07:52,514 --> 00:07:54,850
I really think I could help your fund.

107
00:07:56,226 --> 00:07:57,603
Yeah.

108
00:07:57,687 --> 00:07:59,312
Yeah, sure. Go on.

109
00:08:02,024 --> 00:08:05,278
- You're...
- David. Great.

110
00:08:05,360 --> 00:08:07,196
I guess I'll go find a desk.

111
00:08:07,279 --> 00:08:09,865
Is there anything you want me
to work on for start...

112
00:08:12,910 --> 00:08:14,286
Yeah.

113
00:08:14,370 --> 00:08:16,209
You could let me know later.
I could come back.

114
00:08:18,790 --> 00:08:23,336
Did you think it was strange when

115
00:08:23,420 --> 00:08:25,923
the tech bubble burst in 2001

116
00:08:26,007 --> 00:08:28,800
and the housing market in San Jose,

117
00:08:28,884 --> 00:08:31,095
the tech capital of the world,

118
00:08:32,596 --> 00:08:34,347
went up?

119
00:08:34,432 --> 00:08:36,475
- Wasn't that strange?
- No.

120
00:08:36,558 --> 00:08:39,187
No, it's housing.
Housing is always stable.

121
00:08:39,269 --> 00:08:40,312
Low risk. It's solid.

122
00:08:40,395 --> 00:08:42,355
That's the idea, yeah.

123
00:08:42,440 --> 00:08:44,192
I want you to get me

124
00:08:44,274 --> 00:08:47,485
the top 20 selling mortgage bonds.

125
00:08:47,570 --> 00:08:50,405
So you want to know what the top 20
selling mortgage bonds are?

126
00:08:50,489 --> 00:08:54,826
No, no, no, I want to know
what mortgages are in each one.

127
00:08:56,245 --> 00:08:59,206
Okay, aren't those
mortgages made up of...

128
00:08:59,289 --> 00:09:00,750
Wait, aren't those bonds made up

129
00:09:00,832 --> 00:09:02,876
of thousands and thousands
of mortgages?

130
00:09:02,960 --> 00:09:04,419
Yeah.

131
00:09:08,466 --> 00:09:09,966
Right away, Dr. Burry.

132
00:09:29,028 --> 00:09:33,365
I am a nice guy all day long.

133
00:09:33,448 --> 00:09:36,118
Ask anyone, I'm a pleasure to work with.

134
00:09:38,037 --> 00:09:42,375
But the second my son
screws up, I am...

135
00:09:43,042 --> 00:09:45,543
...yelling at him
just like my dad did to me.

136
00:09:48,880 --> 00:09:51,591
I hear the words that are
coming out of my mouth and...

137
00:09:51,676 --> 00:09:54,470
Sorry I'm late! No cabs.

138
00:09:56,639 --> 00:09:58,224
So, get this.

139
00:09:58,975 --> 00:10:01,476
I met with this retail banker yesterday.

140
00:10:01,726 --> 00:10:04,145
I'm supposed to be getting him
to invest in a fund,

141
00:10:04,230 --> 00:10:05,563
but instead

142
00:10:05,648 --> 00:10:08,525
I start grilling him about
overdraft penalties

143
00:10:08,609 --> 00:10:11,611
and how his bank will let
a customer write 10-12 checks

144
00:10:11,696 --> 00:10:12,947
before they tell them they're overdrawn.

145
00:10:13,029 --> 00:10:16,951
And this creep is making billions off
screwing over people this way.

146
00:10:17,033 --> 00:10:18,827
And I'm getting madder and madder.

147
00:10:18,911 --> 00:10:22,289
And I ask him,
I look him in the face and I say,

148
00:10:22,373 --> 00:10:24,207
"How can you sleep at night

149
00:10:24,708 --> 00:10:28,169
"knowing that you are
ripping off working people?"

150
00:10:28,254 --> 00:10:29,963
And you know what he did? He left.

151
00:10:30,047 --> 00:10:32,758
He just walks out of the lunch,
doesn't say a word.

152
00:10:32,841 --> 00:10:33,842
What the fuck is that?

153
00:10:33,926 --> 00:10:36,261
Who's fucked up in that scenario? Am I?

154
00:10:36,345 --> 00:10:38,806
Or is this douchebag,
who leaves me hanging?

155
00:10:38,889 --> 00:10:40,140
Is he the fucked up one?

156
00:10:40,224 --> 00:10:43,019
We have talked about
this numerous times.

157
00:10:43,101 --> 00:10:46,230
You can't come in late
and hijack the entire session.

158
00:10:46,313 --> 00:10:47,773
What do you mean?
I didn't hijack the meeting.

159
00:10:47,856 --> 00:10:50,192
- Did I hijack the session?
- Yeah.

160
00:10:50,650 --> 00:10:53,111
- What do you do?
- I'm in commodities.

161
00:10:53,195 --> 00:10:54,488
Good luck with that.

162
00:10:54,572 --> 00:10:58,158
Mark, I know
you suffered a terrible loss.

163
00:10:58,241 --> 00:10:59,659
Maybe you want to talk about that.

164
00:10:59,744 --> 00:11:00,785
I don't talk about that.

165
00:11:00,870 --> 00:11:02,288
Hold on.

166
00:11:02,370 --> 00:11:03,706
Hold on...

167
00:11:03,788 --> 00:11:06,625
Shit, I have to take this. Sorry. Sorry.

168
00:11:07,543 --> 00:11:09,669
No... I don't care, Porter.

169
00:11:09,754 --> 00:11:11,339
This guy's whole business
is built on ripping people off.

170
00:11:11,422 --> 00:11:12,965
How long can that last?

171
00:11:14,466 --> 00:11:15,634
Bye, everybody!

172
00:11:16,719 --> 00:11:18,386
95...

173
00:11:18,636 --> 00:11:20,764
That's 30 days late... Sixty days late...

174
00:11:23,225 --> 00:11:25,727
They pay on time...

175
00:11:28,605 --> 00:11:30,231
These FICO scores...

176
00:11:35,946 --> 00:11:38,948
<i>Late. And they caught up
on their payments...</i>

177
00:11:39,033 --> 00:11:40,533
<i>Another 30 days late...</i>

178
00:11:40,618 --> 00:11:43,870
<i>LTV, 95... LTV, 90...
They caught up on their payments...</i>

179
00:11:43,953 --> 00:11:45,498
<i>Sixty days late? Jesus!</i>

180
00:11:45,581 --> 00:11:47,707
<i>LTV, 110? I've never heard of that!</i>

181
00:11:47,792 --> 00:11:49,125
<i>Thirty days late, rate adjusts...</i>

182
00:11:50,126 --> 00:11:51,379
<i>In '07 rate adjusts...</i>

183
00:11:51,461 --> 00:11:52,629
<i>In '06 rate adjusts...</i>

184
00:11:52,754 --> 00:11:55,048
<i>95... 90... Jesus!</i>

185
00:11:56,759 --> 00:11:58,385
He hasn't moved all day.

186
00:11:58,469 --> 00:12:00,804
He does this every few days.

187
00:12:00,888 --> 00:12:02,556
He hasn't spoken to me
since he hired me.

188
00:12:02,639 --> 00:12:04,057
<i>Maybe the LTV's at... High-risk,</i>

189
00:12:04,140 --> 00:12:06,394
<i>interest-only... I never heard
of that mortgage history,</i>

190
00:12:06,476 --> 00:12:09,230
<i>I never heard of that... How?</i>

191
00:12:09,312 --> 00:12:10,605
Michael, how are you, guy?

192
00:12:10,688 --> 00:12:13,734
<i>Lawrence, I found
something really interesting.</i>

193
00:12:13,817 --> 00:12:15,735
Great, Michael. Whenever you
find something interesting,

194
00:12:15,820 --> 00:12:17,028
<i>we all tend to make money.</i>

195
00:12:17,113 --> 00:12:19,948
<i>- What stock are you valuing?
- No, no, no, no. No stocks.</i>

196
00:12:20,032 --> 00:12:22,076
I want to short the housing market.

197
00:12:23,494 --> 00:12:26,163
Really? But the housing market
is rock solid.

198
00:12:26,663 --> 00:12:28,081
<i>Greenspan just said</i>

199
00:12:28,164 --> 00:12:30,708
<i>bubbles are regional, defaults are rare.</i>

200
00:12:30,835 --> 00:12:32,961
Tell them I'll be there in a minute.

201
00:12:33,044 --> 00:12:34,838
<i>- Say again?
- Look, look...</i>

202
00:12:34,922 --> 00:12:36,756
Greenspan's wrong.

203
00:12:36,841 --> 00:12:40,260
<i>I don't think you mean to do this,
but sometimes you sound very</i>

204
00:12:40,344 --> 00:12:42,638
dismissive and superior.

205
00:12:42,721 --> 00:12:43,889
It's a fact. Greenspan's wrong.

206
00:12:43,972 --> 00:12:46,307
I don't know
how else you want me to say...

207
00:12:46,392 --> 00:12:47,768
Look, Michael.

208
00:12:47,851 --> 00:12:49,477
Metro Capital backed you four years ago

209
00:12:49,562 --> 00:12:51,355
<i>when you were a doctor with a</i>

210
00:12:51,438 --> 00:12:53,774
dinky webpage
and some inheritance money.

211
00:12:53,857 --> 00:12:54,859
<i>We've all done very well.</i>

212
00:12:54,942 --> 00:12:56,067
Why don't you just stick with stocks?

213
00:12:56,152 --> 00:12:58,278
<i>Look. You know me. I, I, I...</i>

214
00:12:58,361 --> 00:13:02,115
I look for value
wherever it can be found.

215
00:13:02,198 --> 00:13:03,283
And the fact is

216
00:13:03,366 --> 00:13:06,578
that these mortgage-backed
securities are filled

217
00:13:06,703 --> 00:13:10,124
<i>with extremely risky
subprime adjustable-rate loans.</i>

218
00:13:10,206 --> 00:13:12,710
<i>And when the majority
of the adjustable rates</i>

219
00:13:12,793 --> 00:13:15,044
<i>kick in, in '07,</i>

220
00:13:15,211 --> 00:13:16,379
they will begin to fail.

221
00:13:16,463 --> 00:13:19,799
And if they fail above 15%,
the whole bond is worthless.

222
00:13:19,884 --> 00:13:22,052
<i>Michael, just take a beat.</i>

223
00:13:22,135 --> 00:13:23,345
<i>We'll talk about this later, okay?</i>

224
00:13:23,428 --> 00:13:26,474
Lawrence, please,
don't patronize me. Listen...

225
00:13:26,557 --> 00:13:28,017
<i>Mortgage-backed securities.</i>

226
00:13:28,100 --> 00:13:30,811
<i>- It, it, it...
- Subprime loans. Tranches.</i>

227
00:13:31,394 --> 00:13:33,062
<i>It's pretty confusing, right?</i>

228
00:13:33,147 --> 00:13:35,774
<i>Does it make you feel bored?
Or stupid?</i>

229
00:13:35,857 --> 00:13:38,152
<i>Well, it's supposed to.</i>

230
00:13:38,235 --> 00:13:39,820
<i>Wall Street loves
to use confusing terms</i>

231
00:13:39,903 --> 00:13:42,572
<i>to make you think only they
can do what they do.</i>

232
00:13:42,907 --> 00:13:44,115
<i>Or, even better,</i>

233
00:13:44,200 --> 00:13:46,576
<i>for you to just leave them
the fuck alone.</i>

234
00:13:46,659 --> 00:13:49,788
<i>So here's Margot Robbie
in a bubble bath to explain.</i>

235
00:13:49,871 --> 00:13:52,875
Basically, Lewis Ranieri's
mortgage bonds

236
00:13:52,957 --> 00:13:55,251
were amazingly profitable
for the big banks.

237
00:13:55,336 --> 00:13:59,298
They made billions and billions
on their 2% fee

238
00:13:59,380 --> 00:14:01,591
they got for selling each of these bonds.

239
00:14:01,674 --> 00:14:03,475
But then they started
running out of mortgages

240
00:14:03,552 --> 00:14:05,095
to put in them.

241
00:14:05,178 --> 00:14:07,847
After all, there are only so many homes

242
00:14:07,932 --> 00:14:09,682
and so many people
with good enough jobs

243
00:14:09,767 --> 00:14:11,684
to buy them, right?

244
00:14:11,769 --> 00:14:13,854
So the banks started filling these bonds

245
00:14:13,937 --> 00:14:16,105
with riskier and riskier mortgages.

246
00:14:16,190 --> 00:14:17,357
Thank you, Benter.

247
00:14:17,441 --> 00:14:21,986
That way they can keep
that profit machine churning, right?

248
00:14:22,071 --> 00:14:26,450
By the way, these risky
mortgages are called subprime.

249
00:14:26,533 --> 00:14:28,911
So whenever you hear "subprime", think

250
00:14:28,994 --> 00:14:30,453
"shit".

251
00:14:30,538 --> 00:14:34,082
Our friend Michael Burry found out
that these mortgage bonds

252
00:14:34,165 --> 00:14:37,378
that were supposedly 65% AAA

253
00:14:37,461 --> 00:14:40,213
were actually just mostly full of shit.

254
00:14:40,798 --> 00:14:43,551
So now he's going to "short" the bonds.

255
00:14:43,634 --> 00:14:45,635
Which means to "bet against".

256
00:14:46,470 --> 00:14:47,513
Got it?

257
00:14:48,221 --> 00:14:49,472
Good.

258
00:14:52,559 --> 00:14:53,851
Now fuck off.

259
00:14:53,936 --> 00:14:56,272
It's only a matter of time before
someone else sees this investment.

260
00:14:56,355 --> 00:14:58,065
We have to act now!

261
00:14:58,148 --> 00:15:00,400
How do you know
the bonds are worthless?

262
00:15:00,484 --> 00:15:02,695
Aren't they filled with fucking thousands

263
00:15:02,778 --> 00:15:03,903
<i>of pages of mortgages?</i>

264
00:15:03,988 --> 00:15:06,240
I read them.

265
00:15:06,322 --> 00:15:08,241
<i>- You read them?
- I read... Yes.</i>

266
00:15:08,325 --> 00:15:11,537
No one reads them. Only the lawyers
who put them together read them.

267
00:15:11,620 --> 00:15:16,332
Look, I don't think that they even know
what they've made.

268
00:15:16,457 --> 00:15:19,711
The housing market
is propped up on these

269
00:15:20,004 --> 00:15:22,673
bad loans, and I'm...

270
00:15:22,755 --> 00:15:24,799
It's a time bomb, and I want to short it.

271
00:15:24,883 --> 00:15:27,177
Through what instrument, Michael?

272
00:15:27,260 --> 00:15:30,264
There are no insurance contracts
or options for mortgage bonds.

273
00:15:30,346 --> 00:15:33,017
- The bonds are too stable.
- Lawrence...

274
00:15:36,352 --> 00:15:40,190
This is what I'm gonna do.
I am gonna get a bank

275
00:15:40,524 --> 00:15:42,567
to make me one.

276
00:15:43,192 --> 00:15:44,861
And then

277
00:15:45,696 --> 00:15:47,405
I'm gonna buy it.

278
00:15:48,032 --> 00:15:50,576
I don't want that kind of business.

279
00:15:50,658 --> 00:15:53,328
Money is not money. That's bad money.

280
00:15:53,995 --> 00:15:56,206
Hey! Excuse me!

281
00:15:57,582 --> 00:16:00,501
Let me ask you this. What
company treats its customers

282
00:16:00,586 --> 00:16:03,172
that shittily and succeeds?

283
00:16:04,048 --> 00:16:05,883
Fine. Okay, Goldman. You're right.

284
00:16:05,966 --> 00:16:07,301
<i>Mark Baum had built his career</i>

285
00:16:07,384 --> 00:16:09,427
<i>on never assuming anyone
or any company</i>

286
00:16:09,510 --> 00:16:11,179
<i>was legit without proving it.</i>

287
00:16:11,263 --> 00:16:12,764
<i>When he was a kid
he excelled at studying</i>

288
00:16:12,847 --> 00:16:14,892
<i>the Talmud in Yeshiva. Whatever.</i>

289
00:16:14,975 --> 00:16:16,894
<i>But one day his rabbi told his mom why.</i>

290
00:16:18,062 --> 00:16:21,065
Paul is a fine boy,
and Mark is an excellent student

291
00:16:21,190 --> 00:16:23,775
of the Torah and the Talmud.

292
00:16:23,859 --> 00:16:25,818
Then what's the problem, rabbi?

293
00:16:25,903 --> 00:16:29,072
It's the reason Mark is studying so hard.

294
00:16:29,907 --> 00:16:33,076
He's looking for inconsistencies
in the word of God!

295
00:16:35,828 --> 00:16:37,998
So has he found any?

296
00:16:39,082 --> 00:16:42,336
<i>Later, Baum started
his own fund on Wall Street.</i>

297
00:16:42,418 --> 00:16:43,859
<i>He had an amazing nose for bullshit.</i>

298
00:16:43,921 --> 00:16:45,923
<i>And he wasn't afraid to let
anyone know when and where</i>

299
00:16:46,005 --> 00:16:48,634
<i>the bull had gone number two.</i>

300
00:16:48,716 --> 00:16:50,344
<i>But then a tragedy happened to Mark,</i>

301
00:16:50,427 --> 00:16:51,886
<i>and it turned his world view dark</i>

302
00:16:51,970 --> 00:16:54,306
<i>and ready to believe
the whole system was a lie.</i>

303
00:16:54,389 --> 00:16:55,932
Hold on.

304
00:16:56,015 --> 00:16:58,851
It's Cynthia.
I'll be in the office in 20 minutes.

305
00:16:59,769 --> 00:17:00,979
Hi, honey.

306
00:17:02,438 --> 00:17:06,109
The therapist called. You did it again.

307
00:17:06,527 --> 00:17:09,278
There were no cabs.
What was I supposed to do?

308
00:17:09,363 --> 00:17:11,030
I worry about you, Mark.

309
00:17:11,115 --> 00:17:12,449
<i>At least I went.</i>

310
00:17:13,741 --> 00:17:15,702
You're running around like
you have to right

311
00:17:15,786 --> 00:17:17,621
- every wrong in the world.
- Okay.

312
00:17:17,746 --> 00:17:18,913
<i>You're so angry.</i>

313
00:17:18,997 --> 00:17:20,415
Fine. You know what?

314
00:17:20,499 --> 00:17:23,419
<i>I'm a mean guy and I'm pissed off.</i>

315
00:17:23,501 --> 00:17:25,421
But it is a shit storm out here, sweetie.

316
00:17:25,503 --> 00:17:28,798
You have no idea
the kind of crap people are pulling.

317
00:17:28,882 --> 00:17:31,593
And everyone's walking around
like they're in a goddamn Enya video.

318
00:17:33,261 --> 00:17:34,721
They're all getting screwed, you know.

319
00:17:34,805 --> 00:17:37,391
You know what they care about?
They care about the ballgame.

320
00:17:37,473 --> 00:17:40,352
Or they care about
what actress just went into rehab.

321
00:17:40,435 --> 00:17:42,479
I think you should try medication.

322
00:17:42,563 --> 00:17:45,732
No, no. We agreed.
If it interfered with work.

323
00:17:45,816 --> 00:17:47,651
You hate Wall Street.
Maybe it's time to quit.

324
00:17:48,152 --> 00:17:50,112
- I love my job.
- You hate your job.

325
00:17:50,194 --> 00:17:52,239
- I love my job.
- You're miserable.

326
00:17:52,322 --> 00:17:54,324
I love my job. I love my job, honey.

327
00:17:55,284 --> 00:17:56,576
Mark...

328
00:17:57,786 --> 00:18:00,873
I am sad every day
about what happened.

329
00:18:00,955 --> 00:18:04,292
<i>I know you must feel the same,
but you never show it.</i>

330
00:18:10,548 --> 00:18:13,050
I know how close you were
to your brother.

331
00:18:16,430 --> 00:18:17,513
<i>Paul.</i>

332
00:18:18,557 --> 00:18:20,183
<i>Where'd you go, Paul?</i>

333
00:18:25,439 --> 00:18:26,690
<i>Paul!</i>

334
00:18:32,362 --> 00:18:35,115
Every day I think you're gonna
talk about it, but you never do.

335
00:18:38,993 --> 00:18:42,748
Will you at least think about the idea
of making a change?

336
00:18:42,830 --> 00:18:45,666
<i>Fine. Fine. Honey, you know what?
I will consider it.</i>

337
00:18:45,750 --> 00:18:49,128
But, honestly, Cynthia.
I'm okay. I really am.

338
00:18:49,212 --> 00:18:51,173
Hey, hey, hey! No, no.

339
00:18:51,256 --> 00:18:54,634
My cab. That's my cab.
That's my cab. That is my cab.

340
00:18:54,718 --> 00:18:56,302
<i>- Schmuck. Fuck you.
- Fuck you.</i>

341
00:18:56,385 --> 00:18:58,055
<i>- Fuck you.
- Fuck you.</i>

342
00:18:59,056 --> 00:19:00,557
I'll call you later.

343
00:19:07,940 --> 00:19:12,027
I want to buy swaps
on mortgage bonds.

344
00:19:12,109 --> 00:19:14,445
A credit default swap that will pay off

345
00:19:15,489 --> 00:19:17,990
if the underlying bond fails.

346
00:19:18,741 --> 00:19:20,326
You want to bet against
the housing market?

347
00:19:20,410 --> 00:19:22,371
- Yes.
- Why?

348
00:19:22,453 --> 00:19:23,622
Those bonds only fail

349
00:19:23,704 --> 00:19:26,165
if millions of Americans
don't pay their mortgages.

350
00:19:26,250 --> 00:19:28,669
That's never happened in history.

351
00:19:28,751 --> 00:19:31,672
If you'll excuse me, Dr. Burry,
it seems like a foolish investment.

352
00:19:31,755 --> 00:19:34,508
Well, based on prevailing sentiment

353
00:19:34,590 --> 00:19:36,634
of the market and banks
in popular culture,

354
00:19:36,718 --> 00:19:39,011
yes, it's a foolish investment.

355
00:19:39,096 --> 00:19:41,597
But... Everyone's wrong.

356
00:19:43,182 --> 00:19:44,684
That's a good one.

357
00:19:47,019 --> 00:19:48,689
This is Wall Street, Dr. Burry.

358
00:19:48,771 --> 00:19:50,731
If you offer us free money,
we are going to take it.

359
00:19:50,816 --> 00:19:55,444
My one concern is that
when the bonds fail,

360
00:19:56,572 --> 00:20:00,116
I want to be certain of payment

361
00:20:00,200 --> 00:20:02,952
in case of solvency issues
with your bank.

362
00:20:03,953 --> 00:20:06,330
I'm sorry, are you for real?

363
00:20:06,414 --> 00:20:08,040
You wanna bet against
the housing market

364
00:20:08,125 --> 00:20:09,459
and you're worried we won't pay you?

365
00:20:09,542 --> 00:20:11,127
Yes, that's correct.

366
00:20:22,471 --> 00:20:24,348
...unless the market crashes.

367
00:20:24,473 --> 00:20:26,684
The market on housing's
never gonna crash

368
00:20:26,768 --> 00:20:29,563
because it's so solid right now.

369
00:20:29,645 --> 00:20:32,398
I mean, who doesn't pay
their mortgages?

370
00:20:39,615 --> 00:20:40,656
Dr. Burry,

371
00:20:40,740 --> 00:20:43,076
we could work out
a pay-as-we-go structure

372
00:20:43,160 --> 00:20:45,162
that would pay out if the bonds fail.

373
00:20:45,244 --> 00:20:46,805
But it would also apply
to your payments

374
00:20:46,829 --> 00:20:48,789
if the value of the
mortgage bond goes up.

375
00:20:48,874 --> 00:20:51,585
You'd have to pay us monthly premiums.

376
00:20:51,667 --> 00:20:54,378
Is that acceptable, Dr. Burry?

377
00:20:56,839 --> 00:20:58,174
Yes. Yes.

378
00:20:59,175 --> 00:21:02,304
I have prospectuses
on six mortgage-backed

379
00:21:02,386 --> 00:21:04,556
securities I want to short.

380
00:21:09,019 --> 00:21:10,770
Majority of the mortgages...

381
00:21:22,074 --> 00:21:24,617
I don't see us losing
any money on these at all.

382
00:21:38,089 --> 00:21:40,759
Dr. Burry, these should be fine.

383
00:21:40,842 --> 00:21:42,760
Yeah. We're prepared
to sell you $5 million

384
00:21:42,844 --> 00:21:44,723
in credit default swaps
on these mortgage bonds.

385
00:21:45,931 --> 00:21:47,348
Can we make it $100 million?

386
00:21:50,227 --> 00:21:52,604
Absolutely, we can make it $100 million.

387
00:21:54,189 --> 00:21:57,401
We'll be in touch,
send some paperwork over.

388
00:22:00,903 --> 00:22:03,490
I like these cups.
Can I take one for my son?

389
00:22:03,573 --> 00:22:05,325
Have... Yes. Yes.

390
00:22:05,409 --> 00:22:06,910
Thank you.

391
00:22:06,993 --> 00:22:08,369
Have two.

392
00:22:28,347 --> 00:22:31,351
Is there any way to do $200 million?

393
00:22:32,810 --> 00:22:35,439
I mean, we can. But are you sure?

394
00:22:36,355 --> 00:22:39,526
Absolutely. Absolutely, we can do that.

395
00:22:53,248 --> 00:22:56,625
We do different projects.
We do gardening.

396
00:22:56,710 --> 00:22:58,420
The bonds I'd like to bet against.

397
00:23:00,172 --> 00:23:01,673
It's not bad seeing yourself
on the big screen.

398
00:23:01,757 --> 00:23:02,758
It's very cool.

399
00:23:03,799 --> 00:23:07,471
<i>I ordered the 24-ounce T-bone,
which was choice.</i>

400
00:23:07,554 --> 00:23:09,013
<i>- I went for volume...
- Yeah.</i>

401
00:23:09,096 --> 00:23:10,723
<i>...rather than prime.</i>

402
00:23:10,807 --> 00:23:13,477
I went for subprime, and the gist was...

403
00:23:20,817 --> 00:23:23,111
Can I have like, lettuce,
tomato, no onions?

404
00:23:23,944 --> 00:23:27,240
So, no onions. Lettuce,
tomato, Thousand Island okay?

405
00:23:27,324 --> 00:23:28,325
Yeah.

406
00:23:35,373 --> 00:23:37,084
Hey, Randall! What's with the Dom?

407
00:23:37,166 --> 00:23:39,044
Bonuses aren't for three months.

408
00:23:39,126 --> 00:23:43,089
We just sold $200 million
in credit swaps for mortgage bonds.

409
00:23:43,173 --> 00:23:45,342
Some fund manager from California.

410
00:23:45,467 --> 00:23:46,801
It's fucking crazy, right?

411
00:23:46,884 --> 00:23:47,969
A whole new way to make money, Doug.

412
00:23:48,052 --> 00:23:50,305
Wait, wait. I didn't know
there were swaps on mortgages.

413
00:23:50,387 --> 00:23:52,973
There are now.
We made it for him.

414
00:23:53,057 --> 00:23:54,726
He must have gone off
his Zoloft or something.

415
00:23:54,809 --> 00:23:56,144
I don't know.

416
00:23:56,228 --> 00:23:58,020
- Want to join? No?
- Just a second.

417
00:23:59,230 --> 00:24:00,648
Hey, Jared.

418
00:24:00,731 --> 00:24:02,192
Did you hear about the deal
that Randall just did

419
00:24:02,275 --> 00:24:03,484
with some fund manager?

420
00:24:03,567 --> 00:24:05,362
Randall? Bullshit.

421
00:24:05,820 --> 00:24:07,661
He's a foot soldier.
I'm sure it's a shit deal.

422
00:24:07,739 --> 00:24:08,990
No, it's for real.

423
00:24:10,200 --> 00:24:11,617
I told you we'd meet later.

424
00:24:11,701 --> 00:24:14,121
Unfortunately, it's in a place
like this which I would never be.

425
00:24:14,203 --> 00:24:16,873
I never hung out with
these idiots after work, ever.

426
00:24:16,957 --> 00:24:18,750
I had fashion friends.

427
00:24:19,166 --> 00:24:22,503
Apparently, this guy wanted $200 mil
in credit default swaps.

428
00:24:22,586 --> 00:24:24,338
Randall made the sale.
Can you believe it?

429
00:24:24,422 --> 00:24:26,633
Somebody shorted $200 mil
on mortgage bonds?

430
00:24:26,715 --> 00:24:30,136
That was just with Deutsche.
Word is he hit half the town.

431
00:24:31,011 --> 00:24:32,138
How much in total?

432
00:24:32,221 --> 00:24:33,932
$1.3 billion.

433
00:24:34,015 --> 00:24:37,853
<i>What? That's pretty
much all of Scion's liquidity.</i>

434
00:24:37,935 --> 00:24:40,020
<i>Michael, this is highly distressing.</i>

435
00:24:40,105 --> 00:24:41,522
<i>Lawrence, that is not</i>

436
00:24:41,605 --> 00:24:44,151
all of our liquidity.

437
00:24:44,233 --> 00:24:45,442
And I'm not certain

438
00:24:45,527 --> 00:24:47,737
<i>that you really understand this trade.</i>

439
00:24:47,863 --> 00:24:48,904
This is a certainty.

440
00:24:48,989 --> 00:24:52,075
<i>Mike, I consider myself a mentor to you.</i>

441
00:24:52,159 --> 00:24:55,996
<i>But our company is not comfortable
with this investment. Am I being clear?</i>

442
00:24:56,078 --> 00:24:58,330
Lawrence, I have full autonomy

443
00:24:58,414 --> 00:25:01,334
when it comes to investment strategy.

444
00:25:01,417 --> 00:25:02,544
You can read our agreement.

445
00:25:02,626 --> 00:25:05,963
<i>Do not throw our inception
agreement in my face, Michael.</i>

446
00:25:06,047 --> 00:25:07,132
<i>We had an underlying</i>

447
00:25:07,214 --> 00:25:09,800
<i>understanding you wouldn't
act like a goddamn crazy man.</i>

448
00:25:09,884 --> 00:25:11,469
This is not crazy.

449
00:25:11,553 --> 00:25:13,012
It's all very logical.

450
00:25:13,096 --> 00:25:15,307
<i>So, now we pay up premiums
on these swaps</i>

451
00:25:15,891 --> 00:25:18,643
against the housing market
until the mortgages fail?

452
00:25:18,727 --> 00:25:20,394
In other words, we lose millions

453
00:25:20,519 --> 00:25:23,190
<i>until something that's
never happened before happens?</i>

454
00:25:27,067 --> 00:25:28,068
That's correct.

455
00:26:01,603 --> 00:26:02,854
Hello, Mark Baum.

456
00:26:02,938 --> 00:26:05,022
Oh, hey, Kathy, you busted me.

457
00:26:05,105 --> 00:26:07,150
- I had a personal thing this afternoon.
- I'm not your babysitter.

458
00:26:07,233 --> 00:26:09,861
If FrontPoint makes money
for Morgan Stanley, I'm happy.

459
00:26:09,944 --> 00:26:12,239
Okay. Hey, did I hear you're expecting?

460
00:26:12,321 --> 00:26:13,698
We're expecting to be expecting.

461
00:26:13,781 --> 00:26:15,450
IVF's are cleaning us out
but we're staying positive...

462
00:26:15,532 --> 00:26:17,035
That's exciting!

463
00:26:21,163 --> 00:26:24,166
...lump on my ball.
And I go in for a scan.

464
00:26:25,376 --> 00:26:29,088
Turns out that I have a very large thing
called an epididymis.

465
00:26:29,172 --> 00:26:31,715
Which is a thing
that goes around the ball

466
00:26:31,799 --> 00:26:33,509
and is like a sac underneath.

467
00:26:33,593 --> 00:26:34,635
I have an extremely

468
00:26:34,719 --> 00:26:36,554
- pronounced epididymis.
- I'm riveted...

469
00:26:36,637 --> 00:26:38,682
I'm riveted by this.
Do you have any pictures?

470
00:26:38,765 --> 00:26:42,309
It's almost as large as
another testicle unto itself.

471
00:26:42,394 --> 00:26:44,479
So get this. Cynthia...

472
00:26:44,561 --> 00:26:48,817
Guys. Cynthia wants me to quit
and open a B&B in Vermont.

473
00:26:48,900 --> 00:26:52,278
That sounds great. I'd love to see
Mark Baum run a bed and breakfast.

474
00:26:52,362 --> 00:26:54,322
Like, "Here's your steel-cut
oatmeal, asshole. "

475
00:26:54,405 --> 00:26:56,991
<i>Mark refused to kiss the ring
of the people with the checkbooks,</i>

476
00:26:57,075 --> 00:27:00,202
<i>so he had to set up his fund
under Morgan Stanley's umbrella.</i>

477
00:27:00,828 --> 00:27:03,914
<i>His small team reflected
his distrust of the system.</i>

478
00:27:03,999 --> 00:27:05,416
You guys are sick. You're sick.

479
00:27:05,541 --> 00:27:07,669
She says this job
is making me unhappy.

480
00:27:07,751 --> 00:27:08,795
But you're happy when you're unhappy.

481
00:27:08,877 --> 00:27:10,380
I am happy when I'm unhappy.

482
00:27:10,462 --> 00:27:11,463
<i>Vinnie Daniel.</i>

483
00:27:11,548 --> 00:27:12,673
You know how to make a muffin?

484
00:27:12,757 --> 00:27:14,477
<i>- Mark's numbers guy.
- Do you even know how</i>

485
00:27:14,550 --> 00:27:16,030
- to do laundry? Make a bed?
- Okay...

486
00:27:16,094 --> 00:27:18,721
<i>Vinnie lost his father to a violent crime
when he was young.</i>

487
00:27:18,805 --> 00:27:20,640
<i>Just like Mark, he didn't talk about it.</i>

488
00:27:20,723 --> 00:27:21,974
I don't talk about that.

489
00:27:22,057 --> 00:27:24,394
Cynthia's no joke. She could actually
make him move to Vermont.

490
00:27:24,477 --> 00:27:26,145
I mean, she made me
start wearing a seatbelt.

491
00:27:26,229 --> 00:27:27,939
<i>- Hey, you want me to...
- Porter Collins.</i>

492
00:27:28,064 --> 00:27:30,232
<i>Former Olympic rower
who went to Brown.</i>

493
00:27:30,317 --> 00:27:31,984
<i>He worked with Baum at a previous firm</i>

494
00:27:32,067 --> 00:27:33,987
<i>and couldn't figure out
why no one listened to Baum.</i>

495
00:27:34,069 --> 00:27:36,155
<i>The guy with all the good ideas.</i>

496
00:27:36,239 --> 00:27:38,032
Sorry. I think you have
the wrong FrontPoint.

497
00:27:38,157 --> 00:27:40,958
'Cause there is another FrontPoint
in this same building that is bonds.

498
00:27:40,993 --> 00:27:43,747
<i>And Danny Moses.
The optimist of the bunch.</i>

499
00:27:44,663 --> 00:27:45,874
<i>And a hell of a trader.</i>

500
00:27:45,957 --> 00:27:49,085
<i>Which is the only reason they put up
with his bullshit optimism.</i>

501
00:27:49,169 --> 00:27:50,420
That was a weird call.

502
00:27:50,502 --> 00:27:53,798
You take longer with a wrong number
than anybody else.

503
00:27:53,882 --> 00:27:56,509
It was this guy from Deutsche

504
00:27:56,593 --> 00:27:59,179
who was talking about
shorting housing bonds.

505
00:28:00,555 --> 00:28:03,016
And then in the middle of the call
I realized he had the wrong FrontPoint.

506
00:28:03,098 --> 00:28:05,434
And then... 'Cause he wanted
the one on the 8th floor.

507
00:28:06,102 --> 00:28:08,020
He wanted to short housing bonds?

508
00:28:08,104 --> 00:28:09,146
That happens like five times a day

509
00:28:09,230 --> 00:28:10,690
that somebody gets
the wrong FrontPoint.

510
00:28:10,773 --> 00:28:12,942
- We should change our name.
- Wait. Wait.

511
00:28:13,026 --> 00:28:14,986
He wanted to short housing bonds?

512
00:28:15,278 --> 00:28:17,071
Who bets against housing?

513
00:28:18,030 --> 00:28:20,532
- What's the ABX at?
- What's ABX?

514
00:28:20,616 --> 00:28:23,452
It tracks subprime mortgage
bond value. Go back to sleep.

515
00:28:23,869 --> 00:28:26,163
The ABX is at...

516
00:28:26,288 --> 00:28:29,541
Wow, it's down! It's down
three points since last year.

517
00:28:29,625 --> 00:28:31,877
That's weird. I haven't heard
a peep about that.

518
00:28:31,961 --> 00:28:33,003
What was this guy's name?

519
00:28:33,087 --> 00:28:35,214
Jared Vennett. Vennett.

520
00:28:35,298 --> 00:28:37,549
<i>That's right.
These lucky sons of bitches</i>

521
00:28:37,634 --> 00:28:40,386
<i>caught wind of one of the best trades
in Wall Street history</i>

522
00:28:40,470 --> 00:28:42,055
<i>from a wrong number.</i>

523
00:28:42,137 --> 00:28:44,391
<i>They should have paid 10%
to my fuckstick assistant.</i>

524
00:28:44,473 --> 00:28:46,809
His name was Jared Vennett. Vennett.

525
00:28:46,893 --> 00:28:48,728
Jared Vennett from Deutsche.
Sounded very sketchy.

526
00:28:48,811 --> 00:28:49,813
Sounds like a douchebag.

527
00:28:50,646 --> 00:28:52,040
Do you smell that?

528
00:28:52,673 --> 00:28:53,857
Do you smell that?

529
00:28:53,982 --> 00:28:55,234
I smell money.

530
00:28:56,027 --> 00:28:57,444
This is your basic mortgage...

531
00:29:01,240 --> 00:29:03,410
Okay, hi. How are you?

532
00:29:03,951 --> 00:29:05,161
Have a seat.

533
00:29:05,244 --> 00:29:07,997
Okay, Mr. Vennett from Deutsche Bank.
What do we have?

534
00:29:12,544 --> 00:29:14,128
There you go.

535
00:29:17,589 --> 00:29:20,134
So, how many people have you talked to
about this trade?

536
00:29:20,218 --> 00:29:22,971
A few. There's definitely some interest.

537
00:29:23,054 --> 00:29:24,471
- No!
- My boss would have my ass...

538
00:29:24,556 --> 00:29:25,973
- N.O.!
- You crazy, Jared?

539
00:29:26,057 --> 00:29:27,599
- Get lost.
- Fuck you.

540
00:29:28,351 --> 00:29:31,145
Which is why you're here talking
to us, a wrong number.

541
00:29:31,229 --> 00:29:32,646
Sounds like there's a lot of interest.

542
00:29:32,730 --> 00:29:35,066
All right. A few people have invited us in

543
00:29:35,150 --> 00:29:37,527
just to laugh at me on this deal.
Is that you?

544
00:29:37,609 --> 00:29:38,611
Is that what this is?

545
00:29:38,694 --> 00:29:39,737
That's not what this is.

546
00:29:39,820 --> 00:29:41,614
That's just how Mark is.

547
00:29:41,698 --> 00:29:42,990
- Let's see what you got.
- I'm sorry.

548
00:29:43,074 --> 00:29:44,741
You smell that? What is that?

549
00:29:44,867 --> 00:29:46,286
- What?
- What's that smell?

550
00:29:46,702 --> 00:29:48,746
- Your cologne?
- No.

551
00:29:51,082 --> 00:29:53,792
- Opportunity.
- No. Money.

552
00:29:53,876 --> 00:29:55,170
Okay.

553
00:29:55,252 --> 00:29:56,796
- I smell money.
- Okay.

554
00:29:57,297 --> 00:29:59,965
- Chris, God damn it.
- Sorry.

555
00:30:03,178 --> 00:30:05,596
This is your basic mortgage bond.

556
00:30:05,680 --> 00:30:07,932
All right? The originals were simple.

557
00:30:08,016 --> 00:30:11,685
They were just thousands
of AAA mortgages bundled together,

558
00:30:11,769 --> 00:30:13,520
guaranteed by the U.S. government.

559
00:30:13,605 --> 00:30:15,440
The modern ones are different.

560
00:30:15,522 --> 00:30:18,442
They're private. And they're
made up of layers of tranches.

561
00:30:23,698 --> 00:30:26,116
The highest level, AAA,
is getting paid first.

562
00:30:26,201 --> 00:30:27,881
The lowest rated, B, is getting paid last,

563
00:30:27,911 --> 00:30:29,369
taking on defaults first.

564
00:30:29,453 --> 00:30:32,123
Now, obviously, if you're buying B's,
you could make more money.

565
00:30:32,207 --> 00:30:33,374
But they're a little risky.

566
00:30:33,458 --> 00:30:35,626
Sometimes they fail.

567
00:30:36,877 --> 00:30:38,212
Chris?

568
00:30:42,049 --> 00:30:44,301
Somewhere along the line,
these B's and BB's

569
00:30:44,384 --> 00:30:45,845
went from a little risky

570
00:30:45,929 --> 00:30:48,347
to dog shit. Where's the trash?

571
00:30:48,431 --> 00:30:49,432
It's right behind you.

572
00:30:49,807 --> 00:30:52,684
I'm talking rock-bottom FICO scores.

573
00:30:53,894 --> 00:30:55,438
No income verification.

574
00:30:56,564 --> 00:30:59,400
Adjustable rates. Dog shit!

575
00:31:00,902 --> 00:31:03,738
The default rates are already
up from 1% to 4%, fellas.

576
00:31:03,820 --> 00:31:06,031
And if they rise to 8%, and they will,

577
00:31:06,824 --> 00:31:09,076
a lot of these BBB's
are going to zero, too.

578
00:31:09,160 --> 00:31:10,577
And that... You're too close.

579
00:31:12,413 --> 00:31:14,374
- ... is an opportunity.
- Okay.

580
00:31:14,457 --> 00:31:18,086
You're saying that at 8% the bonds fail
and we are already at 4%?

581
00:31:18,169 --> 00:31:19,170
That's right.

582
00:31:19,253 --> 00:31:21,047
If they go to 8%, it's Armageddon?

583
00:31:21,130 --> 00:31:22,131
Yeah. That's right.

584
00:31:22,257 --> 00:31:23,967
How come nobody's talking about this?

585
00:31:24,092 --> 00:31:26,219
You're completely sure of the math?

586
00:31:26,301 --> 00:31:28,887
Look at him. That's my quant.

587
00:31:28,971 --> 00:31:30,013
Your what?

588
00:31:30,097 --> 00:31:31,891
My quantitative!

589
00:31:31,974 --> 00:31:34,644
My math specialist. Look at him.

590
00:31:34,769 --> 00:31:37,105
You notice anything different
about him? Look at his face.

591
00:31:37,188 --> 00:31:38,230
That's pretty racist.

592
00:31:38,314 --> 00:31:40,817
Look at his eyes! I'll give you a hint.

593
00:31:40,900 --> 00:31:42,442
His name's Yang!

594
00:31:43,611 --> 00:31:46,905
He won a national
math competition in China!

595
00:31:46,990 --> 00:31:49,491
He doesn't even speak English!

596
00:31:49,576 --> 00:31:51,243
Yeah, I'm sure of the math.

597
00:31:52,953 --> 00:31:56,749
Actually, my name's Jiang
and I do speak English.

598
00:31:56,833 --> 00:31:58,292
Jared likes to say I don't
because he thinks

599
00:31:58,375 --> 00:32:00,211
it makes me seem more authentic.

600
00:32:00,295 --> 00:32:02,838
And I got second in that
national math competition.

601
00:32:03,423 --> 00:32:08,303
So you're offering us a chance to short
this pile of blocks? How?

602
00:32:08,385 --> 00:32:11,013
With something called
a credit default swap.

603
00:32:12,140 --> 00:32:14,642
It's like insurance on the bond,
and if it goes bust

604
00:32:14,726 --> 00:32:17,894
you can make 10-to-1,
even 20-to-1 return.

605
00:32:17,979 --> 00:32:20,105
And it's already slowly going bust!

606
00:32:20,355 --> 00:32:22,442
10-to-1? 20-to-1? No way.

607
00:32:22,525 --> 00:32:24,484
And no one's paying attention.

608
00:32:24,986 --> 00:32:27,404
No one is paying attention!

609
00:32:27,488 --> 00:32:30,950
Because the banks are too busy
getting paid obscene fees

610
00:32:31,034 --> 00:32:32,326
to sell these bonds.

611
00:32:32,410 --> 00:32:35,163
But wait. You are the bank.
You work for the bank.

612
00:32:35,246 --> 00:32:37,289
I bet your margins
are pretty nice and fat.

613
00:32:37,373 --> 00:32:39,666
Let's not talk about
my margins, by the way.

614
00:32:39,750 --> 00:32:42,310
Being nice and fat, that's a nice shirt.
Do they make it for men?

615
00:32:43,171 --> 00:32:44,171
Aren't you the bank?

616
00:32:44,212 --> 00:32:47,133
I work for the bank.
I don't think like a bank.

617
00:32:47,215 --> 00:32:51,095
Big bank, small bank,
I like to make money. All right?

618
00:32:51,179 --> 00:32:53,890
Let me put it this way. I'm standing
in front of a burning house...

619
00:32:54,015 --> 00:32:56,768
And I'm offering you fire insurance on it.

620
00:32:56,851 --> 00:32:59,354
How can these underlying bonds
be as bad as you say?

621
00:32:59,479 --> 00:33:00,688
It wouldn't be legal.

622
00:33:00,771 --> 00:33:02,731
Nobody knows what's in them.

623
00:33:02,815 --> 00:33:04,317
Nobody knows what's in the bonds.

624
00:33:04,400 --> 00:33:07,487
I've seen some that are 65% AAA-rated

625
00:33:07,569 --> 00:33:10,530
that I know for a fact are filled with 95%

626
00:33:10,615 --> 00:33:13,409
subprime shit with FICOs below 550!

627
00:33:13,867 --> 00:33:14,993
Get the fuck out of here.

628
00:33:15,077 --> 00:33:16,453
You want me to really blow your mind?

629
00:33:16,537 --> 00:33:18,080
When the market deems
a bond too risky to buy,

630
00:33:18,163 --> 00:33:20,375
what do you think we do with it?

631
00:33:20,458 --> 00:33:23,086
- Take a guess.
- I don't know. You tell me.

632
00:33:23,169 --> 00:33:27,089
All right. You think we just
warehouse it on the books? No.

633
00:33:27,173 --> 00:33:29,092
We just repackage it
with a bunch of other shit

634
00:33:29,174 --> 00:33:31,259
that didn't sell and put it into a CDO.

635
00:33:32,095 --> 00:33:34,096
- A CDO?
- Yes. A CDO.

636
00:33:34,931 --> 00:33:36,682
- What is that?
- This is where we take a bunch of B's,

637
00:33:36,766 --> 00:33:38,934
BB's and BBB's that haven't sold,

638
00:33:39,018 --> 00:33:40,686
and we put them in a pile.

639
00:33:42,230 --> 00:33:44,231
And when the pile gets large enough,

640
00:33:44,356 --> 00:33:46,901
the whole thing is suddenly
considered diversified

641
00:33:46,983 --> 00:33:51,698
and the whores at the rating agency
give it a 92%-93% AAA rating,

642
00:33:51,780 --> 00:33:53,782
no questions asked.

643
00:33:55,451 --> 00:33:57,953
Hold it. What? Say that again.

644
00:33:58,246 --> 00:34:00,498
A collateralized debt obligation.

645
00:34:00,580 --> 00:34:02,083
It's important to understand
because it's what allowed

646
00:34:02,165 --> 00:34:06,295
a housing crisis to become a
nationwide economic disaster.

647
00:34:06,378 --> 00:34:09,590
Here's world-famous chef
Anthony Bourdain to explain.

648
00:34:14,137 --> 00:34:17,681
Okay, I'm a chef on a Sunday afternoon
setting the menu at a big restaurant.

649
00:34:17,806 --> 00:34:19,224
I ordered my fish on Friday,

650
00:34:19,307 --> 00:34:22,061
which is the mortgage bond
that Michael Burry shorted.

651
00:34:22,269 --> 00:34:24,230
But some of the fresh fish doesn't sell.

652
00:34:24,313 --> 00:34:27,733
I don't know why. Maybe it just came out
halibut has the intelligence of a dolphin.

653
00:34:27,817 --> 00:34:29,485
So, what am I going to do?

654
00:34:29,610 --> 00:34:33,114
Throw all this unsold fish,
which is the BBB level of the bond,

655
00:34:33,197 --> 00:34:35,657
in the garbage and take the loss?

656
00:34:36,617 --> 00:34:37,617
No way.

657
00:34:37,659 --> 00:34:40,079
Being the crafty
and morally onerous chef that I am,

658
00:34:40,163 --> 00:34:42,873
whatever crappy levels
of the bond I don't sell,

659
00:34:42,998 --> 00:34:44,916
I throw into a seafood stew.

660
00:34:45,001 --> 00:34:48,463
See, it's not old fish.
It's a whole new thing!

661
00:34:48,545 --> 00:34:52,257
And the best part is
they're eating 3-day-old halibut.

662
00:34:52,340 --> 00:34:54,010
That is a CDO.

663
00:34:54,135 --> 00:34:56,971
I just need to know,
how could these possibly be collated?

664
00:34:57,054 --> 00:34:59,431
Somehow you're like Dora the Explorer

665
00:34:59,514 --> 00:35:00,807
and you're the first person

666
00:35:00,891 --> 00:35:02,226
- who found this thing.
- Hold on. Hold on.

667
00:35:02,309 --> 00:35:04,186
So mortgage bonds are dog shit,

668
00:35:04,269 --> 00:35:06,481
CDOs are dog shit
wrapped in cat shit.

669
00:35:07,981 --> 00:35:09,817
Yeah, that's right.

670
00:35:09,900 --> 00:35:13,403
Institutions treat these CDOs
like they're as solid as treasury bonds,

671
00:35:13,487 --> 00:35:15,864
and they're going to zero.

672
00:35:15,947 --> 00:35:18,159
No. That can't be right.
There were $500 billion

673
00:35:18,242 --> 00:35:20,577
in housing bonds sold last year alone.

674
00:35:20,869 --> 00:35:23,498
The rating agencies, the banks,
the fucking government,

675
00:35:23,581 --> 00:35:25,583
you're saying they're
all asleep at the wheel?

676
00:35:25,666 --> 00:35:29,128
Yeah. My whole department's
long on this stuff.

677
00:35:30,003 --> 00:35:33,882
They call me Chicken Little.
They call me Bubble Boy.

678
00:35:36,552 --> 00:35:39,972
A's, zero. B's, zero.

679
00:35:40,264 --> 00:35:43,518
BB's, zero. BBB's, zero.

680
00:35:45,936 --> 00:35:47,313
And then that happens.

681
00:35:47,396 --> 00:35:49,065
What is that?

682
00:35:50,942 --> 00:35:52,652
That's America's housing market.

683
00:35:55,612 --> 00:35:56,655
Thank you.

684
00:35:56,739 --> 00:35:57,739
Fuckin' A, Jared.

685
00:35:57,824 --> 00:35:59,826
Shut your fucking mouth.

686
00:35:59,909 --> 00:36:02,077
- ... hang out with you.
- Good. Okay.

687
00:36:02,202 --> 00:36:04,329
Sack up, do the deal. Let's be friends.

688
00:36:04,413 --> 00:36:05,623
We will see. Thank you.

689
00:36:05,706 --> 00:36:06,748
- Don't bullshit me.
- All right.

690
00:36:06,833 --> 00:36:07,916
You're gonna say no, aren't you?

691
00:36:08,041 --> 00:36:10,503
No. No, I'm just evaluating right now.

692
00:36:10,585 --> 00:36:12,295
Thank you. Thank you for coming in.

693
00:36:13,380 --> 00:36:14,715
Bye, Jared.

694
00:36:20,762 --> 00:36:22,181
I don't like it.

695
00:36:23,139 --> 00:36:24,809
He's playing us.

696
00:36:25,934 --> 00:36:27,769
He's playing us.
He's got too much skin in the game

697
00:36:27,853 --> 00:36:29,521
and he's dumping his position.

698
00:36:30,481 --> 00:36:31,983
What if he's right?

699
00:36:32,065 --> 00:36:35,110
- You want him to be right.
- Yes, I do.

700
00:36:35,360 --> 00:36:38,447
The banks have given us
25% interest rates on credit cards.

701
00:36:38,530 --> 00:36:42,076
They have screwed us on student loans
that we can never get out from under.

702
00:36:42,159 --> 00:36:45,371
Then this guy walks into
my office and says

703
00:36:45,454 --> 00:36:48,416
those same banks got greedy,
they lost track of the market,

704
00:36:48,498 --> 00:36:50,543
and I can profit off of their stupidity?

705
00:36:50,626 --> 00:36:52,878
Fuck, yeah, I want him to be right!

706
00:36:52,961 --> 00:36:54,213
How come you don't hate this guy?

707
00:36:54,297 --> 00:36:55,976
He's everything
you taught us not to trust.

708
00:36:56,047 --> 00:36:57,757
I can't hate him. He is so transparent

709
00:36:57,842 --> 00:37:00,219
in his self-interest
that I kind of respect him.

710
00:37:00,302 --> 00:37:02,597
Would I buy a car from him? No.

711
00:37:03,639 --> 00:37:04,891
Is he right about the mortgage market?

712
00:37:04,974 --> 00:37:07,184
- No.
- Let's find out. Let's find out.

713
00:37:08,768 --> 00:37:10,605
Look. It's two very simple questions.

714
00:37:10,688 --> 00:37:12,188
Is there a housing bubble?

715
00:37:12,273 --> 00:37:14,858
And if there is,
how exposed are the banks?

716
00:37:14,942 --> 00:37:15,985
Yeah. Okay.

717
00:37:16,068 --> 00:37:17,485
Let's get on this quickly too.

718
00:37:17,570 --> 00:37:18,945
Because if he's right,

719
00:37:19,030 --> 00:37:22,490
every loser with a couple million bucks
and a fund is gonna be jumping on this.

720
00:37:23,034 --> 00:37:24,034
Let's go.

721
00:37:26,329 --> 00:37:27,829
Just that morning...

722
00:37:32,001 --> 00:37:35,338
JPMorgan Chase. JPMorgan Chase.

723
00:37:37,088 --> 00:37:39,467
Okay. Stop saying "JPMorgan Chase".

724
00:37:39,550 --> 00:37:40,967
I got a good feeling about this.

725
00:37:41,052 --> 00:37:42,532
It's just a meeting though, you know?

726
00:37:42,844 --> 00:37:44,764
It's just a meeting. It's something like...

727
00:37:44,847 --> 00:37:46,974
People have meetings
all the time. You know?

728
00:37:47,057 --> 00:37:48,684
People drink their coffee,
they have a meeting.

729
00:37:48,768 --> 00:37:50,101
- Brownfield Fund?
- Yes!

730
00:37:50,186 --> 00:37:52,063
- Hey. Hello.
- Ted.

731
00:37:52,146 --> 00:37:54,940
- Chris. I'm on Ted's desk.
- Chris. Okay.

732
00:37:55,023 --> 00:37:56,192
- I'm Charlie, Charlie Geller.
- Charlie.

733
00:37:56,275 --> 00:37:57,902
- Jamie Shipley. Hi.
- Jamie.

734
00:37:57,985 --> 00:38:00,947
We're so excited to get set
up on your trading platform.

735
00:38:01,030 --> 00:38:02,155
Cool.

736
00:38:02,239 --> 00:38:04,032
Here, have a seat a second.

737
00:38:04,784 --> 00:38:05,784
All right.

738
00:38:06,869 --> 00:38:09,789
So, I... Ted had asked me
to do some meeting prep.

739
00:38:09,871 --> 00:38:13,250
But I couldn't find any
marketing material on you guys.

740
00:38:13,333 --> 00:38:15,168
We just moved here from Boulder.

741
00:38:15,251 --> 00:38:16,753
- Yeah.
- Got it.

742
00:38:16,836 --> 00:38:19,215
Could we see some
of your offering documents?

743
00:38:19,297 --> 00:38:21,800
Well, Brownfield is its own money.

744
00:38:22,385 --> 00:38:24,094
- It's our money.
- Yeah.

745
00:38:24,177 --> 00:38:25,972
Can you tell us how much you manage?

746
00:38:26,054 --> 00:38:29,516
Of course. We're doing
$30 million right now.

747
00:38:29,599 --> 00:38:30,809
But we started

748
00:38:30,893 --> 00:38:33,646
- four years ago with $110,000.
- Wow.

749
00:38:33,728 --> 00:38:38,358
So, as you can see,
that's pretty phenomenal returns.

750
00:38:38,442 --> 00:38:41,653
We want to get an ISDA agreement
with JPMorgan so we can

751
00:38:41,778 --> 00:38:44,280
deal in long-term options.

752
00:38:44,364 --> 00:38:45,699
- That's really cool.
- Yeah.

753
00:38:58,586 --> 00:39:00,380
That is so cool.

754
00:39:00,463 --> 00:39:01,548
Thank you.

755
00:39:01,632 --> 00:39:05,802
But you guys are under
the capital requirements for an ISDA.

756
00:39:05,927 --> 00:39:06,929
By how much?

757
00:39:08,806 --> 00:39:12,184
One billion four hundred
seventy million, so...

758
00:39:13,184 --> 00:39:14,728
...a lot.

759
00:39:15,980 --> 00:39:17,440
This makes us look bad, doesn't it,

760
00:39:17,523 --> 00:39:20,735
that we didn't know
what the capital requirements were?

761
00:39:22,360 --> 00:39:23,778
It's not great.

762
00:39:24,280 --> 00:39:25,572
But

763
00:39:25,655 --> 00:39:28,117
keep up those returns and give us a call

764
00:39:28,199 --> 00:39:29,994
way down the line. You know.

765
00:39:30,077 --> 00:39:31,077
Okay?

766
00:39:31,161 --> 00:39:32,454
- Okay.
- Thanks, Chris.

767
00:39:32,579 --> 00:39:34,581
- Have a good one, guys.
- Thank you, Chris.

768
00:39:38,960 --> 00:39:39,961
Shit!

769
00:39:41,130 --> 00:39:42,409
Who the fuck schedules a meeting

770
00:39:42,465 --> 00:39:44,592
- at 4:50 in the afternoon?
- Oh, my, God.

771
00:39:44,675 --> 00:39:46,427
That was so painful.

772
00:39:46,510 --> 00:39:50,139
Dude, B of A and Bear
didn't even return our calls.

773
00:39:50,222 --> 00:39:52,391
And even fucking Wachovia

774
00:39:52,474 --> 00:39:54,143
- blew us off, man!
- I know.

775
00:39:54,309 --> 00:39:56,561
Here's the prospectuses
of all the other losers

776
00:39:56,644 --> 00:39:58,355
who didn't make it past the lobby.

777
00:39:58,438 --> 00:40:00,315
I don't think I can do
this anymore. You know.

778
00:40:00,398 --> 00:40:03,235
I'm young, yet.
I can still do something with my life.

779
00:40:03,318 --> 00:40:05,403
I miss Colorado anyway.
The weed's better.

780
00:40:06,362 --> 00:40:08,364
Gentlemen, I need you to leave.

781
00:40:08,490 --> 00:40:09,867
Yep, yep, we're going. Let's go.

782
00:40:09,992 --> 00:40:11,117
Look at this. Look at this.

783
00:40:11,202 --> 00:40:12,536
This guy

784
00:40:12,619 --> 00:40:15,539
says that the housing market's
a giant bubble.

785
00:40:17,916 --> 00:40:20,085
Okay, so this part
isn't totally accurate, you know.

786
00:40:20,168 --> 00:40:22,253
We didn't find Jared Vennett's
housing bubble pitch

787
00:40:22,338 --> 00:40:24,255
in the lobby of a bank that rejected us.

788
00:40:24,340 --> 00:40:25,800
The truth is

789
00:40:25,882 --> 00:40:28,760
a friend had told Charlie about it,
and I read about it

790
00:40:28,844 --> 00:40:30,262
<i>in Grant's Interest Rate Observer.</i>

791
00:40:30,346 --> 00:40:31,679
This is crazy.

792
00:40:31,764 --> 00:40:34,266
This is crazy stuff.

793
00:40:34,349 --> 00:40:37,018
Shit, he's saying that there's
10-to-1 returns

794
00:40:37,103 --> 00:40:40,731
on credit default swaps
for mortgage-backed securities?

795
00:40:40,856 --> 00:40:43,483
And the whole housing market
is about to collapse?

796
00:40:44,193 --> 00:40:45,945
<i>For Jamie and Charlie,
the housing market</i>

797
00:40:46,027 --> 00:40:48,489
<i>doomsday prediction
was music to their ears.</i>

798
00:40:56,079 --> 00:40:58,039
<i>They had started working
out of Jamie's garage</i>

799
00:40:58,123 --> 00:41:00,041
<i>with $110,000 Jamie had saved</i>

800
00:41:00,126 --> 00:41:02,210
<i>taking sailboats up and down
the East Coast.</i>

801
00:41:04,130 --> 00:41:05,922
Our investment strategy was simple.

802
00:41:06,005 --> 00:41:08,050
People hate to think about
bad things happening,

803
00:41:08,134 --> 00:41:10,469
so they always underestimate
their likelihood.

804
00:41:10,552 --> 00:41:13,054
<i>Their strategy was simple and brilliant.</i>

805
00:41:13,597 --> 00:41:14,681
What he said.

806
00:41:14,764 --> 00:41:17,476
<i>Jamie and Charlie found markets
will sell options very cheaply</i>

807
00:41:17,559 --> 00:41:19,769
<i>on things they think will never happen.</i>

808
00:41:19,853 --> 00:41:21,438
<i>So when they were wrong,
they were wrong small,</i>

809
00:41:21,521 --> 00:41:23,481
<i>but when they were right,
they were right big.</i>

810
00:41:30,322 --> 00:41:34,076
<i>Within a few years they had turned
$110,000 into $30 million.</i>

811
00:41:34,159 --> 00:41:35,880
<i>But then it was time
to go to New York City.</i>

812
00:41:35,911 --> 00:41:38,539
<i>And so far, it wasn't going very well.</i>

813
00:41:38,621 --> 00:41:40,373
So what if it does
seem interesting. No...

814
00:41:40,456 --> 00:41:43,960
No bank will give us our ISDA.
We're dead in the water.

815
00:41:45,461 --> 00:41:47,882
These kind of trades
are totally out of the question.

816
00:41:47,965 --> 00:41:49,592
We got to call Ben.

817
00:41:51,802 --> 00:41:53,304
Let's call Ben!

818
00:41:54,179 --> 00:41:56,264
<i>Ben Rickert was
a former trader in Singapore</i>

819
00:41:56,347 --> 00:41:59,101
<i>for Chase who quit
the whole game in disgust.</i>

820
00:41:59,184 --> 00:42:01,519
<i>He happened to be Jamie's neighbor
when they were in Colorado</i>

821
00:42:01,603 --> 00:42:03,771
<i>and they met walking dogs.</i>

822
00:42:03,856 --> 00:42:05,315
<i>But Ben was dark.</i>

823
00:42:05,440 --> 00:42:07,483
<i>He didn't just think
the whole system would fail.</i>

824
00:42:07,568 --> 00:42:09,777
<i>He thought the whole world
was going down.</i>

825
00:42:11,822 --> 00:42:13,942
Every one of these vegetables
is fresh from my garden.

826
00:42:16,409 --> 00:42:17,702
You guys should start your own garden.

827
00:42:17,786 --> 00:42:21,248
What you got to do is get your
soil off the petrochemicals.

828
00:42:21,331 --> 00:42:23,541
I used wood ash and urine
to help restore the soil.

829
00:42:23,626 --> 00:42:25,210
It creates ammonium nitrate.

830
00:42:25,293 --> 00:42:27,045
Seeds are gonna be the new currency.

831
00:42:27,170 --> 00:42:29,172
And not those Franken-seeds
from Monsanto.

832
00:42:29,255 --> 00:42:31,842
I'm talking about good,
healthy, organic seeds.

833
00:42:31,925 --> 00:42:33,052
Make yourself a garden.

834
00:42:33,135 --> 00:42:34,594
- Learn to live off the land.
- You're a fucking lunatic.

835
00:42:34,677 --> 00:42:36,889
<i>Ben had real experience in a big bank.</i>

836
00:42:36,972 --> 00:42:40,643
<i>Jamie and Charlie had never even been
in a Manhattan bank bathroom.</i>

837
00:42:40,768 --> 00:42:42,436
<i>But Ben was done
with the banking world.</i>

838
00:42:42,518 --> 00:42:43,853
<i>He was very clear.</i>

839
00:42:43,938 --> 00:42:45,521
<i>All right, let's crunch some numbers</i>

840
00:42:45,606 --> 00:42:47,983
<i>and then maybe
we'll talk about calling Ben.</i>

841
00:42:48,067 --> 00:42:49,108
We're always crunching numbers.

842
00:42:49,193 --> 00:42:50,235
When haven't we crunched
the numbers?

843
00:42:50,318 --> 00:42:51,362
We're gonna crunch
the numbers like harder...

844
00:42:51,487 --> 00:42:52,487
I need you out of here.

845
00:42:52,528 --> 00:42:54,528
- Of course. One second.
- Yes, ma'am. We're going.

846
00:42:57,534 --> 00:42:59,827
Oh, God. I hate this.
This is a total waste of time.

847
00:43:00,036 --> 00:43:02,373
Oh, come on. Would you relax?

848
00:43:03,123 --> 00:43:06,251
There's a housing development
45 minutes outside town.

849
00:43:06,335 --> 00:43:08,211
Mark wants us to check that out first.

850
00:43:08,295 --> 00:43:10,297
Well, I hope there are some
Cuban restaurants on the way there.

851
00:43:10,380 --> 00:43:13,007
Because I heard the Cuban food
is amazing in Miami.

852
00:43:13,092 --> 00:43:15,802
Please don't be chipper in the
face of me being miserable.

853
00:43:15,885 --> 00:43:17,554
It really makes me hate you.

854
00:43:17,637 --> 00:43:20,181
How is wanting to eat
good food being chipper?

855
00:43:21,891 --> 00:43:23,059
Hello?

856
00:43:24,478 --> 00:43:25,728
Hello?

857
00:43:26,521 --> 00:43:27,856
What do these go for?

858
00:43:29,525 --> 00:43:31,235
$425,000 each?

859
00:43:53,090 --> 00:43:54,675
What's up, man? What do you want?

860
00:43:54,757 --> 00:43:58,094
Hello. I'm surveying mortgage owners
who are over 90 days delinquent.

861
00:43:58,177 --> 00:44:00,722
I'm looking for a Harvey Humpsey.

862
00:44:00,806 --> 00:44:01,974
You want my landlord's dog?

863
00:44:04,143 --> 00:44:05,601
Your landlord filled out
his mortgage application

864
00:44:05,686 --> 00:44:08,146
using his dog's name?

865
00:44:08,230 --> 00:44:09,690
I guess so.

866
00:44:09,773 --> 00:44:12,275
Wait, has that asshole
not been paying his mortgage?

867
00:44:12,358 --> 00:44:13,693
'Cause I've been paying my rent.

868
00:44:13,777 --> 00:44:15,695
Well, yeah, he is over
90 days delinquent.

869
00:44:16,070 --> 00:44:17,655
Seriously, man,

870
00:44:17,739 --> 00:44:19,574
am I gonna have to leave?

871
00:44:22,077 --> 00:44:24,454
'Cause my kid just got
settled in school, man.

872
00:44:24,538 --> 00:44:26,706
Hey. How are ya?

873
00:44:27,373 --> 00:44:29,876
- My name's Ken.
- You're Ken?

874
00:44:29,960 --> 00:44:31,753
You should talk to your landlord
about that.

875
00:44:31,836 --> 00:44:33,338
I'm sorry, I don't have
any more information.

876
00:44:33,422 --> 00:44:34,797
But you...

877
00:44:35,465 --> 00:44:37,050
You have a great day. See ya, Ken.

878
00:44:37,134 --> 00:44:38,552
There's books everywhere!

879
00:44:38,635 --> 00:44:40,887
Books everywhere?

880
00:44:40,971 --> 00:44:44,224
Seriously, man,
is everything gonna be okay?

881
00:44:44,307 --> 00:44:47,393
You should... You should call him.

882
00:44:47,478 --> 00:44:48,557
You should give him a call.

883
00:44:48,603 --> 00:44:50,324
It's not my fault, dude.
I've been paying...

884
00:44:54,150 --> 00:44:55,235
Hello!

885
00:44:59,155 --> 00:45:01,282
<i>Looks like the Mary Celeste.</i>

886
00:45:01,367 --> 00:45:04,119
Look. All they took was the TV.

887
00:45:04,911 --> 00:45:06,871
It's weird.

888
00:45:06,954 --> 00:45:09,291
They didn't even clean out the cat litter.

889
00:45:17,840 --> 00:45:18,884
Oh, God.

890
00:45:30,521 --> 00:45:32,438
It's like Chernobyl.

891
00:45:32,523 --> 00:45:35,943
There's like a hundred houses.
There can't be four people living here.

892
00:45:37,985 --> 00:45:40,155
- Oh, fuck that!
- Shit!

893
00:45:55,045 --> 00:45:58,090
He's been in there for seven hours.
Where does he go to the bathroom?

894
00:45:58,172 --> 00:45:59,590
I heard he had a breakdown.

895
00:45:59,675 --> 00:46:01,635
He's letting the fund tank.

896
00:46:01,717 --> 00:46:03,177
My buddy in Manhattan said...

897
00:46:03,302 --> 00:46:04,847
Dr. Burry's office.

898
00:46:05,179 --> 00:46:06,860
No, he actually prefers
that you email him.

899
00:46:06,889 --> 00:46:08,182
Excuse me.

900
00:46:08,516 --> 00:46:09,518
Mr. Fields, Mr...

901
00:46:13,646 --> 00:46:15,398
- Hi, Lawrence.
- Holy shit!

902
00:46:17,025 --> 00:46:20,570
We have no confidence
in your ability to identify

903
00:46:20,653 --> 00:46:23,657
macroeconomic trends.

904
00:46:24,574 --> 00:46:27,119
You flew here to tell me that? Why?

905
00:46:27,202 --> 00:46:30,621
Anyone can see that
there is a real estate bubble.

906
00:46:30,706 --> 00:46:32,541
Actually, no one can see a bubble.

907
00:46:32,623 --> 00:46:33,833
That's what makes it a bubble.

908
00:46:33,916 --> 00:46:36,210
That's dumb, Lawrence.

909
00:46:36,295 --> 00:46:37,880
There's always markers.

910
00:46:38,630 --> 00:46:41,090
Mortgage fraud has

911
00:46:41,175 --> 00:46:42,925
quintupled since 2000

912
00:46:43,050 --> 00:46:45,887
and the average take-home pay is flat,

913
00:46:45,971 --> 00:46:47,431
but home prices are soaring.

914
00:46:47,514 --> 00:46:49,599
That means the homes
are debt, not assets.

915
00:46:49,682 --> 00:46:51,893
So Mike Burry of San Jose, a guy who

916
00:46:52,894 --> 00:46:56,273
gets his hair cut at Supercuts
and doesn't wear shoes,

917
00:46:56,398 --> 00:46:59,233
knows more than Alan Greenspan
and Hank Paulson.

918
00:46:59,400 --> 00:47:00,402
Well...

919
00:47:01,110 --> 00:47:03,739
Dr. Mike Burry, yes, he does.

920
00:47:04,947 --> 00:47:06,742
That's cute. That's cute.

921
00:47:06,824 --> 00:47:09,161
Are you being sarcastic with us, Mike?

922
00:47:12,289 --> 00:47:13,706
Lawrence,

923
00:47:13,789 --> 00:47:16,293
I don't know how to be sarcastic.

924
00:47:16,960 --> 00:47:19,755
I don't know how to be funny.
I don't know how to

925
00:47:20,422 --> 00:47:21,882
work people.

926
00:47:21,965 --> 00:47:23,132
I...

927
00:47:23,217 --> 00:47:25,552
I just know how to read numbers.

928
00:47:25,635 --> 00:47:28,137
How big is your short position
right now?

929
00:47:29,639 --> 00:47:31,224
Just $1.3 billion.

930
00:47:31,807 --> 00:47:34,644
- And the premiums?
- Well, we pay

931
00:47:35,103 --> 00:47:38,440
roughly $80 to 90 million

932
00:47:38,565 --> 00:47:40,025
each year, which is high,

933
00:47:40,108 --> 00:47:42,193
but I was the first to do this trade.

934
00:47:42,277 --> 00:47:45,739
Watch. It will pay. I may have
been early, but I'm not wrong.

935
00:47:45,822 --> 00:47:48,157
It's the same thing.
It's the same thing, Mike!

936
00:47:48,992 --> 00:47:53,121
You're managing a fund of,
what, $555 million?

937
00:47:53,664 --> 00:47:57,166
In six years, it'll all be gone.

938
00:47:57,960 --> 00:47:59,378
On one bet.

939
00:47:59,460 --> 00:48:02,630
No, the second quarter of '07
is when the adjustable rates kick in.

940
00:48:02,755 --> 00:48:04,257
The defaults will skyrocket.

941
00:48:04,340 --> 00:48:06,050
Yeah. Says you.

942
00:48:06,134 --> 00:48:08,594
How much is eligible
for withdrawal before they do?

943
00:48:08,679 --> 00:48:10,597
Say, in the next two quarters.

944
00:48:11,306 --> 00:48:13,307
If your investors panic.

945
00:48:16,853 --> 00:48:18,981
- $302 million?
- I...

946
00:48:19,856 --> 00:48:21,483
My God, Mike.

947
00:48:26,320 --> 00:48:28,239
No one will pull out.
That would be suicide.

948
00:48:28,322 --> 00:48:30,742
I mean, I'm down 17% for the year.

949
00:48:30,867 --> 00:48:33,161
But if they trust me,
and they trust me, because...

950
00:48:33,244 --> 00:48:35,871
No one trusts you! No one!

951
00:48:35,956 --> 00:48:38,375
I sent several emails to my investors

952
00:48:38,500 --> 00:48:40,543
letting them know that the...

953
00:48:42,170 --> 00:48:47,175
...the second quarter of '07 is when our
housing positions show returns and...

954
00:48:48,552 --> 00:48:49,802
I've been very clear.

955
00:48:50,596 --> 00:48:53,431
People will withdraw their money.

956
00:48:54,016 --> 00:48:57,476
Lawrence, that would be so stupid.
I mean, the...

957
00:48:57,561 --> 00:49:01,063
If the fund's capitals drop too much,

958
00:49:01,523 --> 00:49:04,610
then the swaps contracts are voided.

959
00:49:04,693 --> 00:49:07,945
And then the banks get to keep
all of the collateral.

960
00:49:08,030 --> 00:49:10,239
- Wait a minute. Wait.
- All of it.

961
00:49:10,364 --> 00:49:12,059
The contracts are voided?

962
00:49:12,576 --> 00:49:14,369
The contracts are voided?

963
00:49:15,077 --> 00:49:16,746
Holy shit!

964
00:49:17,204 --> 00:49:18,206
Oh, motherfucker!

965
00:49:18,873 --> 00:49:20,375
Michael?

966
00:49:20,751 --> 00:49:22,418
Give me my money back.

967
00:49:25,838 --> 00:49:29,217
Michael, do you hear me?
I want my money back.

968
00:49:31,719 --> 00:49:34,056
Give me my fucking money back...

969
00:49:35,097 --> 00:49:36,516
...you motherfucker.

970
00:49:37,434 --> 00:49:40,561
The market's in an itsy-bitsy
little gully right now.

971
00:49:40,686 --> 00:49:42,938
It's like everybody said,
"Okay, that was crazy.

972
00:49:43,023 --> 00:49:44,900
"Let's just all calm down. "

973
00:49:46,735 --> 00:49:49,945
I sold that house for $350,000
the year it was built.

974
00:49:50,614 --> 00:49:52,782
Two years later, $480,000.

975
00:49:52,907 --> 00:49:56,077
Then $585,000 maybe 18 months ago.

976
00:49:56,202 --> 00:49:58,746
This couple bought it
for $650,000 last year.

977
00:49:59,246 --> 00:50:01,083
He'd let it go for that.

978
00:50:01,166 --> 00:50:02,833
Hi, John.

979
00:50:02,918 --> 00:50:03,960
No, no, no.

980
00:50:04,585 --> 00:50:05,961
It will break his heart,
but he'll let it go.

981
00:50:06,088 --> 00:50:07,838
Why is he selling?

982
00:50:07,922 --> 00:50:09,757
Neither one's working right now.

983
00:50:10,759 --> 00:50:13,387
Marlene, you'd say
they're motivated, right?

984
00:50:13,469 --> 00:50:16,472
As motivated as one can be
in this neighborhood.

985
00:50:16,556 --> 00:50:19,101
This house on the left, I would say
they're probably motivated.

986
00:50:19,184 --> 00:50:21,143
Wow, a lot of people
seem very motivated.

987
00:50:21,228 --> 00:50:22,311
Oh, it's just the gully.

988
00:50:22,603 --> 00:50:24,356
That's all. Just...

989
00:50:24,438 --> 00:50:25,856
Just nerves.

990
00:50:25,940 --> 00:50:27,650
So where do we stand?

991
00:50:28,818 --> 00:50:31,320
I need to talk to my wife.

992
00:50:31,405 --> 00:50:32,697
This market won't last.

993
00:50:32,780 --> 00:50:34,574
Actually, could I talk
to a mortgage broker?

994
00:50:34,657 --> 00:50:36,492
Anybody you recommend?
Anybody you like.

995
00:50:36,576 --> 00:50:38,577
Yes, yes, I have someone. Absolutely.

996
00:50:38,661 --> 00:50:39,913
Yeah, bitch better like me.

997
00:50:39,996 --> 00:50:41,248
Sent her ass to Cabo.

998
00:50:42,873 --> 00:50:45,460
So is Morgan Stanley
recruiting us? Is that it?

999
00:50:45,751 --> 00:50:48,713
Oh, no. No.
The bank owns our hedge fund,

1000
00:50:48,797 --> 00:50:49,840
but we're not really part of it.

1001
00:50:49,965 --> 00:50:52,425
We invest in financial
service companies

1002
00:50:52,509 --> 00:50:55,469
and we're trying to understand
the residential mortgage business.

1003
00:50:55,554 --> 00:50:58,472
How many loans
do you write each month?

1004
00:50:58,597 --> 00:51:00,141
- About 60.
- Yeah.

1005
00:51:00,224 --> 00:51:01,684
What was it four years ago?

1006
00:51:02,643 --> 00:51:03,978
Ten...

1007
00:51:04,061 --> 00:51:05,313
Maybe 15.

1008
00:51:05,396 --> 00:51:07,690
Yeah, I was a bartender.
Now I own a boat.

1009
00:51:07,773 --> 00:51:08,773
You own a...

1010
00:51:08,817 --> 00:51:12,070
So how many of these are
adjustable-rate mortgages?

1011
00:51:12,153 --> 00:51:13,822
- Well, most.
- Oh, yeah.

1012
00:51:13,905 --> 00:51:15,865
Yeah, I'd say about 90%.

1013
00:51:15,949 --> 00:51:19,077
The bonuses on those
skyrocketed a few years ago.

1014
00:51:19,161 --> 00:51:20,481
Adjustable's our bread and honey.

1015
00:51:20,536 --> 00:51:23,081
So do applicants ever get rejected?

1016
00:51:27,418 --> 00:51:28,628
Seriously?

1017
00:51:29,503 --> 00:51:31,590
Look, if they get rejected,
I suck at my job.

1018
00:51:31,672 --> 00:51:33,175
Even if they have no money?

1019
00:51:33,257 --> 00:51:36,135
Well, my firm offers NINJA loans.

1020
00:51:36,219 --> 00:51:38,679
- Okay.
- "No Income, No Job. "

1021
00:51:39,014 --> 00:51:41,224
I just leave the income section blank
if I want.

1022
00:51:41,307 --> 00:51:42,559
Corporate doesn't care.

1023
00:51:42,641 --> 00:51:45,936
These people just want homes.
And they go with the flow.

1024
00:51:46,021 --> 00:51:48,063
- Good for you.
- Your companies don't verify?

1025
00:51:51,860 --> 00:51:53,862
If I write a loan on Friday afternoon,

1026
00:51:54,737 --> 00:51:56,739
a big bank will buy it by Monday lunch.

1027
00:51:57,282 --> 00:51:58,617
Yeah. Same here.

1028
00:52:00,409 --> 00:52:03,288
- Could you hold on a second?
- Yeah.

1029
00:52:08,960 --> 00:52:11,630
I don't get it. Why are they confessing?

1030
00:52:11,713 --> 00:52:13,672
They're not confessing.

1031
00:52:13,798 --> 00:52:15,467
They're bragging.

1032
00:52:24,226 --> 00:52:28,230
Do people have any idea
what they are buying?

1033
00:52:29,188 --> 00:52:31,440
I focus on the immigrants, you know.

1034
00:52:31,525 --> 00:52:32,943
Once they find out
they're getting a home,

1035
00:52:33,025 --> 00:52:34,610
they sign where you tell them to sign.

1036
00:52:34,693 --> 00:52:36,822
Don't ask questions.
Don't understand the rates.

1037
00:52:36,905 --> 00:52:38,364
- Fucking idiots.
- Yeah.

1038
00:52:38,447 --> 00:52:39,865
And you target immigrants, too?

1039
00:52:39,949 --> 00:52:42,786
Well, their credit actually
isn't bad enough for him.

1040
00:52:44,704 --> 00:52:46,373
Look, I'm a yield guy.

1041
00:52:46,873 --> 00:52:47,916
Okay...

1042
00:52:49,000 --> 00:52:52,420
I make $2,000 on a fixed-rate
prime loan, right?

1043
00:52:52,503 --> 00:52:56,132
But I can make $10,000
on a subprime adjustable.

1044
00:52:56,215 --> 00:52:59,177
Trust me, I'm not driving
a 7 Series without strippers.

1045
00:52:59,260 --> 00:53:02,556
No one on the pole has good credit
and they're all cash rich.

1046
00:53:02,639 --> 00:53:04,974
I think I read Warren Buffett
say something like that.

1047
00:53:05,474 --> 00:53:07,726
What? Who's Warren Buffett?

1048
00:53:08,269 --> 00:53:10,981
Okay, so strippers. Like exotic dancers?

1049
00:53:11,063 --> 00:53:12,273
Yeah, yeah, yeah.

1050
00:53:12,356 --> 00:53:14,317
Nude, you know, topless.

1051
00:53:14,400 --> 00:53:16,235
- Strippers.
- Yeah.

1052
00:53:19,822 --> 00:53:21,032
Can you introduce us?

1053
00:53:21,115 --> 00:53:23,577
Yes! Yes.

1054
00:53:25,619 --> 00:53:28,539
I always get option-pay adjustables.
I'm a private contractor.

1055
00:53:28,623 --> 00:53:30,291
What? I can't hear you. I'm sorry.

1056
00:53:30,375 --> 00:53:32,210
I always get option-pay adjustables.

1057
00:53:32,293 --> 00:53:34,545
I'm a private contractor.
I need flexibility.

1058
00:53:34,628 --> 00:53:37,215
And you tell the mortgage
company what you do?

1059
00:53:37,298 --> 00:53:39,300
I write "therapist".

1060
00:53:39,384 --> 00:53:40,844
- You can touch me.
- Always?

1061
00:53:41,469 --> 00:53:42,512
Only in V.I.P.

1062
00:53:42,596 --> 00:53:45,222
No, no, no, you say
you always do adjustables.

1063
00:53:45,306 --> 00:53:47,106
And you have more than
one loan on a property?

1064
00:53:47,182 --> 00:53:49,393
Everybody does. At least down here.

1065
00:53:49,476 --> 00:53:50,478
I'm sorry, what?

1066
00:53:50,561 --> 00:53:53,148
Everybody does. At least down here.

1067
00:53:53,231 --> 00:53:55,400
That way you only put down, like, 5%.

1068
00:53:55,483 --> 00:53:57,277
Prices have leveled off, though, right?

1069
00:53:57,360 --> 00:53:59,195
Yeah. There's a gully.

1070
00:53:59,278 --> 00:54:02,990
Would you mind not moving anymore?
I'll still pay you.

1071
00:54:06,786 --> 00:54:09,496
Sorry. We're not alone.

1072
00:54:09,581 --> 00:54:12,208
Okay, look. If home prices don't go up,

1073
00:54:12,291 --> 00:54:14,585
you are not going to be able
to refinance.

1074
00:54:14,668 --> 00:54:17,797
And you'll be stuck paying
whatever your monthly payment is

1075
00:54:17,880 --> 00:54:20,592
once it jumps up
after your teaser rate expires.

1076
00:54:21,009 --> 00:54:23,052
Your monthlies
could go up 200%-300%.

1077
00:54:23,469 --> 00:54:25,512
James says I can always refinance.

1078
00:54:25,597 --> 00:54:27,389
Well, he's a liar.

1079
00:54:27,474 --> 00:54:30,601
Actually, in this particular case,
James probably is wrong.

1080
00:54:30,684 --> 00:54:33,980
200 percent? On all my loans?

1081
00:54:34,063 --> 00:54:35,440
What do you mean "all" your loans?

1082
00:54:35,523 --> 00:54:37,943
We're talking about two loans
on one house, right?

1083
00:54:38,777 --> 00:54:40,737
I have five houses.

1084
00:54:40,862 --> 00:54:42,822
And a condo.

1085
00:54:44,699 --> 00:54:46,201
Hey, there's a bubble.

1086
00:54:46,284 --> 00:54:47,284
<i>How do you know?</i>

1087
00:54:47,369 --> 00:54:50,789
Trust me. Call Vennett,
buy $50 million in swaps on the MBS.

1088
00:54:50,871 --> 00:54:53,791
What do we got? Garibaldi IV, BBB.

1089
00:54:53,875 --> 00:54:55,376
Mark, are you sure?

1090
00:54:55,460 --> 00:54:57,295
Yeah. Yeah, it's time to call bullshit.

1091
00:54:57,378 --> 00:55:00,047
- Bullshit on what?
- Every fucking thing.

1092
00:55:24,239 --> 00:55:25,907
FrontPoint! FrontPoint!

1093
00:55:27,742 --> 00:55:29,536
Is this America's angriest hedge fund?

1094
00:55:29,619 --> 00:55:31,746
<i>All right, listen.
I got one last question for you.</i>

1095
00:55:32,914 --> 00:55:34,748
How are you fucking us?

1096
00:55:36,583 --> 00:55:38,184
There's a nicer way to say that, Vinnie.

1097
00:55:38,210 --> 00:55:39,753
I'm serious.

1098
00:55:39,838 --> 00:55:42,923
We'll buy your swaps, but only if you say
how you're fucking us.

1099
00:55:43,007 --> 00:55:45,510
<i>I'm not fucking you, Vinnie.
I'm kissing you.</i>

1100
00:55:45,592 --> 00:55:48,346
I'm looking deep into your eyes
as I make love to you, Vinnie.

1101
00:55:48,429 --> 00:55:51,766
I'm handing you the deal of the century
on a fucking platter.

1102
00:55:51,849 --> 00:55:54,226
<i>What do I get out of it? Easy.</i>

1103
00:55:54,309 --> 00:55:56,730
I got a $20-million-a-month
negative carry.

1104
00:55:56,813 --> 00:55:58,188
I got bosses trying to pull the plug

1105
00:55:58,273 --> 00:56:00,692
because they think I'm out
of my fucking mind.

1106
00:56:00,775 --> 00:56:01,775
All right?

1107
00:56:01,860 --> 00:56:02,943
We make this trade,

1108
00:56:03,027 --> 00:56:05,362
those problems aren't so big anymore.

1109
00:56:05,447 --> 00:56:09,199
And sure, swaps are a dark market,
so I set the price.

1110
00:56:09,284 --> 00:56:10,784
Whatever price I want.

1111
00:56:10,869 --> 00:56:12,286
And when you come for the payday,

1112
00:56:12,411 --> 00:56:14,621
I'm gonna rip your eyes out,
I'm gonna make a fortune.

1113
00:56:15,748 --> 00:56:17,250
<i>But the good news is, Vinnie,
you're not gonna care</i>

1114
00:56:17,333 --> 00:56:19,543
<i>because you're gonna make
so much fucking money.</i>

1115
00:56:19,626 --> 00:56:20,920
<i>That's what I get out of it.</i>

1116
00:56:21,003 --> 00:56:22,297
<i>Want to know what you get out of it?</i>

1117
00:56:22,380 --> 00:56:25,884
You get the ice cream, the hot fudge,
the banana, and the nuts.

1118
00:56:25,967 --> 00:56:27,719
Right now, I get
the sprinkles, and, yeah,

1119
00:56:27,802 --> 00:56:30,429
if this goes through, I get the cherry.

1120
00:56:30,512 --> 00:56:32,724
But you get the sundae, Vinnie.

1121
00:56:32,806 --> 00:56:34,476
<i>You get the sundae.</i>

1122
00:56:36,936 --> 00:56:39,731
All right, I buy that. Thank you.

1123
00:56:39,813 --> 00:56:41,983
<i>So what do you say?</i>

1124
00:56:42,067 --> 00:56:43,943
<i>- You want me to make you a market?
- Yeah.</i>

1125
00:56:44,027 --> 00:56:47,530
We'll take $50 million,
Garibaldi IV, BBB.

1126
00:56:48,989 --> 00:56:51,034
Sharpen your pencils.
I'll get the paperwork ready.

1127
00:56:53,744 --> 00:56:55,246
Fuck you, too.

1128
00:56:57,206 --> 00:56:58,708
Yes!

1129
00:57:00,668 --> 00:57:01,668
That's right.

1130
00:57:03,797 --> 00:57:05,715
Oh, man.

1131
00:57:05,798 --> 00:57:09,344
He has so many numbers,
and I always forget

1132
00:57:10,135 --> 00:57:11,762
which one he prefers,
because he's very specific.

1133
00:57:11,846 --> 00:57:13,056
Start with the first one.

1134
00:57:13,139 --> 00:57:14,349
I don't know if it's the first one.

1135
00:57:14,474 --> 00:57:15,766
Just try it.

1136
00:57:15,849 --> 00:57:17,393
Okay. I... Okay.

1137
00:57:35,036 --> 00:57:37,789
<i>- Ben Rickert.
- Hey, Ben. It's Jamie.</i>

1138
00:57:39,331 --> 00:57:41,411
Jamie, you know you're not
supposed to use this line.

1139
00:57:43,670 --> 00:57:44,920
Told you.

1140
00:57:46,297 --> 00:57:48,967
Okay, let's try number two out of 14.

1141
00:58:00,561 --> 00:58:01,563
Ben Rickert.

1142
00:58:01,646 --> 00:58:03,648
Ben, why do you do that, man? I mean...

1143
00:58:03,731 --> 00:58:06,150
You're a retired trader, okay?
No one is listening to your calls.

1144
00:58:06,233 --> 00:58:07,943
<i>The NSA has a $52 billion
budget and the ability</i>

1145
00:58:08,027 --> 00:58:09,403
to monitor tens
of millions of calls a second.

1146
00:58:09,487 --> 00:58:11,822
You think they're not using it?

1147
00:58:11,905 --> 00:58:14,742
Hey, I promise I will refrain from saying

1148
00:58:14,826 --> 00:58:16,994
"Ben Rickert" and "dirty bomb"
in the same sent...

1149
00:58:18,871 --> 00:58:20,512
- Jesus fucking Christ.
- I'm sorry, dude.

1150
00:58:22,166 --> 00:58:23,251
Ben Rickert.

1151
00:58:23,376 --> 00:58:25,753
Did you get a chance to look
at what we sent you, Ben?

1152
00:58:25,836 --> 00:58:28,005
It's Charlie. I'm here, too.

1153
00:58:28,755 --> 00:58:31,092
<i>Hi, Charlie. Yeah, I did. Hold on.</i>

1154
00:58:37,097 --> 00:58:39,434
<i>- Ben, you still there?
- Yeah.</i>

1155
00:58:40,184 --> 00:58:42,228
I'll be honest, gentlemen.

1156
00:58:42,311 --> 00:58:44,230
It scared the shit out of me.

1157
00:58:44,355 --> 00:58:45,731
But that's a good thing, right?

1158
00:58:45,815 --> 00:58:48,610
That means this Vennett guy's
not wrong.

1159
00:58:49,318 --> 00:58:50,402
No, he's not.

1160
00:58:53,114 --> 00:58:54,114
Cool.

1161
00:58:54,199 --> 00:58:55,782
Tell me more about these CDOs.

1162
00:58:55,867 --> 00:58:59,621
<i>Yeah, yeah. Okay, so, you know,
Vennett mentions the CDOs,</i>

1163
00:58:59,746 --> 00:59:01,289
but actually, we took a look

1164
00:59:01,371 --> 00:59:03,092
and they're way worse
than even he realizes.

1165
00:59:03,123 --> 00:59:04,541
These things don't make any sense!

1166
00:59:04,626 --> 00:59:05,876
<i>We can't even model them.</i>

1167
00:59:05,960 --> 00:59:08,670
These are 100 times bigger
than the MBS.

1168
00:59:08,755 --> 00:59:10,340
And 90% AAA-rated.

1169
00:59:10,422 --> 00:59:12,175
- Yes! Exactly!
- Over 90%.

1170
00:59:12,300 --> 00:59:13,384
<i>It's incredible.</i>

1171
00:59:13,467 --> 00:59:16,637
I took a good hard look
at the CDOs you want to short.

1172
00:59:17,387 --> 00:59:19,806
They're brilliant. Worthless. Total crap.

1173
00:59:20,474 --> 00:59:22,643
Jamie. Very good.

1174
00:59:22,726 --> 00:59:26,231
What can I say? I'm good at finding shit.

1175
00:59:26,313 --> 00:59:29,067
<i>So, Ben, we shorted
the BB's and the BBB's,</i>

1176
00:59:29,150 --> 00:59:31,235
<i>and the risk is relatively low.</i>

1177
00:59:31,318 --> 00:59:33,987
<i>- Payoff is, like, 25-to-1.
- Yeah.</i>

1178
00:59:36,324 --> 00:59:38,409
Okay, so, why are you calling me?
I don't do this anymore.

1179
00:59:38,492 --> 00:59:39,661
Look, Ben?

1180
00:59:40,994 --> 00:59:44,748
We need you to help us get the ISDA.

1181
00:59:44,831 --> 00:59:47,918
If we get a hunting license,
we can short this crap.

1182
00:59:48,001 --> 00:59:50,463
<i>And we know you hate Wall Street.
We're not asking you to do the trading.</i>

1183
00:59:50,545 --> 00:59:54,509
<i>We're simply asking you
to help us get a seat</i>

1184
00:59:54,592 --> 00:59:57,762
<i>at the fucking table.</i>

1185
00:59:57,844 --> 00:59:59,764
It's a pretty ugly table, guys.

1186
00:59:59,847 --> 01:00:04,851
Look, Ben, the system fucked up
in a big, big way here, okay?

1187
01:00:04,936 --> 01:00:07,021
And somehow

1188
01:00:07,355 --> 01:00:10,023
we know before anyone else.

1189
01:00:10,358 --> 01:00:13,277
You know? This is a
once-in-a-lifetime deal.

1190
01:00:15,862 --> 01:00:16,864
I'm thinking.

1191
01:00:21,952 --> 01:00:23,871
Okay. I'll call Deutsche Bank.

1192
01:00:23,954 --> 01:00:26,206
Thank you, Ben. Thank you.

1193
01:00:26,291 --> 01:00:29,876
And Bear. What about Bear?
They have some reprehensible product.

1194
01:00:30,210 --> 01:00:32,547
<i>Okay. Bear will trade with anybody.</i>

1195
01:01:20,677 --> 01:01:23,431
All right. I'll see if
I can push it through.

1196
01:01:23,514 --> 01:01:25,349
Thank you, Noah.
And thank Jared for us.

1197
01:01:27,309 --> 01:01:29,853
- Couldn't we go inside?
- Yeah, me, too.

1198
01:02:13,981 --> 01:02:16,317
Hi. It's Mark. I need to talk
to Vinnie right now.

1199
01:02:16,400 --> 01:02:19,820
We're just asking you to explain to us

1200
01:02:19,987 --> 01:02:22,447
just how it is that you are fucking us,

1201
01:02:22,532 --> 01:02:23,782
because what we are seeing...

1202
01:02:26,661 --> 01:02:27,994
Morgan Stanley building, fast.

1203
01:02:28,954 --> 01:02:31,416
Are we hooked up
to the same computer screen?

1204
01:02:31,498 --> 01:02:33,166
It doesn't make any sense.

1205
01:02:36,003 --> 01:02:37,463
<i>Vinnie, you there?</i>

1206
01:02:37,963 --> 01:02:39,923
- Mark, you there?
- Yeah, did you hear?

1207
01:02:40,007 --> 01:02:41,766
Mortgage defaults have gone
through the roof.

1208
01:02:41,842 --> 01:02:43,302
Is anybody jumping off of buildings yet?

1209
01:02:43,385 --> 01:02:45,596
Why would they?
Subprime mortgage bond prices are up.

1210
01:02:45,679 --> 01:02:46,722
What?

1211
01:02:46,806 --> 01:02:50,101
Vennett wants $1.9 million
more in collateral by close.

1212
01:02:50,184 --> 01:02:51,476
Vennett's asking us to post collateral.

1213
01:02:51,561 --> 01:02:52,978
What the hell is going on?

1214
01:02:53,061 --> 01:02:55,021
We don't know, but Deutsche's
on the phone demanding payment.

1215
01:02:55,106 --> 01:02:56,940
<i>Call Vennett. Call that little shit.</i>

1216
01:02:57,023 --> 01:02:58,985
Call Vennett.
Tell him to get his ass down here.

1217
01:02:59,068 --> 01:03:00,862
So subprime loans go bad,

1218
01:03:00,945 --> 01:03:04,157
but subprime bonds, which are made up
of subprime loans, are more valuable?

1219
01:03:04,239 --> 01:03:06,701
I know. They want another
$1.9 million by market close.

1220
01:03:06,826 --> 01:03:08,952
What about the ratings agencies?
Moody's, S&P...

1221
01:03:09,036 --> 01:03:11,456
Are they downgrading the CDOs
and mortgage bonds?

1222
01:03:11,539 --> 01:03:12,623
Where are the ratings agencies at?

1223
01:03:12,706 --> 01:03:15,793
- They're the fucking same.
- No, they're all still AAA.

1224
01:03:15,876 --> 01:03:18,378
What the hell?
Are you fucking kidding me?

1225
01:03:18,463 --> 01:03:20,547
Those fuckers! Those motherfuckers!

1226
01:03:20,630 --> 01:03:23,630
They go public, and all they care about
is their bottom line and their shit.

1227
01:03:23,675 --> 01:03:25,427
Hey, Mark, that's not all.

1228
01:03:25,510 --> 01:03:26,804
The Morgan Stanley risk guys are here.

1229
01:03:26,887 --> 01:03:28,264
They called in Kathy Tao.

1230
01:03:28,347 --> 01:03:30,474
They're trying to convince her
to make us sell our swaps.

1231
01:03:30,557 --> 01:03:32,809
Apparently, tying up six years
of insurance payments

1232
01:03:32,893 --> 01:03:34,644
in hopes of a housing Armageddon

1233
01:03:34,728 --> 01:03:37,356
<i>- is not prudent investing.
- What did Kathy say?</i>

1234
01:03:37,440 --> 01:03:40,150
Nothing yet. She keeps asking if
this is one of your crusades.

1235
01:03:40,233 --> 01:03:42,152
Okay, I want you to walk back in there

1236
01:03:42,235 --> 01:03:46,699
and very calmly, very politely,
tell the risk assessors to fuck off.

1237
01:03:46,782 --> 01:03:48,461
And then meet me over
at Standard & Poor's.

1238
01:03:48,534 --> 01:03:50,036
We're gonna talk to Georgia.

1239
01:03:50,119 --> 01:03:51,161
<i>All right. Okay.</i>

1240
01:03:51,244 --> 01:03:53,164
Get that fuck Jared Vennett
in this office.

1241
01:03:53,246 --> 01:03:55,041
<i>I'm gonna bash his fucking head in.</i>

1242
01:04:00,295 --> 01:04:01,630
Gentlemen?

1243
01:04:01,713 --> 01:04:04,759
I spoke with Mark Baum.
He says to fuck off.

1244
01:04:18,563 --> 01:04:20,900
I can't see a damn thing.

1245
01:04:22,568 --> 01:04:24,778
My eye doctor's always busy.

1246
01:04:24,862 --> 01:04:26,655
I end up taking
any appointment they'll give me,

1247
01:04:26,739 --> 01:04:29,074
and then the whole morning
gets shot to hell!

1248
01:04:30,242 --> 01:04:31,744
So...

1249
01:04:32,244 --> 01:04:33,746
All righty,

1250
01:04:34,121 --> 01:04:36,623
FrontPoint Partners,

1251
01:04:37,166 --> 01:04:39,543
how can Standard & Poor's help you?

1252
01:04:39,626 --> 01:04:40,878
Well, we don't understand why

1253
01:04:40,961 --> 01:04:43,588
the ratings agencies haven't
downgraded subprime bonds

1254
01:04:43,672 --> 01:04:46,717
since the underlying loans
are clearly deteriorating.

1255
01:04:46,800 --> 01:04:49,219
Well, the delinquency rates
do have people worried,

1256
01:04:49,302 --> 01:04:51,097
but they're actually within our models.

1257
01:04:51,179 --> 01:04:53,139
- So...
- Says you.

1258
01:04:54,307 --> 01:04:56,726
...you're convinced
the underlying mortgages

1259
01:04:56,811 --> 01:04:59,230
in these bonds are solid loans.

1260
01:04:59,355 --> 01:05:01,231
That is our opinion, yes.

1261
01:05:01,315 --> 01:05:03,400
Have you looked at the loan-level data?

1262
01:05:03,483 --> 01:05:05,235
I mean, they're giving these loans

1263
01:05:05,318 --> 01:05:06,570
to anybody
with a credit score and a pulse.

1264
01:05:06,653 --> 01:05:09,239
Excuse me, sir. What do you
think we do here all day?

1265
01:05:09,322 --> 01:05:10,365
We're not sure. That's why we're here.

1266
01:05:10,449 --> 01:05:11,576
Here's what I don't understand...

1267
01:05:11,659 --> 01:05:13,369
We check, recheck, recheck again.

1268
01:05:13,494 --> 01:05:14,786
If these mortgage bonds are so stable...

1269
01:05:14,869 --> 01:05:16,581
Perhaps you could check your friend.

1270
01:05:16,664 --> 01:05:18,666
...have you ever refused to rate...

1271
01:05:18,748 --> 01:05:20,083
Ma'am, that's delusional.

1272
01:05:20,166 --> 01:05:21,293
We stand behind them.

1273
01:05:21,376 --> 01:05:22,961
Georgia, have you ever refused to rate

1274
01:05:23,045 --> 01:05:26,340
any of these bonds
upper tranches AAA?

1275
01:05:26,423 --> 01:05:28,009
Can we see the paperwork
on those deals?

1276
01:05:28,092 --> 01:05:30,094
I am under no obligation
to share that information

1277
01:05:30,177 --> 01:05:31,262
with you, whoever you might be.

1278
01:05:31,344 --> 01:05:33,054
Just answer the question, Georgia.

1279
01:05:33,179 --> 01:05:35,141
Can you name one time in the past year

1280
01:05:35,224 --> 01:05:36,559
where you checked the tape

1281
01:05:36,641 --> 01:05:40,855
and you didn't give the banks
the AAA percentage they wanted?

1282
01:05:43,106 --> 01:05:44,275
If we don't give them the ratings,

1283
01:05:44,358 --> 01:05:46,277
they'll go to Moody's,
right down the block.

1284
01:05:47,193 --> 01:05:50,530
If we don't work with them,
they will go to our competitors.

1285
01:05:51,197 --> 01:05:54,367
Not our fault.
Simply the way the world works.

1286
01:05:58,706 --> 01:06:01,208
- Holy shit.
- Yes, now you see.

1287
01:06:02,251 --> 01:06:04,295
And I never said that.

1288
01:06:04,378 --> 01:06:06,797
They're selling ratings for fees.

1289
01:06:06,880 --> 01:06:07,880
A ratings shop.

1290
01:06:07,922 --> 01:06:10,760
You can afford to make less. Make less.

1291
01:06:10,842 --> 01:06:12,719
Nobody said that.

1292
01:06:12,802 --> 01:06:14,972
And it is not my decision.
I have a boss.

1293
01:06:15,056 --> 01:06:17,849
- Are you kidding me?
- No, I am not "kidding you".

1294
01:06:17,932 --> 01:06:20,226
How'd your boss do on the IPO?

1295
01:06:20,311 --> 01:06:21,519
Is that the angle you're taking?

1296
01:06:21,603 --> 01:06:25,148
So, now, anyone who has a boss
can't be held responsible

1297
01:06:25,231 --> 01:06:26,672
for doing shitty and illegal things.

1298
01:06:26,733 --> 01:06:28,318
What are you, four?

1299
01:06:28,402 --> 01:06:32,697
No, I am not four, Mr. Baum.
I am not, no.

1300
01:06:32,782 --> 01:06:36,159
And I wonder
what your incentives might be.

1301
01:06:36,284 --> 01:06:37,827
Is it maybe in your best interest

1302
01:06:37,911 --> 01:06:40,914
to have the ratings change?
Is it, perhaps?

1303
01:06:42,708 --> 01:06:44,626
How many credit default swaps
do you own?

1304
01:06:47,295 --> 01:06:49,172
It doesn't make me wrong.

1305
01:06:49,255 --> 01:06:50,382
No.

1306
01:06:50,465 --> 01:06:52,592
It just makes you a hypocrite.

1307
01:07:33,217 --> 01:07:35,219
Fuck!

1308
01:07:35,302 --> 01:07:36,429
<i>Mortgage delinquencies went up</i>

1309
01:07:36,512 --> 01:07:38,556
<i>and the CDOs got more
valuable. Unbelievable.</i>

1310
01:07:38,639 --> 01:07:40,891
<i>- Unbelievable.
- We know. It's completely backwards.</i>

1311
01:07:40,974 --> 01:07:42,559
<i>I just called an old friend at Bear.</i>

1312
01:07:42,643 --> 01:07:44,311
<i>He didn't even know what a CDO is.</i>

1313
01:07:44,394 --> 01:07:48,733
Yeah, I just had to wire
Bear and Deutsche $70,000.

1314
01:07:48,815 --> 01:07:51,152
It's like two plus two equals

1315
01:07:51,652 --> 01:07:52,820
fish.

1316
01:07:52,902 --> 01:07:55,572
It's rigged.
We bought into a rigged game.

1317
01:07:55,655 --> 01:07:57,449
We're gonna lose everything.

1318
01:07:57,532 --> 01:07:59,994
I'm gonna have to move back
in with my mom.

1319
01:08:00,536 --> 01:08:01,911
Can't do that.

1320
01:08:01,996 --> 01:08:04,164
<i>All right. Well, I got
a colonic appointment.</i>

1321
01:08:04,248 --> 01:08:05,916
Wait a minute. Hold on, Ben.

1322
01:08:06,000 --> 01:08:07,333
Ben, look.

1323
01:08:07,418 --> 01:08:09,795
Either the banks are clueless

1324
01:08:09,878 --> 01:08:12,172
and they don't know
how to value these CDOs,

1325
01:08:12,255 --> 01:08:17,261
or they're such crooks that
the CDOs are worth shit

1326
01:08:17,427 --> 01:08:19,012
and they're hiding it.

1327
01:08:21,347 --> 01:08:22,807
I think we should buy more swaps.

1328
01:08:23,350 --> 01:08:24,393
What?

1329
01:08:24,476 --> 01:08:26,479
Suck it up and pay up, fellas.
We made a deal.

1330
01:08:26,561 --> 01:08:28,605
No way! No!

1331
01:08:28,689 --> 01:08:30,106
Are you fucking kidding me?

1332
01:08:30,190 --> 01:08:32,525
Are you serious?
You think this is a game?

1333
01:08:32,609 --> 01:08:35,279
- No. No. No. No. No.
- Yeah. Yeah.

1334
01:08:41,827 --> 01:08:43,496
No! No! No!

1335
01:08:43,621 --> 01:08:45,288
<i>No, seriously, a colonic once a year.</i>

1336
01:08:45,372 --> 01:08:46,372
Ass!

1337
01:08:46,457 --> 01:08:49,460
And you got a matching little butler boy,
you buttfuck!

1338
01:08:53,130 --> 01:08:54,965
- Are you done?
- I think so, yeah.

1339
01:08:55,048 --> 01:08:57,801
God! I pulled a muscle
in my back from yelling.

1340
01:09:00,386 --> 01:09:03,724
Mortgage defaults
have done nothing but go up.

1341
01:09:04,057 --> 01:09:07,228
Yet you quote us
a higher price on the bonds.

1342
01:09:08,103 --> 01:09:10,230
Please explain that to me.
There's no way that makes sense.

1343
01:09:10,314 --> 01:09:13,317
There's no way you're marking
these swaps appropriately.

1344
01:09:13,984 --> 01:09:15,944
Why shouldn't we back out
of this trade right now?

1345
01:09:18,404 --> 01:09:21,826
Didn't I say when we made this deal
that the ratings agencies, the SEC

1346
01:09:21,908 --> 01:09:24,411
and the big banks were clueless?
Didn't I say that?

1347
01:09:24,494 --> 01:09:25,787
- Yes.
- Didn't I say it?

1348
01:09:25,871 --> 01:09:27,706
Yes, you did. You did.

1349
01:09:27,832 --> 01:09:29,291
Shut up.

1350
01:09:29,375 --> 01:09:30,708
Now their foot's on fire, they think

1351
01:09:30,792 --> 01:09:32,336
their steak is done,
and you're surprised?

1352
01:09:32,418 --> 01:09:35,213
That's not stupidity. That's fraud.

1353
01:09:35,296 --> 01:09:37,006
Tell me the difference
between stupid and illegal,

1354
01:09:37,091 --> 01:09:39,092
and I'll have my wife's brother arrested.

1355
01:09:40,970 --> 01:09:41,970
That was funny.

1356
01:09:42,095 --> 01:09:45,765
I guess you just don't realize
how clueless the system really is.

1357
01:09:45,850 --> 01:09:48,185
Yes, there's some shady shit
going down,

1358
01:09:48,269 --> 01:09:51,604
but trust me, it's fueled by stupidity!

1359
01:09:52,814 --> 01:09:54,149
Look at yourselves.

1360
01:09:54,942 --> 01:09:58,404
You know, you pass yourself off
as cynical people

1361
01:09:58,487 --> 01:10:00,864
but you still have some faith
in the system, don't you?

1362
01:10:00,948 --> 01:10:02,240
I don't.

1363
01:10:02,323 --> 01:10:05,202
Well, except for Vinnie.
And who gives a shit?

1364
01:10:05,286 --> 01:10:07,037
- No way!
- Look...

1365
01:10:07,121 --> 01:10:10,291
Either we're right or we're wrong
in a giant, giant way.

1366
01:10:10,373 --> 01:10:12,251
And if we're wrong,
then we got to find someone

1367
01:10:12,333 --> 01:10:13,961
to help us get out of this trade.

1368
01:10:14,043 --> 01:10:16,796
I'm not feeling remotely
confident that we're right.

1369
01:10:16,881 --> 01:10:20,301
And if we're wrong,
who's gonna tell us?

1370
01:10:20,384 --> 01:10:23,804
Who understands this stuff?
It makes no sense!

1371
01:10:26,265 --> 01:10:28,057
<i>I think we need to go to Vegas.</i>

1372
01:10:28,141 --> 01:10:30,310
- What's in Vegas?
- Vegas?

1373
01:10:30,394 --> 01:10:32,270
What the hell's in Las Vegas?

1374
01:10:33,354 --> 01:10:36,567
The American Securitization
Forum is there next week.

1375
01:10:36,649 --> 01:10:39,069
Every bond and CDO salesman,
subprime lender

1376
01:10:39,153 --> 01:10:41,238
and swap trader is gonna be there.

1377
01:10:41,322 --> 01:10:44,073
I'm telling you,
your bet is against dumb money.

1378
01:10:44,158 --> 01:10:46,993
It's about time you find out
just how dumb that money really is.

1379
01:10:47,077 --> 01:10:48,203
God, I hate Vegas.

1380
01:10:48,328 --> 01:10:49,747
I hear the food has gotten
really good in Vegas.

1381
01:10:49,829 --> 01:10:51,332
They have a Nobu now.

1382
01:10:51,414 --> 01:10:52,791
Would you fucking stop it?

1383
01:11:39,380 --> 01:11:40,381
Any sense?

1384
01:11:40,546 --> 01:11:42,048
And if a bond is "rich" it is...

1385
01:11:42,382 --> 01:11:45,469
- I don't know, loaded with assets?
- "Rich" just means overpriced.

1386
01:11:45,551 --> 01:11:47,512
I can't sleep on planes,
so I did my homework.

1387
01:11:47,595 --> 01:11:50,015
Okay, let's focus. What's our goal?

1388
01:11:50,099 --> 01:11:52,434
To figure out if this
is a deal of a lifetime

1389
01:11:52,518 --> 01:11:54,310
or if everyone here knows
something we don't

1390
01:11:54,395 --> 01:11:56,229
and we're gonna get royally screwed.

1391
01:11:56,313 --> 01:11:59,065
Right. Remember that when you
meet with the guys from Bear.

1392
01:11:59,233 --> 01:12:00,984
I set you up with a face-to-face.

1393
01:12:01,068 --> 01:12:02,360
- Awesome.
- Where is that?

1394
01:12:02,444 --> 01:12:06,782
Holy shit. Five years ago,
Securitization was a loser convention.

1395
01:12:06,864 --> 01:12:08,951
100, maybe 200 people would show.

1396
01:12:09,076 --> 01:12:11,244
$500 billion a year later, you get this.

1397
01:12:11,328 --> 01:12:12,954
There's a lot of smug-looking
people in here, huh?

1398
01:12:13,037 --> 01:12:16,500
It's like someone hit a piñata
filled with white people who suck at golf.

1399
01:12:16,582 --> 01:12:18,085
I mean, who are all these clowns?

1400
01:12:18,167 --> 01:12:19,545
Come on. I think it looks fun.

1401
01:12:19,627 --> 01:12:23,090
Certainly. Vennett says these
are the people we're betting against.

1402
01:12:23,172 --> 01:12:25,050
- Yeah, here we go. Here we go.
- There he is.

1403
01:12:25,134 --> 01:12:26,885
Chris, on my left. Chris, on my left.

1404
01:12:27,344 --> 01:12:28,470
Gentlemen.

1405
01:12:28,554 --> 01:12:32,140
When do we get a chance to face time
with some of these lovely folks?

1406
01:12:32,224 --> 01:12:33,641
Chris, give him the keycards.

1407
01:12:33,766 --> 01:12:34,976
Do you even know which
keycards you're giving out?

1408
01:12:35,060 --> 01:12:36,060
- You're just giving them out?
- Thank you.

1409
01:12:36,145 --> 01:12:38,855
First of all, how was your travel?
How are you? Uneventful?

1410
01:12:38,939 --> 01:12:40,149
- Uneventful.
- Okay.

1411
01:12:40,231 --> 01:12:41,942
I've been here for six hours.
I've already been to the gym,

1412
01:12:42,025 --> 01:12:43,359
I had two poached eggs

1413
01:12:43,444 --> 01:12:45,069
and I played blackjack
with Harry Dean Stanton.

1414
01:12:45,154 --> 01:12:46,613
Thank you for your diary.

1415
01:12:47,072 --> 01:12:48,698
Face time. I'd like some face time.

1416
01:12:48,782 --> 01:12:50,242
Just remember.
We're here to gather information.

1417
01:12:50,324 --> 01:12:51,743
We're gathering information, okay?

1418
01:12:51,827 --> 01:12:54,203
We're not advertising
our short position. All right?

1419
01:12:54,287 --> 01:12:55,913
We don't want to spook
everybody. Can you do that?

1420
01:12:55,997 --> 01:12:57,541
I know you got a big mouth,
you like to run it.

1421
01:12:57,623 --> 01:12:59,460
Can you just keep it shut
for a few days?

1422
01:12:59,542 --> 01:13:00,586
Okay. Okay.

1423
01:13:00,668 --> 01:13:02,503
Yeah, don't worry. We'll play nice.

1424
01:13:02,628 --> 01:13:03,921
Ladies and gentlemen.

1425
01:13:04,006 --> 01:13:06,216
Business is good.

1426
01:13:06,300 --> 01:13:07,717
Profits are strong

1427
01:13:07,801 --> 01:13:10,720
and the mortgage continues
to be the bedrock

1428
01:13:10,804 --> 01:13:13,140
on which this economy is built.

1429
01:13:17,810 --> 01:13:19,395
And, yes, we had to take some losses

1430
01:13:19,479 --> 01:13:22,774
in our subprime department
last year, but those losses

1431
01:13:22,858 --> 01:13:25,485
will be contained at only 5%.

1432
01:13:25,652 --> 01:13:27,779
Now, in our residential sector...

1433
01:13:27,863 --> 01:13:29,030
Mark, it's not a Q and A.

1434
01:13:29,155 --> 01:13:30,823
...our rollout of those
variable rate packages

1435
01:13:30,908 --> 01:13:32,533
were gobbled up by the consumers!

1436
01:13:32,658 --> 01:13:34,703
I have a question, please.

1437
01:13:37,663 --> 01:13:39,750
Sir, the Q and A is after my statements.

1438
01:13:39,832 --> 01:13:42,252
But you know what? You seem anxious.
How can I help you?

1439
01:13:42,336 --> 01:13:44,253
- Thank you. How are you?
- Fine, thank you.

1440
01:13:44,337 --> 01:13:47,466
Would you say that it is a possibility

1441
01:13:47,548 --> 01:13:52,179
or a probability that
subprime losses stop at 5%?

1442
01:13:52,386 --> 01:13:53,471
Thank you.

1443
01:13:53,555 --> 01:13:58,351
I would say it is a very
strong probability, indeed.

1444
01:13:58,851 --> 01:14:01,395
So back to the residential sector.

1445
01:14:01,521 --> 01:14:03,606
When we rolled out the new
variable rates package...

1446
01:14:03,689 --> 01:14:05,274
Excuse me.

1447
01:14:07,694 --> 01:14:08,779
Yes, sir.

1448
01:14:08,862 --> 01:14:12,240
Zero! Zero!

1449
01:14:12,365 --> 01:14:15,118
There is a 0% chance

1450
01:14:15,202 --> 01:14:18,997
that your subprime losses
will stop at 5%.

1451
01:14:19,081 --> 01:14:20,164
Zero.

1452
01:14:20,248 --> 01:14:21,792
Excuse me.

1453
01:14:21,875 --> 01:14:22,917
I have to take this.

1454
01:14:23,001 --> 01:14:24,962
He must be from Bank of America.

1455
01:14:26,671 --> 01:14:29,341
- Our subprime department is fine.
- No, I'm not doing anything right now.

1456
01:14:29,423 --> 01:14:30,967
As I was saying,
our residential department...

1457
01:14:31,051 --> 01:14:32,219
How are the kids?

1458
01:14:32,344 --> 01:14:34,720
...consumers reacted to our packages...

1459
01:14:34,805 --> 01:14:36,472
Mark Baum really did that.

1460
01:14:36,556 --> 01:14:37,807
When we were in Vegas, he did that.

1461
01:14:37,890 --> 01:14:40,060
He said that, he took the call.

1462
01:14:40,519 --> 01:14:42,229
Now you see what I had to deal with?

1463
01:14:55,908 --> 01:14:58,036
Yeah, the Beretta... Meh.

1464
01:14:58,119 --> 01:15:00,329
But this Uzi is fucking awesome!

1465
01:15:00,413 --> 01:15:03,000
I need this CDO machine
to run for another two years.

1466
01:15:03,082 --> 01:15:06,336
And then I'm rich as fuck
and I got my house in Aspen.

1467
01:15:06,420 --> 01:15:09,631
But do you have any concerns
about the performance

1468
01:15:09,715 --> 01:15:11,300
of the underlying securitizations?

1469
01:15:11,382 --> 01:15:13,176
It's easy to see that delinquencies

1470
01:15:13,260 --> 01:15:16,137
and default rates
are on the rise right now.

1471
01:15:16,220 --> 01:15:18,390
Could you please stop
being such a buzzkill, dude?

1472
01:15:18,765 --> 01:15:21,310
We didn't bring you out here
to talk about work, bro.

1473
01:15:21,393 --> 01:15:22,853
Why did you bring us out here?

1474
01:15:22,935 --> 01:15:26,148
Because we need to be able to
expense the ammo to a client.

1475
01:15:26,230 --> 01:15:29,234
I'm gonna go shoot some terrorists.
Watch how it's done, boys!

1476
01:15:29,443 --> 01:15:32,069
- These guys are morons.
- Fucking tool.

1477
01:15:32,779 --> 01:15:33,822
These guys are morons.

1478
01:15:34,948 --> 01:15:37,408
- Fuck, yes! Boom!
- Yeah, man!

1479
01:15:37,492 --> 01:15:39,869
We need to be buying up every swap
we can get our hands on here.

1480
01:15:39,953 --> 01:15:42,247
Just hold on, okay? Hold on.

1481
01:15:42,331 --> 01:15:44,625
My brother's ex-girlfriend
works for the SEC.

1482
01:15:44,750 --> 01:15:46,585
She just told me she's in town, okay?

1483
01:15:46,667 --> 01:15:48,795
So, if we're missing something,
maybe she can tell me.

1484
01:15:48,921 --> 01:15:50,546
You know, give me some insight.

1485
01:15:50,631 --> 01:15:52,381
In the meantime,
you go to the main floor

1486
01:15:52,466 --> 01:15:54,176
<i>and price some swaps.</i>

1487
01:15:54,635 --> 01:15:58,639
Well, actually, we're about to invest
in housing bonds, and...

1488
01:15:58,721 --> 01:16:01,390
I was wondering if the SEC
is worried about them at all.

1489
01:16:01,475 --> 01:16:04,228
I know you're not allowed
to tell me specifics, but just generally.

1490
01:16:04,310 --> 01:16:06,520
We don't investigate mortgage bonds.

1491
01:16:06,604 --> 01:16:09,942
Truth is, since we got our budget cut,
we don't investigate much.

1492
01:16:11,984 --> 01:16:14,947
- Then why are you here? I thought...
- I'm not here for the SEC.

1493
01:16:15,029 --> 01:16:16,698
I'm here on my own dime.

1494
01:16:17,658 --> 01:16:20,868
I'm floating my resume
to some big banks.

1495
01:16:20,953 --> 01:16:22,537
How's your brother, by the way?

1496
01:16:22,621 --> 01:16:24,497
How are you floating
your resume to big banks?

1497
01:16:24,581 --> 01:16:27,461
I mean, you're supposed to be the ones,
you know, policing the big banks.

1498
01:16:27,501 --> 01:16:28,918
Grow up, Jamie.

1499
01:16:29,002 --> 01:16:32,756
There must be some kind of law
against working for a financial institution

1500
01:16:32,838 --> 01:16:36,051
right after you've been working
in financial regulation, right?

1501
01:16:36,134 --> 01:16:38,220
No. No.

1502
01:16:39,720 --> 01:16:41,847
Hey! Dougie!

1503
01:16:42,682 --> 01:16:45,644
Hey! Come over here.
What are you doing at Caesars?

1504
01:16:45,726 --> 01:16:47,229
He's at Goldman.

1505
01:16:47,854 --> 01:16:48,896
See you.

1506
01:16:48,980 --> 01:16:54,027
We can do BBB-level swaps
at 500 basis points. Maybe.

1507
01:16:54,110 --> 01:16:57,905
You're pricing the swaps
like the bond is gonna collapse

1508
01:16:57,989 --> 01:17:00,367
even though the bond value's
going up? Really?

1509
01:17:00,908 --> 01:17:01,993
Sign of the times.

1510
01:17:02,077 --> 01:17:03,117
What the hell is going on?

1511
01:18:01,970 --> 01:18:05,765
Lewis, can you come in
early tomorrow, please?

1512
01:18:05,849 --> 01:18:08,143
I need to unload the
AIG and Countrywide

1513
01:18:08,225 --> 01:18:09,685
and Freddie Mac positions

1514
01:18:09,770 --> 01:18:12,271
so that we can afford
the premiums on the...

1515
01:18:13,523 --> 01:18:16,443
...core mortgage shorts on the swaps.

1516
01:18:16,902 --> 01:18:18,403
No problem, Dr. Burry.

1517
01:18:20,447 --> 01:18:21,614
Dr. Burry?

1518
01:18:25,202 --> 01:18:26,243
If the investors withdraw,

1519
01:18:26,328 --> 01:18:29,081
what's going to happen here?
Are we done?

1520
01:18:29,206 --> 01:18:31,123
Honestly, I don't know.

1521
01:18:38,798 --> 01:18:41,051
The bonds aren't going down.

1522
01:18:42,301 --> 01:18:44,970
They won't move. It's possible

1523
01:18:45,389 --> 01:18:49,975
that we are in a completely
fraudulent system.

1524
01:18:51,395 --> 01:18:54,064
Or... You're wrong.

1525
01:18:58,819 --> 01:18:59,903
Sure.

1526
01:19:00,654 --> 01:19:04,658
It's possible I'm wrong.
I just don't know how.

1527
01:19:09,371 --> 01:19:13,542
I guess when someone's wrong,
they never...

1528
01:19:13,917 --> 01:19:16,168
They never know how.

1529
01:19:20,465 --> 01:19:22,676
- See you in the morning.
- Yeah.

1530
01:19:24,469 --> 01:19:26,470
Even Bear upped their prices.

1531
01:19:27,055 --> 01:19:29,557
And they keep calling us Brownhole.

1532
01:19:29,640 --> 01:19:31,268
You just don't have the money
or the reputation.

1533
01:19:31,350 --> 01:19:32,685
Don't take it personally.

1534
01:19:32,810 --> 01:19:34,104
I don't think I have
the strip club in me tonight.

1535
01:19:34,186 --> 01:19:37,858
I'm just gonna get some ginger ale
and watch some pay-per-view.

1536
01:19:37,940 --> 01:19:40,318
I'll book us some flights out
for the morning.

1537
01:19:41,735 --> 01:19:44,363
A deal. We need a deal, right? A deal.

1538
01:19:44,448 --> 01:19:46,240
We need a deal we can afford.

1539
01:19:46,365 --> 01:19:48,659
We need a deal
that they're not gonna refuse.

1540
01:19:48,743 --> 01:19:52,079
So... What can we do?
We can...

1541
01:19:53,372 --> 01:19:56,292
The AA tranches. What if we
bet against the AA tranches?

1542
01:19:56,376 --> 01:19:57,711
Who's not gonna take that bet?

1543
01:19:58,420 --> 01:20:01,338
We know they say
they're 95% AAA-rated,

1544
01:20:01,422 --> 01:20:03,425
but in reality they're more like 25%.

1545
01:20:03,507 --> 01:20:05,926
Some of them are 0%!

1546
01:20:06,011 --> 01:20:08,637
We also know that if the
bottom tranches fail at over 8%,

1547
01:20:08,721 --> 01:20:09,890
the upper tranches are affected.

1548
01:20:09,972 --> 01:20:11,182
They go to zero.

1549
01:20:11,432 --> 01:20:14,394
I'll bet you right now
that those AA's are actually like B's.

1550
01:20:14,853 --> 01:20:17,939
I rarely ever say these words,
but I think Charlie's right.

1551
01:20:18,273 --> 01:20:19,940
Look, Ben.

1552
01:20:21,609 --> 01:20:23,028
The payoff

1553
01:20:23,528 --> 01:20:24,945
is 200 to 1.

1554
01:20:25,029 --> 01:20:27,073
But they're all taking
the ratings at face value.

1555
01:20:27,198 --> 01:20:30,577
So they're charging pennies
on the dollar a bet against the AA's.

1556
01:20:32,203 --> 01:20:35,039
Just when I start thinking
you guys are clowns...

1557
01:20:35,122 --> 01:20:37,626
No one on the planet's
betting against AA's.

1558
01:20:37,708 --> 01:20:40,628
The banks will think we're either high
or having a stroke.

1559
01:20:40,712 --> 01:20:43,047
They'll take every dime we have to offer.

1560
01:20:45,634 --> 01:20:46,967
Kinda brilliant.

1561
01:20:48,761 --> 01:20:50,846
This is what we did
that no one else thought of.

1562
01:20:50,930 --> 01:20:53,850
Not even Baum or Burry
thought to short the AA's.

1563
01:20:53,934 --> 01:20:55,310
But we did.

1564
01:20:55,393 --> 01:20:56,936
Little Brownhole Capital.

1565
01:20:57,270 --> 01:21:02,192
We're interested in shorting
some of the AA tranche of CDOs.

1566
01:21:02,274 --> 01:21:04,069
Come on, guys, what's the angle?

1567
01:21:04,152 --> 01:21:06,445
Oh, got no angle. We're new to this.
We're just excited.

1568
01:21:06,570 --> 01:21:10,283
We want to do $15 million
in swaps on the AA tranche.

1569
01:21:10,742 --> 01:21:11,826
I don't understand.

1570
01:21:11,909 --> 01:21:14,537
You can buy as much AA tranche
as you want.

1571
01:21:16,747 --> 01:21:18,875
$40 million against the AA.

1572
01:21:18,958 --> 01:21:21,168
Brother, I will sell you
as much as you want.

1573
01:21:21,461 --> 01:21:23,671
You understand perfectly, Bob.
You want the deal?

1574
01:21:25,840 --> 01:21:27,841
That's cool. That's all right with me.

1575
01:21:30,052 --> 01:21:31,262
Pleasure.

1576
01:21:39,479 --> 01:21:41,398
Don't do that. Stop. Stop.

1577
01:21:42,106 --> 01:21:43,315
- Stop that.
- Charlie.

1578
01:21:44,024 --> 01:21:45,484
Stop it! Stop.

1579
01:21:47,904 --> 01:21:48,988
What?

1580
01:21:50,407 --> 01:21:51,966
Do you have any idea what you just did?

1581
01:21:52,199 --> 01:21:53,868
Come on. We just made
the deal of our lifetimes!

1582
01:21:53,952 --> 01:21:55,119
We should celebrate.

1583
01:21:55,203 --> 01:21:57,122
You just bet against
the American economy.

1584
01:21:57,204 --> 01:21:58,707
Fuck, yeah, we did!

1585
01:21:58,789 --> 01:22:00,750
- Fuck, yeah!
- Which means...

1586
01:22:00,833 --> 01:22:03,502
Which means if we're right...

1587
01:22:04,546 --> 01:22:07,923
If we're right, people lose homes.
People lose jobs.

1588
01:22:08,007 --> 01:22:11,176
People lose retirement savings.
People lose pensions.

1589
01:22:11,302 --> 01:22:12,470
You know what I hate
about fucking banking?

1590
01:22:12,554 --> 01:22:14,096
It reduces people to numbers.
Here's a number.

1591
01:22:14,180 --> 01:22:17,016
Every 1% unemployment goes up,
40,000 people die. Did you know that?

1592
01:22:17,100 --> 01:22:18,601
- No.
- Did you know that?

1593
01:22:18,685 --> 01:22:20,270
No, I didn't know that.

1594
01:22:21,729 --> 01:22:23,398
We were just excited.

1595
01:22:25,817 --> 01:22:27,819
Just don't fucking dance.

1596
01:22:28,485 --> 01:22:30,322
- All right.
- Where are you going?

1597
01:22:34,701 --> 01:22:36,869
Whoa, I just got really scared.

1598
01:22:38,412 --> 01:22:40,332
First of all, great show today.

1599
01:22:40,414 --> 01:22:41,875
- You were terrific.
- Thank you.

1600
01:22:41,957 --> 01:22:43,585
Your big mouth was a revelation.

1601
01:22:43,667 --> 01:22:45,377
I appreciate that.

1602
01:22:45,502 --> 01:22:47,255
You worried you and your swaps
are getting played?

1603
01:22:47,338 --> 01:22:50,466
Well, this is an opportunity for you
to meet who you're betting against.

1604
01:22:50,550 --> 01:22:52,344
Try not to get too righteous
and listen a little.

1605
01:22:52,426 --> 01:22:53,802
Okay, fine. Who is this guy?

1606
01:22:53,927 --> 01:22:55,596
<i>A real solid-gold asshole.</i>

1607
01:22:55,764 --> 01:22:58,015
- I'm a CDO manager.
- A "CDO manager"?

1608
01:22:58,099 --> 01:22:59,516
Yeah, at Harding Advisors.

1609
01:23:00,100 --> 01:23:03,229
I didn't realize that there was
anything to manage with CDOs.

1610
01:23:05,939 --> 01:23:08,484
We select the securities
that go into the CDO portfolio

1611
01:23:08,568 --> 01:23:09,944
and monitor the assets.

1612
01:23:10,028 --> 01:23:11,820
I do most of Merrill Lynch's CDOs.

1613
01:23:11,904 --> 01:23:14,865
Do you represent the investors
or Merrill Lynch?

1614
01:23:14,948 --> 01:23:17,034
- The investors.
- You do.

1615
01:23:17,202 --> 01:23:18,536
- Yeah.
- But...

1616
01:23:18,744 --> 01:23:20,625
Merrill Lynch isn't gonna send you
any customers

1617
01:23:20,704 --> 01:23:24,250
unless you put Merrill Lynch's bonds
in your CDO.

1618
01:23:25,377 --> 01:23:28,087
Good question. Let's just say
Merrill and I have...

1619
01:23:28,712 --> 01:23:30,798
We have a good relationship.

1620
01:23:30,923 --> 01:23:33,134
You have a good relationship
with Merrill Lynch.

1621
01:23:33,217 --> 01:23:34,886
We've been doing business
together for a long time.

1622
01:23:34,969 --> 01:23:37,430
And so the CDOs that you create

1623
01:23:37,555 --> 01:23:41,475
are of the highest quality
and the highest value.

1624
01:23:41,559 --> 01:23:43,478
- Absolutely. Yep.
- Absolutely.

1625
01:23:43,560 --> 01:23:47,106
Are you at all concerned
about the rising default rates?

1626
01:23:49,067 --> 01:23:52,237
I assume no risk for these
products myself, Mark.

1627
01:23:54,905 --> 01:23:56,073
Okay.

1628
01:23:57,658 --> 01:24:00,828
So let me get this straight.
The bank calls you up.

1629
01:24:01,412 --> 01:24:02,956
They give you the bonds
they want to sell.

1630
01:24:03,038 --> 01:24:04,373
They give you clients,

1631
01:24:04,457 --> 01:24:06,835
they give you money to run
your business.

1632
01:24:06,917 --> 01:24:08,627
Give you fat fees for doing so.

1633
01:24:08,712 --> 01:24:10,713
But you represent the investors?

1634
01:24:12,256 --> 01:24:14,466
- Is that right?
- Yeah.

1635
01:24:14,551 --> 01:24:16,010
But we're not
in the Merrill Lynch building.

1636
01:24:16,094 --> 01:24:17,679
- Okay. Where are you?
- We're in New Jersey.

1637
01:24:17,761 --> 01:24:19,847
You're 20 minutes away.

1638
01:24:19,930 --> 01:24:21,850
Well, five if you use a helicopter.

1639
01:24:23,726 --> 01:24:26,145
- That's funny, huh?
- That's hilarious.

1640
01:24:29,356 --> 01:24:30,399
Oh, boy.

1641
01:24:30,774 --> 01:24:32,985
Your boss is about to explode.

1642
01:24:33,069 --> 01:24:34,695
No, he's too curious to explode.

1643
01:24:34,779 --> 01:24:36,238
Hold on. Say that again.

1644
01:24:36,322 --> 01:24:38,449
CDO "A" has parts of CDO "B".

1645
01:24:38,533 --> 01:24:40,452
And CDO "B" has parts of CDO "A".

1646
01:24:40,534 --> 01:24:42,787
But then they both
get put inside CDO "C".

1647
01:24:42,871 --> 01:24:44,622
Yeah, that one's called CDO squared.

1648
01:24:44,706 --> 01:24:46,791
A CDO of a CDO.

1649
01:24:47,207 --> 01:24:48,208
All right?

1650
01:24:48,376 --> 01:24:50,336
And then there's CDOs made up
of the opposite side

1651
01:24:50,420 --> 01:24:51,962
of the bet you made with your swaps.

1652
01:24:52,212 --> 01:24:54,506
We call them synthetic CDOs.

1653
01:24:54,631 --> 01:24:56,801
What did you say? Synthetic CDOs.

1654
01:24:56,885 --> 01:25:00,387
- That is fucking crazy.
- It's not. It's awesome.

1655
01:25:01,805 --> 01:25:05,310
<i>His face is starting to boil.
He looks like the bad guy from Dune.</i>

1656
01:25:09,396 --> 01:25:11,315
All right, let's say

1657
01:25:11,815 --> 01:25:15,153
you have a pool of $50 million
in subprime loans.

1658
01:25:15,487 --> 01:25:18,072
How much money could be
out there betting on it,

1659
01:25:18,155 --> 01:25:20,949
in your synthetic CDOs and swaps

1660
01:25:21,033 --> 01:25:22,618
right now, tonight?

1661
01:25:22,702 --> 01:25:25,329
Let's see, $50 million...

1662
01:25:26,331 --> 01:25:28,332
- A billion dollars.
- What?

1663
01:25:29,501 --> 01:25:31,418
<i>If the mortgage bonds
that Michael Burry discovered</i>

1664
01:25:31,502 --> 01:25:32,837
<i>were the match...</i>

1665
01:25:34,255 --> 01:25:36,673
How much bigger is the market
for insuring mortgage bonds

1666
01:25:36,757 --> 01:25:38,217
than actual mortgages?

1667
01:25:39,385 --> 01:25:40,552
About 20 times.

1668
01:25:40,720 --> 01:25:42,805
<i>If the mortgage bonds were the match</i>

1669
01:25:42,889 --> 01:25:45,600
<i>and the CDOs were
the kerosene-soaked rags,</i>

1670
01:25:45,682 --> 01:25:47,726
<i>then the synthetic CDO
was the atomic bomb</i>

1671
01:25:47,810 --> 01:25:49,520
<i>with the drunk President
holding his finger</i>

1672
01:25:49,604 --> 01:25:50,771
<i>over the button.</i>

1673
01:25:50,854 --> 01:25:53,106
<i>It was at that moment
in that dumb restaurant</i>

1674
01:25:53,190 --> 01:25:56,360
<i>with that stupid look on his face
that Mark Baum realized</i>

1675
01:25:56,444 --> 01:25:58,863
<i>that the whole world economy
might collapse.</i>

1676
01:26:02,492 --> 01:26:04,409
<i>And I know what you're thinking.</i>

1677
01:26:04,493 --> 01:26:06,829
<i>"What the fuck is a synthetic CDO?"</i>

1678
01:26:09,207 --> 01:26:12,836
<i>Well, here's Dr. Richard Thaler,
father of behavioral economics</i>

1679
01:26:12,918 --> 01:26:15,546
<i>and Selena Gomez to explain.</i>

1680
01:26:15,880 --> 01:26:19,050
Okay. So here's how
a synthetic CDO works.

1681
01:26:19,132 --> 01:26:22,011
Let's say I bet $10 million
on a blackjack hand.

1682
01:26:22,095 --> 01:26:24,596
$10 million because this hand
is meant to represent

1683
01:26:24,972 --> 01:26:27,225
a single mortgage bond.

1684
01:26:30,185 --> 01:26:33,605
Okay, Selena has a pretty good
hand here, showing 18.

1685
01:26:33,730 --> 01:26:34,731
Dealer showing seven.

1686
01:26:34,815 --> 01:26:36,859
That's a really good hand for Selena.

1687
01:26:36,943 --> 01:26:38,360
Good odds. In fact,
her chances of winning

1688
01:26:38,444 --> 01:26:40,822
<i>this hand are 87%.</i>

1689
01:26:40,904 --> 01:26:44,283
So, my odds are good.
I'm on a winning streak.

1690
01:26:44,367 --> 01:26:47,036
Everybody in this place
wants to get in on the action.

1691
01:26:47,119 --> 01:26:48,496
How could I lose, right?

1692
01:26:48,579 --> 01:26:50,081
Now, this is a classic error.

1693
01:26:50,163 --> 01:26:53,126
In basketball it's called
the Hot Hand Fallacy.

1694
01:26:53,208 --> 01:26:55,752
A player makes a bunch
of shots in a row.

1695
01:26:55,837 --> 01:26:58,131
People are sure they're gonna
make the next one.

1696
01:26:58,213 --> 01:27:00,173
<i>People think that whatever's
happening now</i>

1697
01:27:00,257 --> 01:27:03,011
<i>is gonna continue to happen
into the future.</i>

1698
01:27:03,094 --> 01:27:06,430
<i>During the real estate boom,
markets were going up and up</i>

1699
01:27:06,514 --> 01:27:08,234
and people thought
they would never go down.

1700
01:27:08,265 --> 01:27:10,810
So people who are watching
and think that I won't lose

1701
01:27:10,894 --> 01:27:12,353
will make a side bet.

1702
01:27:12,436 --> 01:27:14,689
Now, this is the first synthetic CDO.

1703
01:27:14,771 --> 01:27:16,356
I love Selena Gomez.

1704
01:27:16,440 --> 01:27:17,942
I bet you $50 million she wins.

1705
01:27:18,025 --> 01:27:20,110
And I'll give you 3-to-1 odds.

1706
01:27:20,194 --> 01:27:24,032
3- to - 1 odds?
Okay, I'll take that bet.

1707
01:27:24,114 --> 01:27:27,452
Now, somebody else
is gonna want to make a bet

1708
01:27:27,534 --> 01:27:29,953
- on the outcome of their bet.
- Bet you 50 million she wins.

1709
01:27:30,037 --> 01:27:32,998
That will lead to synthetic
CDO number two.

1710
01:27:33,082 --> 01:27:36,252
Hey, I bet you $200 million
that lady in the glasses

1711
01:27:36,418 --> 01:27:37,921
wins that bet.

1712
01:27:38,087 --> 01:27:41,173
She probably will win.
So I want a great payoff.

1713
01:27:41,341 --> 01:27:43,676
- How about 20-to-1?
- Deal.

1714
01:27:44,010 --> 01:27:48,305
And this will go on and on
with more and more synthetic CDOs.

1715
01:27:48,389 --> 01:27:52,435
And we can transform an original
$10 million investment

1716
01:27:52,601 --> 01:27:54,520
into billions of dollars.

1717
01:27:55,438 --> 01:27:56,773
You okay?

1718
01:27:58,190 --> 01:27:59,192
No.

1719
01:28:00,568 --> 01:28:02,403
I actually feel pretty sick.

1720
01:28:07,617 --> 01:28:09,534
So I'm going to leave.

1721
01:28:11,119 --> 01:28:13,372
You think I'm a parasite,
don't you, Mr. Baum?

1722
01:28:14,082 --> 01:28:18,002
But, apparently, society values me
very much.

1723
01:28:19,045 --> 01:28:20,796
In fact, let's do this.

1724
01:28:22,840 --> 01:28:25,842
I'll tell you how much I'm worth.

1725
01:28:26,386 --> 01:28:27,886
You tell me how much you're worth.

1726
01:28:29,096 --> 01:28:34,185
God, you are an incredibly
big piece of shit.

1727
01:28:39,940 --> 01:28:41,818
Short everything that guy has touched.

1728
01:28:41,900 --> 01:28:43,528
I want half a billion more in swaps.

1729
01:28:44,069 --> 01:28:46,322
You sure about that?
The collateral calls could bankrupt you.

1730
01:28:46,405 --> 01:28:48,365
- Yeah. Yeah.
- Where are you going?

1731
01:28:48,448 --> 01:28:51,493
I am going to try to find
moral redemption

1732
01:28:51,577 --> 01:28:53,412
at the roulette table.

1733
01:29:57,601 --> 01:29:58,978
Hey, hey, hey!

1734
01:30:03,065 --> 01:30:04,524
Things are worse than I thought.

1735
01:30:06,652 --> 01:30:08,570
I honestly think
the economy might collapse.

1736
01:30:08,988 --> 01:30:10,113
But you've been saying

1737
01:30:10,198 --> 01:30:13,283
that the system's broken
for years, Mark. So...

1738
01:30:13,743 --> 01:30:15,661
Why are you so shocked?

1739
01:30:18,163 --> 01:30:21,583
It's more twisted
than I could have imagined.

1740
01:30:21,667 --> 01:30:23,543
You love to be the virtuous one.

1741
01:30:24,002 --> 01:30:25,587
I'm a banker. I'm a part of it.

1742
01:30:25,671 --> 01:30:27,965
You always have, Mark.
Like you're untainted.

1743
01:30:28,048 --> 01:30:31,511
It changed me.
It changed me into a person

1744
01:30:32,095 --> 01:30:33,930
who is not able to reach out
to someone...

1745
01:30:34,012 --> 01:30:35,931
He was in pain.
My brother was in real pain.

1746
01:30:36,515 --> 01:30:38,850
There's no perfect way to help.

1747
01:30:41,854 --> 01:30:44,314
It's sad. It's scary.

1748
01:30:44,439 --> 01:30:47,609
So stop trying to fix the world.

1749
01:30:47,693 --> 01:30:48,778
He told me...

1750
01:30:48,860 --> 01:30:50,195
You're not a saint.

1751
01:30:50,279 --> 01:30:52,030
Saints don't live on Park Avenue.

1752
01:30:52,239 --> 01:30:53,865
...that he was having bad thoughts.

1753
01:30:53,949 --> 01:30:56,743
Just feel the feelings like the rest of us.

1754
01:30:57,078 --> 01:31:01,248
<i>My first response
was to offer him some money.</i>

1755
01:31:01,582 --> 01:31:04,085
<i>I offered him fucking money!</i>

1756
01:31:09,756 --> 01:31:12,385
His face was so smashed.

1757
01:31:31,444 --> 01:31:32,779
That's right.

1758
01:32:39,471 --> 01:32:40,805
Michael?

1759
01:32:40,890 --> 01:32:42,225
- Michael?
- Yes. Yes.

1760
01:32:42,307 --> 01:32:44,393
- Is everything okay?
- Yes, honey.

1761
01:32:44,476 --> 01:32:46,561
- You sure?
- Yeah, baby.

1762
01:32:48,396 --> 01:32:49,689
I'm fine.

1763
01:32:58,658 --> 01:33:00,326
<i>To all investors.</i>

1764
01:33:00,408 --> 01:33:01,493
<i>As you may know,</i>

1765
01:33:02,494 --> 01:33:06,082
<i>our agreement allows me
to take extraordinary measures</i>

1766
01:33:06,539 --> 01:33:09,460
<i>when markets
aren't functioning properly.</i>

1767
01:33:09,542 --> 01:33:13,256
<i>I currently have reason to believe
the mortgage bond market</i>

1768
01:33:13,922 --> 01:33:15,675
<i>is fraudulent.</i>

1769
01:33:17,842 --> 01:33:22,597
<i>So, in order to protect investors
from this fraudulent market,</i>

1770
01:33:22,681 --> 01:33:25,935
<i>I've decided to restrict
investors' withdrawals</i>

1771
01:33:26,018 --> 01:33:27,686
<i>until further notice.</i>

1772
01:33:28,020 --> 01:33:31,690
<i>Sincerely, Dr. Michael J. Burry.</i>

1773
01:34:39,341 --> 01:34:40,801
<i>I never would have guessed my life</i>

1774
01:34:40,885 --> 01:34:43,429
<i>could change as much as it
has since I moved to L.A.</i>

1775
01:34:43,511 --> 01:34:45,890
<i>It's not just, like, that easy
to, like, not see you.</i>

1776
01:34:45,972 --> 01:34:49,060
<i>He lashed out at rumors
he used performance enhancing drugs.</i>

1777
01:34:49,268 --> 01:34:50,685
This record is not tainted.

1778
01:34:50,770 --> 01:34:51,936
Oh, my God, dude.

1779
01:34:52,020 --> 01:34:53,730
Will you please stop changing
the channels?

1780
01:34:53,814 --> 01:34:55,440
- You're driving me crazy.
- All right.

1781
01:34:55,524 --> 01:34:57,484
- Fine.
- Just put the business news on.

1782
01:34:58,069 --> 01:35:00,695
<i>- ... and the S&P picked up three points.
- Jesus!</i>

1783
01:35:00,779 --> 01:35:02,530
<i>Mortgage meltdown continued today.</i>

1784
01:35:02,614 --> 01:35:05,326
<i>Subprime mortgage lender
New Century Financial,</i>

1785
01:35:05,451 --> 01:35:08,078
<i>once the industry leader, by the way,
filed for bankruptcy.</i>

1786
01:35:08,162 --> 01:35:10,538
<i>- The company immediately...
- Whoa, whoa, whoa.</i>

1787
01:35:10,706 --> 01:35:11,873
<i>Good time for my voice to go...</i>

1788
01:35:11,957 --> 01:35:14,210
<i>Fired 3,200 workers.</i>

1789
01:35:14,292 --> 01:35:16,628
<i>The manufacturing index also
fell in the month of March...</i>

1790
01:35:16,712 --> 01:35:17,796
It's starting.

1791
01:35:17,880 --> 01:35:19,465
<i>...a warning that economic
growth could slow.</i>

1792
01:35:19,547 --> 01:35:22,551
<i>The Institute of Supply Management
also reported a rise in prices...</i>

1793
01:35:22,635 --> 01:35:24,261
I'm gonna call my mom.

1794
01:35:26,514 --> 01:35:29,391
<i>The principal source of the slowdown
in economic growth...</i>

1795
01:35:29,475 --> 01:35:31,519
Time and time and time again,

1796
01:35:31,644 --> 01:35:33,770
I have gone to bat for you, Mark!

1797
01:35:33,854 --> 01:35:35,146
We've known each other
for seven years...

1798
01:35:35,230 --> 01:35:37,565
She's got some lungs on her.
I'm impressed.

1799
01:35:38,734 --> 01:35:40,569
I can't help but enjoy it.

1800
01:35:41,487 --> 01:35:43,113
There's no fucking way.
There's no fucking way

1801
01:35:43,197 --> 01:35:44,657
that the big banks are that stupid.

1802
01:35:45,658 --> 01:35:47,493
Bye, Kathy!

1803
01:35:52,163 --> 01:35:53,164
Well?

1804
01:35:54,375 --> 01:35:58,002
Kathy thinks that it would be a good idea
if we sold our shorts.

1805
01:35:58,087 --> 01:35:59,087
What else is new?

1806
01:35:59,171 --> 01:36:01,047
And she said that
Morgan Stanley will buy them.

1807
01:36:01,131 --> 01:36:02,132
Holy shit!

1808
01:36:02,841 --> 01:36:04,092
What did you say?

1809
01:36:04,176 --> 01:36:05,845
I told her we're not selling shit.

1810
01:36:12,016 --> 01:36:15,854
If you need the files for 2005...

1811
01:36:16,020 --> 01:36:19,024
Mr. Fields' suit is very specific
to files from the past year.

1812
01:36:19,774 --> 01:36:22,528
Good. Then get out.
Say hi to Lawrence for me.

1813
01:36:22,610 --> 01:36:23,779
Will do.

1814
01:36:26,823 --> 01:36:28,492
You can't call me back for a week?

1815
01:36:28,576 --> 01:36:30,411
<i>I am so sorry, Mike.</i>

1816
01:36:30,786 --> 01:36:33,956
<i>Goldman had a systems failure.
I lost a ton of messages.</i>

1817
01:36:34,038 --> 01:36:36,082
Yeah, B of A
said they had a power outage,

1818
01:36:36,207 --> 01:36:39,377
and Morgan Stanley
said their server crashed.

1819
01:36:39,502 --> 01:36:40,628
<i>That's weird.</i>

1820
01:36:40,712 --> 01:36:43,256
Well, I would call it improbable.

1821
01:36:43,340 --> 01:36:46,886
So where do you have
our position marked?

1822
01:36:47,720 --> 01:36:49,471
<i>I think it's the same, Mike.</i>

1823
01:36:49,555 --> 01:36:51,431
What? Can you explain
that to me, please,

1824
01:36:51,515 --> 01:36:54,810
because how can the value
of an insurance contract

1825
01:36:54,894 --> 01:36:59,105
not be affected by the demise
of the very thing it insures?

1826
01:36:59,189 --> 01:37:01,984
<i>They're independent markets.
They're not always correlated.</i>

1827
01:37:02,067 --> 01:37:03,068
<i>I know it sounds odd,</i>

1828
01:37:03,152 --> 01:37:05,613
<i>but these
are very complicated products.</i>

1829
01:37:06,447 --> 01:37:08,323
They are correlated.

1830
01:37:08,407 --> 01:37:10,408
They're gonna lose their houses,
they're gonna lose their jobs,

1831
01:37:10,493 --> 01:37:11,573
they're gonna lose their...

1832
01:37:14,371 --> 01:37:16,207
Will you listen to me?

1833
01:37:16,414 --> 01:37:19,042
This is like the end of capitalism.

1834
01:37:19,167 --> 01:37:22,505
This is like the Dark Ages all over again.

1835
01:37:23,546 --> 01:37:24,672
I don't want to talk to Dad.

1836
01:37:24,756 --> 01:37:27,301
Okay, I love you, too. Save your money.

1837
01:37:28,010 --> 01:37:32,014
She says I need to be on Xanax
and double my dose of Zoloft.

1838
01:37:32,180 --> 01:37:34,140
I asked Bear Stearns to price our shorts.

1839
01:37:34,225 --> 01:37:35,864
They tell me the CDOs
still haven't moved.

1840
01:37:35,893 --> 01:37:37,685
This is fucking insane!

1841
01:37:37,770 --> 01:37:39,270
You realize that?
These people are crooks

1842
01:37:39,354 --> 01:37:41,398
and they should be in prison.

1843
01:37:41,564 --> 01:37:42,690
Look at the TABX.

1844
01:37:42,774 --> 01:37:44,609
You can see that the CDOs
are worth zero!

1845
01:37:44,693 --> 01:37:46,862
So you know what they're doing, huh?
You know what they're doing, right?

1846
01:37:46,987 --> 01:37:48,655
Yeah. They're unloading them.

1847
01:37:48,738 --> 01:37:52,033
They're selling their dog shit CDOs,
then they go to another bank

1848
01:37:52,117 --> 01:37:54,161
and short the shit they just fucking sold!

1849
01:37:54,328 --> 01:37:55,912
Let's go to the press, man!

1850
01:37:55,996 --> 01:37:59,291
This is a massive story.
Who wouldn't publish it?

1851
01:38:00,251 --> 01:38:01,585
Robert Redford!

1852
01:38:02,002 --> 01:38:03,462
No, you don't understand!

1853
01:38:03,546 --> 01:38:05,631
I got it, guys. I got it.

1854
01:38:06,840 --> 01:38:08,425
What am I supposed to do?

1855
01:38:08,509 --> 01:38:10,176
Do you want me to write a piece
called "We're All Fucked"?

1856
01:38:10,301 --> 01:38:12,179
Yes! That's a perfect title!

1857
01:38:12,262 --> 01:38:16,432
Casey, right now every bank in town
is unloading these shit bonds

1858
01:38:16,600 --> 01:38:18,310
onto unsuspecting customers.

1859
01:38:18,394 --> 01:38:21,396
And they won't devalue them
until they get them off their books.

1860
01:38:21,479 --> 01:38:23,940
This level of criminality
is unprecedented,

1861
01:38:24,024 --> 01:38:26,277
even on fucking Wall Street.

1862
01:38:27,403 --> 01:38:30,238
Jamie... And this is me
being honest here, okay?

1863
01:38:30,530 --> 01:38:33,074
It took me years to build my
relationships on Wall Street.

1864
01:38:33,158 --> 01:38:37,328
No bank or ratings agency
is going to confirm a story like this

1865
01:38:37,412 --> 01:38:39,914
just because
it comes from two guys in a...

1866
01:38:40,039 --> 01:38:43,293
Sorry, garage band hedge fund
that thinks it's the apocalypse.

1867
01:38:44,962 --> 01:38:45,962
Wow.

1868
01:38:46,130 --> 01:38:48,798
I thought you were for real, Casey.
You know, I'll have to say I really did.

1869
01:38:49,048 --> 01:38:50,050
Really?

1870
01:38:50,301 --> 01:38:52,386
Yeah, Jamie, you try being
for real with a three-year-old

1871
01:38:52,469 --> 01:38:54,305
and a wife getting her master's degree.

1872
01:38:54,555 --> 01:38:57,890
I'm not gonna burn my reputation
on your wild hunch.

1873
01:38:58,725 --> 01:38:59,893
Wow.

1874
01:39:00,060 --> 01:39:01,228
Wow.

1875
01:39:01,395 --> 01:39:02,438
Thanks for coming, guys.

1876
01:39:02,520 --> 01:39:03,689
Totally fucking awesome to see you.

1877
01:39:03,771 --> 01:39:07,900
Yeah, Casey. I've always hated you,
because you were a prick in college

1878
01:39:07,984 --> 01:39:10,320
and you are a prick today!

1879
01:39:10,779 --> 01:39:13,282
Thanks, Charlie.
Still living with your mom?

1880
01:39:13,823 --> 01:39:15,283
Charlie, come on!

1881
01:39:15,367 --> 01:39:17,286
Mark Baum again. Call me.

1882
01:39:17,869 --> 01:39:19,496
Subprime bonds fell off a cliff.

1883
01:39:19,579 --> 01:39:21,539
Rumor has it the default
numbers are huge.

1884
01:39:21,623 --> 01:39:24,417
Who got the remittance data early?
I bet it's Goldman.

1885
01:39:24,501 --> 01:39:25,836
Yeah, fuck you very much.

1886
01:39:25,918 --> 01:39:28,756
Jared, it's chaos down here.
Where are we?

1887
01:39:29,172 --> 01:39:32,384
"And Caesar wept, for there were
no more worlds to conquer. "

1888
01:39:33,969 --> 01:39:35,220
Shane?

1889
01:39:35,595 --> 01:39:36,846
Shane?

1890
01:39:38,431 --> 01:39:41,143
Well, nobody's buying CDO
or mortgage bonds anymore

1891
01:39:41,225 --> 01:39:42,519
and everybody wants swaps.

1892
01:39:42,853 --> 01:39:45,189
<i>Swaps are now the most popular
product on the street.</i>

1893
01:39:45,271 --> 01:39:47,106
<i>- That's good for us.
- Yes and no.</i>

1894
01:39:47,190 --> 01:39:48,609
I heard from somebody
who heard from somebody...

1895
01:39:48,692 --> 01:39:51,403
No, Alex, no. Sorry.

1896
01:39:54,573 --> 01:39:56,408
Bennie Cleager over at
Morgan is taking on

1897
01:39:56,492 --> 01:39:58,091
<i>some heavy losses
in the bond department.</i>

1898
01:39:59,411 --> 01:40:01,079
<i>Your ship might be taking on water.</i>

1899
01:40:01,622 --> 01:40:03,957
<i>It might be time to get
our lifejacket and get out.</i>

1900
01:40:04,707 --> 01:40:06,210
<i>I'm jacked.</i>

1901
01:40:06,752 --> 01:40:09,253
I'm jacked! I'm jacked to the tits!

1902
01:40:09,880 --> 01:40:10,922
Good.

1903
01:40:11,006 --> 01:40:13,091
<i>- Do you feel it?
- No.</i>

1904
01:40:19,264 --> 01:40:20,724
What'd you hear, Tommy?

1905
01:40:22,893 --> 01:40:23,894
It's happening.

1906
01:40:23,976 --> 01:40:25,813
Everybody wants our swaps.

1907
01:40:26,020 --> 01:40:28,023
Kathy's office is looking for you.

1908
01:40:28,356 --> 01:40:30,775
They're singing a different tune now,
aren't they?

1909
01:40:32,110 --> 01:40:33,612
That's not good.

1910
01:40:38,449 --> 01:40:39,827
Maybe later. Not now.

1911
01:40:39,909 --> 01:40:42,287
This is a joke. Never.

1912
01:40:45,791 --> 01:40:46,875
Listening.

1913
01:40:47,292 --> 01:40:48,877
<i>- Dr. Burry?
- Yeah.</i>

1914
01:40:48,961 --> 01:40:50,378
<i>Deeb Winston, Goldman Sachs.</i>

1915
01:40:50,462 --> 01:40:51,963
<i>Listen, I've been reviewing
your position.</i>

1916
01:40:52,046 --> 01:40:54,328
<i>I wanted to discuss your marks
and make sure they're fair.</i>

1917
01:40:54,382 --> 01:41:00,055
Yeah, I think you mean that you've
secured a net short position yourselves.

1918
01:41:00,221 --> 01:41:02,975
So you're free to mark my
swaps accurately for once

1919
01:41:03,141 --> 01:41:05,810
because it's now
in your interest to do so.

1920
01:41:07,979 --> 01:41:10,064
<i>I'm not sure what you want me to say.</i>

1921
01:41:10,231 --> 01:41:11,734
I think that...

1922
01:41:13,234 --> 01:41:15,319
I think that you've already said it.

1923
01:41:23,162 --> 01:41:25,288
You tell Jeff at Goldman
that I'm not transferring funds.

1924
01:41:25,372 --> 01:41:26,998
This is bullshit!

1925
01:41:34,172 --> 01:41:35,923
Okay, we'll talk later.

1926
01:41:36,425 --> 01:41:37,842
Thank you.

1927
01:41:40,345 --> 01:41:42,221
Thanks for coming so quickly, Mark.

1928
01:41:42,305 --> 01:41:43,640
Yeah.

1929
01:41:43,931 --> 01:41:45,184
I know you've been hearing rumblings

1930
01:41:45,266 --> 01:41:46,769
about some losses
Morgan has suffered.

1931
01:41:46,851 --> 01:41:48,811
- Congratulations.
- On what?

1932
01:41:51,189 --> 01:41:52,690
Thanks.

1933
01:41:52,774 --> 01:41:54,109
Having fun?

1934
01:41:55,152 --> 01:41:56,487
Yes.

1935
01:41:57,695 --> 01:41:59,030
Tons.

1936
01:41:59,530 --> 01:42:01,867
I just wanted you to know that...

1937
01:42:02,451 --> 01:42:04,131
That, yes, Morgan has suffered
some losses,

1938
01:42:04,203 --> 01:42:07,997
but our liquidity is strong
and there's no cause for concern.

1939
01:42:08,207 --> 01:42:11,042
Would Bennie Cleager be concerned?

1940
01:42:11,376 --> 01:42:12,711
Because word on the street

1941
01:42:12,795 --> 01:42:15,631
is that he took some
pretty heavy losses.

1942
01:42:16,965 --> 01:42:18,759
Kathy, come on. We know each other.

1943
01:42:18,841 --> 01:42:21,052
What's going on?

1944
01:42:21,470 --> 01:42:22,970
How bad is this?

1945
01:42:23,137 --> 01:42:24,305
Okay.

1946
01:42:25,097 --> 01:42:28,143
Two years ago, Bennie Cleager
in Morgan's bond department

1947
01:42:28,226 --> 01:42:31,771
also started shorting subprime housing,
$2 billion in BBBs.

1948
01:42:31,854 --> 01:42:33,105
Bennie is smarter than I thought.

1949
01:42:33,189 --> 01:42:34,608
No, he's not smart at all.

1950
01:42:34,690 --> 01:42:37,069
The premiums on the swap
ate into his desk's profit.

1951
01:42:37,152 --> 01:42:39,112
To cover his BBB shorts,

1952
01:42:39,195 --> 01:42:41,698
he sold a lot of A
and AA swaps as protection.

1953
01:42:41,782 --> 01:42:42,783
A lot.

1954
01:42:43,492 --> 01:42:46,662
He believed that there was no way
that they could be affected.

1955
01:42:47,246 --> 01:42:50,582
Tell me Morgan Stanley doesn't hold
the contracts on these swaps.

1956
01:42:53,918 --> 01:42:55,420
Holy shit.

1957
01:42:56,087 --> 01:42:59,507
All this time I've been trying to figure out
who I'm betting against,

1958
01:42:59,757 --> 01:43:01,592
and it's Morgan Stanley.

1959
01:43:02,552 --> 01:43:03,886
Which is me.

1960
01:43:05,596 --> 01:43:07,932
What's your exposure? $3 billion?

1961
01:43:08,850 --> 01:43:10,685
Please, don't tell me it's more than four.

1962
01:43:10,853 --> 01:43:12,493
I can't answer that. I can't answer that.

1963
01:43:12,563 --> 01:43:15,731
Yes, you can answer that,
because I walk in here

1964
01:43:15,815 --> 01:43:18,902
and people are crying in your hallway.

1965
01:43:19,278 --> 01:43:20,444
Kathy,

1966
01:43:20,945 --> 01:43:22,989
you bring me in to tell me
everything's fine,

1967
01:43:23,073 --> 01:43:24,283
and everything's not fine.

1968
01:43:24,949 --> 01:43:26,827
What, what is happening?

1969
01:43:29,037 --> 01:43:31,206
The long exposure is...

1970
01:43:33,125 --> 01:43:34,626
...$15 billion.

1971
01:43:40,591 --> 01:43:41,716
Jesus!

1972
01:43:41,800 --> 01:43:44,176
He kept saying defaults
over 8% were impossible.

1973
01:43:44,261 --> 01:43:45,261
Oh, my God.

1974
01:43:45,345 --> 01:43:46,904
That there would be a million homeless!

1975
01:43:48,015 --> 01:43:50,266
Yeah, but we have nothing
to do with Morgan Stanley.

1976
01:43:53,185 --> 01:43:54,313
Yeah...

1977
01:43:54,645 --> 01:43:56,480
Tell the bankruptcy court.

1978
01:43:56,731 --> 01:43:59,859
Morgan fails, all our accounts
go on their balance sheet.

1979
01:44:00,484 --> 01:44:02,112
It's just crazy.

1980
01:44:02,320 --> 01:44:03,654
Morgan makes the sucker's bet

1981
01:44:03,738 --> 01:44:06,073
and we pay their fucking gambling debt?

1982
01:44:06,574 --> 01:44:09,077
Short the bank stocks. Then we wait.

1983
01:44:12,997 --> 01:44:15,000
Or we sell our swaps
when the market opens.

1984
01:44:16,752 --> 01:44:19,796
We get our bonuses,
our investors get their profits, we get...

1985
01:44:19,880 --> 01:44:22,381
What, 30 cents on the dollar?
It's not bad.

1986
01:44:22,673 --> 01:44:24,176
We're three times that.

1987
01:44:24,259 --> 01:44:25,969
Not if there's no market left
to sell them in.

1988
01:44:26,052 --> 01:44:27,970
Forget it. We're not giving
out any lifeboats.

1989
01:44:28,055 --> 01:44:30,431
If Morgan goes under,
we end up with nothing.

1990
01:44:30,515 --> 01:44:31,515
Vinnie.

1991
01:44:33,268 --> 01:44:36,438
Jesus, come on. I say when we sell.

1992
01:44:40,567 --> 01:44:45,322
Look, I get that this is personal for you,
but we have a fiduciary responsibility.

1993
01:44:45,404 --> 01:44:46,907
No. No, we don't.

1994
01:44:47,198 --> 01:44:49,368
Nobody's acting responsible.

1995
01:44:49,533 --> 01:44:52,287
Fuck responsibility. Are you kidding me?

1996
01:44:52,787 --> 01:44:54,872
The assholes at the big banks
will take...

1997
01:44:54,957 --> 01:44:55,998
You boys want any appetizers?

1998
01:44:56,082 --> 01:44:57,833
We're talking, please!

1999
01:44:58,585 --> 01:45:00,087
- Excuse us.
- Sorry.

2000
01:45:02,213 --> 01:45:05,007
We are going to wait,
and we are going to wait,

2001
01:45:05,132 --> 01:45:06,635
and we are going to wait

2002
01:45:06,801 --> 01:45:10,555
until they feel the pain,
until they start to bleed.

2003
01:45:10,889 --> 01:45:13,015
- That is what I want.
- But what about our clients

2004
01:45:13,100 --> 01:45:14,393
who've entrusted us with their savings...

2005
01:45:14,475 --> 01:45:15,644
I say when we sell.

2006
01:45:15,726 --> 01:45:16,770
This isn't about you.

2007
01:45:16,853 --> 01:45:18,104
This isn't about you
and your Upper East Side

2008
01:45:18,188 --> 01:45:19,230
- mahogany soapbox.
- Hey! Hey!

2009
01:45:19,398 --> 01:45:20,731
I say when we sell!

2010
01:45:22,317 --> 01:45:24,069
Whatever you say, Mark.

2011
01:45:30,783 --> 01:45:32,577
Dude, did you hear the news?

2012
01:45:34,412 --> 01:45:36,747
Okay. So, not only do
two mortgage hedge funds

2013
01:45:36,832 --> 01:45:38,625
<i>backed by Bear Stearns go belly up,</i>

2014
01:45:38,708 --> 01:45:41,837
but now there's a class-action lawsuit
against Bear.

2015
01:45:41,920 --> 01:45:43,087
Holy shit!

2016
01:45:43,171 --> 01:45:45,673
Let's go! Push! Push!

2017
01:45:45,756 --> 01:45:47,175
So, what? Bear could
really collapse here.

2018
01:45:47,259 --> 01:45:49,051
<i>- This is a risk we really shouldn't take.
- Then what?</i>

2019
01:45:49,136 --> 01:45:51,137
<i>We bought 80% of our swaps at Bear.</i>

2020
01:45:51,220 --> 01:45:52,805
<i>- We'd lose everything.
- So what?</i>

2021
01:45:52,889 --> 01:45:54,306
- Hey, sir?
- One second!

2022
01:45:54,432 --> 01:45:55,432
That's my opinion.

2023
01:45:55,475 --> 01:45:57,935
We bought these fucking things.
We have no clue how to sell them.

2024
01:45:58,020 --> 01:45:59,460
I know. We have to get Ben to do it.

2025
01:45:59,520 --> 01:46:01,523
I've been trying to call him and
he won't get back to me.

2026
01:46:01,605 --> 01:46:03,859
No. He's on vacation
with his wife's family.

2027
01:46:03,942 --> 01:46:05,109
They're in England.

2028
01:46:06,069 --> 01:46:07,069
What?

2029
01:46:14,786 --> 01:46:16,371
<i>- Hello, Ben. Hey.
- Guys?</i>

2030
01:46:16,454 --> 01:46:18,039
<i>Yeah, we're here. Can you hear us?</i>

2031
01:46:18,122 --> 01:46:19,623
<i>- Guys?
- Yeah, we got you.</i>

2032
01:46:19,791 --> 01:46:22,627
<i>Yeah. I hardly got
cell phone or Wi-Fi service.</i>

2033
01:46:23,753 --> 01:46:26,338
I'm trying to sell $200 million
worth of securities.

2034
01:46:26,672 --> 01:46:29,009
In a pub. It smells like sheep.

2035
01:46:29,301 --> 01:46:30,301
You can do this.

2036
01:46:30,426 --> 01:46:31,552
<i>I don't want to pressure you, Ben</i>

2037
01:46:31,636 --> 01:46:34,221
<i>but if you don't pull this off,
we lose everything.</i>

2038
01:46:34,472 --> 01:46:37,768
All right. Let's see what
Credit Suisse's appetite is.

2039
01:46:42,939 --> 01:46:44,106
This is Brownfield Fund.

2040
01:46:44,190 --> 01:46:46,109
I want to unload
my credit default swaps.

2041
01:46:46,443 --> 01:46:47,985
<i>All right. What you got?</i>

2042
01:46:48,153 --> 01:46:49,820
Twenty AA tranches of A.B.S. CDOs.

2043
01:46:50,447 --> 01:46:52,823
<i>A.B.S.?
Are these... These are pretty bad?</i>

2044
01:46:52,990 --> 01:46:54,993
Absolutely. They're complete shit.

2045
01:46:55,284 --> 01:46:56,787
<i>What's your notional value?</i>

2046
01:46:56,869 --> 01:46:59,538
Face value is 205 million. Dollars.

2047
01:46:59,831 --> 01:47:02,417
<i>All right, we could, we could go to forty.</i>

2048
01:47:02,501 --> 01:47:03,820
No. We want at least 100 million.

2049
01:47:03,877 --> 01:47:07,546
100 million? Who are you,
a drug dealer or a banker?

2050
01:47:07,671 --> 01:47:10,175
'Cause if you're a banker,
you can fuck right off!

2051
01:47:10,257 --> 01:47:11,426
<i>I don't know if we can make a market.</i>

2052
01:47:11,510 --> 01:47:12,670
Just give me your best price?

2053
01:47:12,719 --> 01:47:15,262
Yeah. Chuck 100 million
in for me, mate.

2054
01:47:15,346 --> 01:47:16,597
<i>I think we're far apart.</i>

2055
01:47:17,099 --> 01:47:19,518
Look, if you don't want the deal,
you can just hang up.

2056
01:47:21,978 --> 01:47:23,521
That's what I thought.

2057
01:47:24,314 --> 01:47:26,315
<i>- 90 million.
- 70.</i>

2058
01:47:27,650 --> 01:47:29,152
85.

2059
01:47:29,360 --> 01:47:31,320
<i>- 78.
- 84.</i>

2060
01:47:32,530 --> 01:47:34,533
<i>- 78.
- 84.</i>

2061
01:47:36,368 --> 01:47:37,661
It's Dr. Burry.

2062
01:47:38,244 --> 01:47:41,081
Looks like the collapse of the
financial sector is imminent.

2063
01:47:42,082 --> 01:47:44,042
Let's start to sell my position.

2064
01:47:44,417 --> 01:47:46,252
It's $1.3 billion.

2065
01:47:47,753 --> 01:47:49,588
Sure, I'll hold.

2066
01:48:13,404 --> 01:48:14,905
So, I was right.

2067
01:48:15,739 --> 01:48:18,243
I took a rash of shit for two years, but

2068
01:48:18,659 --> 01:48:20,578
I was right.

2069
01:48:20,912 --> 01:48:22,663
And everyone was wrong.

2070
01:48:23,582 --> 01:48:26,751
And, yeah, I got a bonus check
for it. Sue me.

2071
01:48:27,418 --> 01:48:28,502
You know?

2072
01:48:28,920 --> 01:48:32,548
It's a lot of money. I get it.
I can feel you judging me.

2073
01:48:32,631 --> 01:48:33,925
That's palpable.

2074
01:48:34,634 --> 01:48:38,637
But, hey, I never said
I was the hero of this story.

2075
01:48:39,264 --> 01:48:41,807
Hey, Ben. How are we looking?

2076
01:48:43,018 --> 01:48:44,351
<i>Eight... on...</i>

2077
01:48:45,103 --> 01:48:46,438
Sorry?

2078
01:48:46,813 --> 01:48:48,939
No. Eighty million.

2079
01:48:49,149 --> 01:48:50,774
$80 million, $80 million,
that's good, right?

2080
01:48:50,859 --> 01:48:51,943
- Eighty is great.
- Is that good?

2081
01:48:52,027 --> 01:48:53,226
- Eighty is great, Ben.
- Okay.

2082
01:48:53,278 --> 01:48:55,613
Thank you. Thank you so much.

2083
01:48:55,947 --> 01:48:57,823
<i>Most of it went to UBS.</i>

2084
01:48:57,948 --> 01:48:59,701
<i>You're very lucky. The largest bank</i>

2085
01:48:59,783 --> 01:49:02,828
in France froze customer's
money market accounts today.

2086
01:49:02,912 --> 01:49:04,456
This thing's hitting Europe.

2087
01:49:04,538 --> 01:49:06,373
Greece and Iceland are finished.

2088
01:49:06,457 --> 01:49:07,792
Spain is teetering.

2089
01:49:07,876 --> 01:49:09,461
Are you serious? Fuck.

2090
01:49:09,877 --> 01:49:11,712
<i>Ben, call us when you get home.</i>

2091
01:49:11,796 --> 01:49:13,590
<i>But, hey, before you go,</i>

2092
01:49:13,672 --> 01:49:15,216
I'm just wondering...

2093
01:49:18,302 --> 01:49:20,346
Why did you do this with us?

2094
01:49:21,305 --> 01:49:23,307
<i>You didn't have to.</i>

2095
01:49:23,641 --> 01:49:27,311
<i>Thank you. But, why?</i>

2096
01:49:28,229 --> 01:49:31,149
You guys said you wanted to get rich.
Now you're rich.

2097
01:49:31,690 --> 01:49:32,775
<i>Goal!</i>

2098
01:49:32,859 --> 01:49:34,538
<i>Pamplona puts themselves
on the scoreboard.</i>

2099
01:49:38,657 --> 01:49:41,201
<i>As the housing markets and banks
continued to hemorrhage,</i>

2100
01:49:41,283 --> 01:49:43,703
<i>only one of the big shorts
refused to sell.</i>

2101
01:49:43,787 --> 01:49:44,996
<i>Mark Baum.</i>

2102
01:49:48,375 --> 01:49:50,417
<i>So it was beyond perfect
when he was asked to speak</i>

2103
01:49:50,502 --> 01:49:52,337
<i>at a conference opposite Bruce Miller,</i>

2104
01:49:52,420 --> 01:49:54,881
<i>the famous bullish investor.</i>

2105
01:49:55,256 --> 01:49:57,466
<i>After he and Mark had their debate,
Alan Greenspan,</i>

2106
01:49:57,550 --> 01:50:01,011
<i>one of the architects of the whole crisis
was scheduled to speak.</i>

2107
01:50:01,262 --> 01:50:03,847
<i>Everyone in Mark's office showed up,
he even invited friends.</i>

2108
01:50:05,350 --> 01:50:08,645
<i>This was the Ali vs. Foreman
of the financial world.</i>

2109
01:50:09,020 --> 01:50:11,021
<i>The realist versus the fools.</i>

2110
01:50:11,480 --> 01:50:12,983
<i>And if it seems almost too perfect,</i>

2111
01:50:13,065 --> 01:50:15,068
<i>trust me, this happened.</i>

2112
01:50:19,530 --> 01:50:23,368
Welcome, everyone.
Please give a generous welcome to

2113
01:50:23,702 --> 01:50:27,288
Mr. Bruce Miller and Mark Baum.

2114
01:50:44,471 --> 01:50:45,974
Strap yourself in.

2115
01:50:47,225 --> 01:50:49,394
So as some of you may know,
Bear Stearns

2116
01:50:49,476 --> 01:50:52,063
has just received
a loan from JP Morgan.

2117
01:50:52,146 --> 01:50:54,983
Of course, we're gonna have to
wait and see how the markets react,

2118
01:50:55,065 --> 01:50:58,778
but that should lay to rest any concerns
about the bank's health.

2119
01:50:58,862 --> 01:51:03,574
Now, I take it you have no plans to sell
your $200 million in Bear stock?

2120
01:51:03,908 --> 01:51:05,534
No. As a matter of fact,
when we're done here,

2121
01:51:05,618 --> 01:51:07,412
I'll probably go out and buy some more.

2122
01:51:08,912 --> 01:51:12,417
For the opposing view, Mr. Baum.

2123
01:51:14,836 --> 01:51:16,921
I got to stand for this.

2124
01:51:19,673 --> 01:51:21,259
Okay, hi.

2125
01:51:21,676 --> 01:51:24,095
My firm's thesis is pretty simple.

2126
01:51:24,429 --> 01:51:26,264
Wall Street took a good idea,

2127
01:51:26,347 --> 01:51:27,849
Lewis Ranieri's mortgage bond,

2128
01:51:28,099 --> 01:51:30,351
and turned it into an atomic bomb

2129
01:51:30,435 --> 01:51:32,604
of fraud and stupidity

2130
01:51:32,936 --> 01:51:35,606
that's on its way to
decimating the world economy.

2131
01:51:35,689 --> 01:51:38,234
How do you really feel?

2132
01:51:38,359 --> 01:51:40,278
I'm glad you still have a sense of humor.

2133
01:51:40,362 --> 01:51:42,404
I wouldn't if I were you.

2134
01:51:42,780 --> 01:51:46,826
Now, anyone who knows me knows that

2135
01:51:46,909 --> 01:51:49,371
I have no problem telling
someone they're wrong.

2136
01:51:49,453 --> 01:51:52,916
Bear Stearns is denying
rumors of liquidity problems.

2137
01:51:53,625 --> 01:51:55,918
Holy fuck, it's 39 now!

2138
01:51:58,087 --> 01:52:00,631
We live in an era of fraud in America.

2139
01:52:00,715 --> 01:52:03,092
Not just in banking, but in government,

2140
01:52:03,551 --> 01:52:06,512
education, religion, food,

2141
01:52:06,595 --> 01:52:08,264
even baseball.

2142
01:52:08,765 --> 01:52:11,350
What bothers me isn't that

2143
01:52:11,975 --> 01:52:15,814
fraud is not nice or that fraud is mean.

2144
01:52:16,105 --> 01:52:17,981
It's that for 15,000 years

2145
01:52:18,817 --> 01:52:20,359
fraud and short-sighted thinking

2146
01:52:20,443 --> 01:52:22,820
have never, ever worked.

2147
01:52:22,945 --> 01:52:25,489
- Jesus, Bear at 37...
- Not once.

2148
01:52:25,907 --> 01:52:29,202
Eventually, people get caught,
things go south.

2149
01:52:29,284 --> 01:52:30,662
It's fucking plummeting, man.

2150
01:52:30,828 --> 01:52:33,122
When the hell did we forget all that?

2151
01:52:37,292 --> 01:52:39,796
I thought we were better than this.
I really did.

2152
01:52:40,130 --> 01:52:42,172
And the fact that we're not

2153
01:52:42,297 --> 01:52:45,009
doesn't make me feel
all right and superior.

2154
01:52:45,092 --> 01:52:47,595
It makes me feel... Sad.

2155
01:52:48,011 --> 01:52:50,347
Every time I fucking hit
"refresh" it's dropping, man.

2156
01:52:52,015 --> 01:52:53,685
And as fun as it is to watch

2157
01:52:53,976 --> 01:52:56,270
pompous, dumb Wall Streeters
be wildly wrong,

2158
01:52:56,354 --> 01:52:58,648
and you are wrong, sir,

2159
01:52:59,481 --> 01:53:02,484
I just know, that at the end of the day

2160
01:53:03,153 --> 01:53:05,863
average people are going to be the ones

2161
01:53:05,988 --> 01:53:08,158
that are gonna have to pay for all this.

2162
01:53:08,824 --> 01:53:10,952
Because they always, always do.

2163
01:53:11,034 --> 01:53:12,036
It's 32.

2164
01:53:12,162 --> 01:53:13,537
It's fucking tanked, man.

2165
01:53:13,662 --> 01:53:15,664
That's my two cents. Thank you.

2166
01:53:17,000 --> 01:53:18,333
Let me drop a deuce at Deutsche.

2167
01:53:18,501 --> 01:53:20,502
Does our bull have a response?

2168
01:53:21,503 --> 01:53:25,007
Only that, in the entire
history of Wall Street,

2169
01:53:25,132 --> 01:53:29,511
no investment bank has ever failed
unless caught in criminal activities.

2170
01:53:30,012 --> 01:53:33,515
So, yes, I stand by
my Bear Stearns optimism.

2171
01:53:33,850 --> 01:53:35,851
Mr. Miller, I'm sorry. Quick question.

2172
01:53:36,351 --> 01:53:38,020
From the time you guys started talking,

2173
01:53:38,188 --> 01:53:41,064
Bear Stearns stock has
fallen more than 38%.

2174
01:53:41,149 --> 01:53:42,524
Would you still buy more?

2175
01:53:42,734 --> 01:53:46,863
Yeah, sure, of course
I'd buy more. Why not?

2176
01:53:47,322 --> 01:53:48,323
Boom.

2177
01:53:51,576 --> 01:53:52,911
Jesus Christ!

2178
01:53:54,369 --> 01:53:57,539
That concludes the first part
of our presentation.

2179
01:53:58,541 --> 01:54:03,171
Up next, we have the legendary
former chairman of the Fed,

2180
01:54:03,253 --> 01:54:05,047
Alan Greenspan.

2181
01:54:05,131 --> 01:54:06,466
Folks?

2182
01:54:24,775 --> 01:54:25,944
<i>...employees of Lehman Brothers today,</i>

2183
01:54:26,069 --> 01:54:29,404
<i>as the Wall Street giant's
stock went to zero.</i>

2184
01:54:29,738 --> 01:54:31,615
<i>The collapse of the venerable
New York bank</i>

2185
01:54:31,698 --> 01:54:35,369
<i>follows a tumultuous few
months of market volatility</i>

2186
01:54:35,453 --> 01:54:38,081
<i>and fear in the world economy.</i>

2187
01:54:38,413 --> 01:54:40,123
I got to see inside.

2188
01:54:40,917 --> 01:54:42,252
How?

2189
01:54:42,961 --> 01:54:43,962
Come on.

2190
01:54:44,796 --> 01:54:47,881
I left my phone in the office.
I threw my pass out already.

2191
01:54:47,966 --> 01:54:49,384
<i>Do you mind if I take your pass?</i>

2192
01:54:49,466 --> 01:54:52,052
I don't give a shit anymore.
You can do what you want.

2193
01:54:59,935 --> 01:55:01,645
Go directly to your transportation.

2194
01:55:01,729 --> 01:55:03,439
Do not talk to the press.

2195
01:55:03,605 --> 01:55:06,943
After 18 years, I just leave?
That's just fucking great!

2196
01:55:07,150 --> 01:55:10,029
I'll talk to whoever the hell I want!

2197
01:55:10,113 --> 01:55:12,448
Do not talk to the press.

2198
01:55:12,782 --> 01:55:14,742
Go directly to your transportation.

2199
01:55:14,826 --> 01:55:15,909
Do not talk to...

2200
01:55:18,496 --> 01:55:19,663
Hey, look, you wanna get a bite tonight?

2201
01:55:19,788 --> 01:55:22,207
There's this new Cuban place

2202
01:55:22,292 --> 01:55:24,293
just opened on the Lower East Side.
It's supposed to be good.

2203
01:55:24,627 --> 01:55:26,296
- Really?
- Yeah.

2204
01:55:26,796 --> 01:55:28,131
You and I?

2205
01:55:28,338 --> 01:55:29,923
Yeah, or other people.

2206
01:55:30,007 --> 01:55:31,807
- That sounds nice. I would like that.
- Yeah.

2207
01:55:31,842 --> 01:55:33,136
Finally.

2208
01:55:33,511 --> 01:55:34,845
Mark, hey.

2209
01:55:35,137 --> 01:55:36,430
<i>It's a bloodbath up here.</i>

2210
01:55:36,514 --> 01:55:38,015
<i>Morgan stock has lost half its value.</i>

2211
01:55:38,099 --> 01:55:40,393
<i>It's down to 23. 10. It's in freefall.</i>

2212
01:55:40,475 --> 01:55:43,479
<i>Clients want to talk to you
about pulling their money.</i>

2213
01:55:43,688 --> 01:55:47,190
<i>It's now or never, Mark. We got to sell.</i>

2214
01:55:50,485 --> 01:55:51,654
<i>Mark.</i>

2215
01:55:53,030 --> 01:55:54,198
<i>Mark, you hear me?</i>

2216
01:55:54,532 --> 01:55:55,992
<i>Mailbox one.</i>

2217
01:55:56,158 --> 01:55:58,869
<i>You have 15 messages.</i>

2218
01:56:00,329 --> 01:56:01,956
<i>Mike, I can't seem to get ahold of you.</i>

2219
01:56:02,039 --> 01:56:04,500
<i>Will you please call me
at your earliest convenience.</i>

2220
01:56:05,835 --> 01:56:08,671
<i>It's Jack. You're buying stocks?</i>

2221
01:56:08,880 --> 01:56:11,841
<i>The market's at an all-time low.
This is crazy!</i>

2222
01:56:12,091 --> 01:56:14,426
<i>I met my wife on Match.com.</i>

2223
01:56:14,844 --> 01:56:16,179
<i>My profile said,</i>

2224
01:56:16,386 --> 01:56:18,722
<i>"I am a medical student
with only one eye,</i>

2225
01:56:18,805 --> 01:56:20,725
<i>"an awkward social manner,</i>

2226
01:56:20,807 --> 01:56:24,395
<i>"and $145,000 in student loans. "</i>

2227
01:56:25,063 --> 01:56:26,521
<i>She wrote back,</i>

2228
01:56:26,814 --> 01:56:28,453
<i>"You're just what I've been looking for. "</i>

2229
01:56:29,359 --> 01:56:31,027
<i>She meant honest.</i>

2230
01:56:31,234 --> 01:56:32,904
<i>So let me be honest.</i>

2231
01:56:33,070 --> 01:56:37,324
The housing crisis represents
the greatest financial opportunity of...

2232
01:56:37,408 --> 01:56:40,203
<i>Making money is not like
I thought it would be.</i>

2233
01:56:40,536 --> 01:56:45,123
<i>This business kills the part
of life that is essential.</i>

2234
01:56:45,207 --> 01:56:48,252
<i>The part that has
nothing to do with business.</i>

2235
01:56:50,546 --> 01:56:52,673
<i>For the past two years, my insides</i>

2236
01:56:53,716 --> 01:56:56,094
<i>have felt like they're eating themselves.</i>

2237
01:56:56,260 --> 01:56:58,554
<i>All the people I respected</i>

2238
01:56:59,055 --> 01:57:01,556
<i>won't talk to me anymore</i>

2239
01:57:01,807 --> 01:57:03,643
<i>except through lawyers.</i>

2240
01:57:07,396 --> 01:57:08,773
<i>People</i>

2241
01:57:09,564 --> 01:57:12,150
<i>want an authority to tell them
how to value things...</i>

2242
01:57:12,234 --> 01:57:17,698
<i>...but they choose this authority
not based on facts or results.</i>

2243
01:57:19,158 --> 01:57:23,829
<i>They choose it because it seems
authoritative and familiar.</i>

2244
01:57:23,912 --> 01:57:26,373
<i>And I am not</i>

2245
01:57:26,457 --> 01:57:29,502
<i>and never have been "familiar".</i>

2246
01:57:31,462 --> 01:57:32,462
<i>So...</i>

2247
01:57:33,338 --> 01:57:36,466
<i>So, I've come to the sullen realization</i>

2248
01:57:36,551 --> 01:57:39,345
<i>that I must close down the fund.</i>

2249
01:57:39,429 --> 01:57:42,515
<i>Sincerely, Michael J. Burry, M.D.</i>

2250
01:58:42,240 --> 01:58:44,327
This isn't how I pictured it.

2251
01:58:46,328 --> 01:58:47,497
What did you think we'd find?

2252
01:58:47,579 --> 01:58:48,622
I don't know.

2253
01:58:50,500 --> 01:58:52,001
Grownups.

2254
01:58:55,921 --> 01:58:57,422
Mark, you there?

2255
01:59:00,091 --> 01:59:01,344
<i>Mark?</i>

2256
01:59:01,594 --> 01:59:04,514
Paulson and Bernanke
just left the White House.

2257
01:59:09,851 --> 01:59:12,020
There's going to be a bailout.

2258
01:59:13,605 --> 01:59:17,025
<i>Well, they had to. Right?</i>

2259
01:59:17,359 --> 01:59:18,528
<i>Paper markets would've collapsed.</i>

2260
01:59:18,610 --> 01:59:19,779
They knew.

2261
01:59:20,029 --> 01:59:21,530
<i>Cash would've stopped
coming out of ATMs.</i>

2262
01:59:21,613 --> 01:59:23,157
<i>They had to backstop this.</i>

2263
01:59:23,448 --> 01:59:25,784
They knew the taxpayers
would bail them out.

2264
01:59:25,868 --> 01:59:28,287
They weren't being stupid.
They just didn't care.

2265
01:59:28,453 --> 01:59:30,622
<i>Yeah. 'Cause they're fucking crooks.</i>

2266
01:59:32,542 --> 01:59:35,086
But at least we're going to
see some of them go to jail.

2267
01:59:36,295 --> 01:59:39,548
Right? I mean, they're gonna
have to break up the banks.

2268
01:59:40,632 --> 01:59:41,967
<i>I mean, the party's over.</i>

2269
01:59:42,051 --> 01:59:44,720
I don't know. I don't know, Vinnie.

2270
01:59:47,472 --> 01:59:48,975
I have a feeling

2271
01:59:49,057 --> 01:59:50,935
that in a few years people
are gonna be doing

2272
01:59:51,018 --> 01:59:54,020
what they always do
when the economy tanks.

2273
01:59:54,479 --> 01:59:57,692
They will be blaming
immigrants and poor people.

2274
01:59:57,984 --> 01:59:59,318
<i>But Mark was wrong.</i>

2275
02:00:00,444 --> 02:00:02,404
<i>In the years that followed,
hundreds of bankers</i>

2276
02:00:02,488 --> 02:00:05,115
<i>and rating agencies executives
went to jail.</i>

2277
02:00:05,283 --> 02:00:07,326
<i>The SEC was completely overhauled.</i>

2278
02:00:07,493 --> 02:00:10,203
<i>And Congress had no choice
but to break up the big banks</i>

2279
02:00:10,621 --> 02:00:13,082
<i>and regulate the mortgage
and derivatives industries.</i>

2280
02:00:17,878 --> 02:00:19,212
<i>Just kidding.</i>

2281
02:00:19,462 --> 02:00:21,673
<i>The banks took the money
the American people gave them</i>

2282
02:00:21,756 --> 02:00:24,051
<i>and used it to pay themselves
huge bonuses</i>

2283
02:00:24,135 --> 02:00:26,386
<i>and lobby Congress to kill big reform.</i>

2284
02:00:26,554 --> 02:00:28,805
<i>And then they blamed
immigrants and poor people.</i>

2285
02:00:28,890 --> 02:00:31,057
<i>And this time, even teachers.</i>

2286
02:00:32,435 --> 02:00:35,479
<i>And when all was said and done,
only one single banker went to jail.</i>

2287
02:00:36,396 --> 02:00:37,523
<i>This poor schmuck.</i>

2288
02:00:37,606 --> 02:00:40,067
<i>Kareem Serageldin from Credit Suisse.</i>

2289
02:00:40,400 --> 02:00:42,737
<i>He hid a few billion
in mortgage bond losses,</i>

2290
02:00:42,819 --> 02:00:46,073
<i>something most of the big banks did
on a good day during the crisis.</i>

2291
02:00:47,699 --> 02:00:49,702
Mark, can we sell now?

2292
02:00:51,369 --> 02:00:53,997
<i>The fund will make almost $1 billion.</i>

2293
02:00:54,081 --> 02:00:55,707
<i>You'll clear $200 mil, Mark.</i>

2294
02:00:56,876 --> 02:00:59,127
You know, once we sell,

2295
02:00:59,878 --> 02:01:01,756
we'll be just like the rest of them.

2296
02:01:01,838 --> 02:01:02,965
You know that.

2297
02:01:03,298 --> 02:01:04,884
<i>No, we're not.
We're not the bad guys here.</i>

2298
02:01:04,966 --> 02:01:08,470
<i>We didn't defraud the American people
and prey on their dreams</i>

2299
02:01:08,554 --> 02:01:10,139
<i>of owning a home.
All right?</i>

2300
02:01:10,221 --> 02:01:11,515
<i>They did.</i>

2301
02:01:12,515 --> 02:01:14,810
And now we get to kick them
in the teeth.

2302
02:01:19,899 --> 02:01:21,900
A billion dollars.

2303
02:01:23,569 --> 02:01:24,819
<i>That's right.</i>

2304
02:01:24,904 --> 02:01:27,739
<i>But we got to close out our
position or it could be zero.</i>

2305
02:01:28,239 --> 02:01:31,077
<i>I mean, it's now or never, Mark.</i>

2306
02:01:40,252 --> 02:01:41,671
Okay.

2307
02:01:45,423 --> 02:01:46,841
Sell it all.