1 00:00:37,954 --> 00:00:39,455 (BIRDS CHIRPING) 2 00:01:18,870 --> 00:01:20,287 (TELEPHONE RINGING) 3 00:01:20,955 --> 00:01:23,290 MAN: Hiya, Frank. How are the wife and kids? 4 00:01:23,374 --> 00:01:25,501 You know, for you, I'm considering treasury bonds 5 00:01:25,585 --> 00:01:28,378 and utility stocks. Smoke? 6 00:01:28,463 --> 00:01:30,547 JARED: In the late '70s, banking wasn't a job 7 00:01:30,632 --> 00:01:33,133 you went into to make large sums of money. 8 00:01:34,052 --> 00:01:35,761 It was a fucking snooze. 9 00:01:35,845 --> 00:01:37,638 (CHUCKLES) How about those Mets? 10 00:01:37,722 --> 00:01:40,390 JARED: Filled with losers. Like selling insurance or 11 00:01:40,475 --> 00:01:41,809 accounting. 12 00:01:41,893 --> 00:01:43,018 And if banking was boring, 13 00:01:43,144 --> 00:01:45,813 then the bond department at the bank was straight-up comatose. 14 00:01:46,648 --> 00:01:48,023 We all know about bonds. 15 00:01:48,108 --> 00:01:50,192 You give them to your snot-nosed kid when he turns 15. 16 00:01:50,276 --> 00:01:52,277 Maybe when he's 30 he makes a hundred bucks. 17 00:01:52,362 --> 00:01:53,654 Boring. 18 00:01:53,738 --> 00:01:55,531 That is, until Lewis Ranieri came on the scene 19 00:01:55,615 --> 00:01:56,657 at Salomon Brothers. 20 00:02:02,622 --> 00:02:04,832 You might not know who he is, but he changed your life 21 00:02:04,916 --> 00:02:08,627 more than Michael Jordan, the iPod and YouTube put together. 22 00:02:08,711 --> 00:02:10,462 - (CHUCKLING) - (MAN LAUGHING) 23 00:02:10,547 --> 00:02:12,297 All right, gentlemen! Let's get some money in here! 24 00:02:12,382 --> 00:02:14,049 Let's make some money! What do you say? 25 00:02:14,217 --> 00:02:15,884 (ALL CHEERING) 26 00:02:15,969 --> 00:02:17,803 JARED: You see, Lewis didn't know it yet, 27 00:02:17,887 --> 00:02:19,805 but he had already changed banking forever 28 00:02:19,889 --> 00:02:21,098 with one simple idea. 29 00:02:21,891 --> 00:02:26,562 The mortgage-backed security. Or private-label MBS. 30 00:02:27,397 --> 00:02:29,231 LEWIS: You've got your average person's mortgage. 31 00:02:29,315 --> 00:02:30,732 Fixed rate, 30 years. 32 00:02:30,817 --> 00:02:34,153 Boring, safe, small payoff, right? But, 33 00:02:35,446 --> 00:02:38,157 when you have thousands of them all bundled together, 34 00:02:38,241 --> 00:02:41,785 suddenly the yield goes up but the risk is still small because, 35 00:02:41,870 --> 00:02:42,828 well, they're mortgages! 36 00:02:42,912 --> 00:02:44,329 And who the hell doesn't pay their mortgage? 37 00:02:44,414 --> 00:02:46,790 What exactly is the credit rating on this bond? 38 00:02:46,875 --> 00:02:49,710 This bond, gentlemen, is AAA-rated. 39 00:02:50,253 --> 00:02:52,921 This is exactly what the Michigan state pension fund has been looking for. 40 00:02:53,423 --> 00:02:54,923 I'll buy $20 million. 41 00:02:55,008 --> 00:02:56,175 Oh, come on, live a little. 42 00:02:56,301 --> 00:02:57,926 - $25 million. - (ALL LAUGHING) 43 00:02:58,011 --> 00:03:00,971 JARED: The money came raining down, 44 00:03:01,055 --> 00:03:02,556 and for the first time, 45 00:03:02,640 --> 00:03:05,434 the banker went from the country club to the strip club. 46 00:03:08,062 --> 00:03:11,273 Pretty soon, stocks and savings were almost inconsequential. 47 00:03:11,441 --> 00:03:13,609 - They were doing $50, $100, $200 billion - Whoo! 48 00:03:13,693 --> 00:03:16,320 in mortgage bonds and dozens of other securities a year. 49 00:03:16,446 --> 00:03:17,654 (MEN CHEERING) 50 00:03:25,955 --> 00:03:28,248 And America barely noticed as its number one industry 51 00:03:28,333 --> 00:03:30,417 became boring old banking. 52 00:03:34,088 --> 00:03:37,591 And then one day, almost 30 years later, in 2008, 53 00:03:38,801 --> 00:03:40,552 it all came crashing down. 54 00:03:43,681 --> 00:03:46,433 FEMALE REPORTER: March. Bear Stearns was in a death spiral 55 00:03:46,517 --> 00:03:47,935 and the Fed brokered its sale. 56 00:03:48,019 --> 00:03:51,063 BRIAN WILLIAMS: It's been called the worst financial crisis in modern times. 57 00:03:51,397 --> 00:03:55,651 Certainly the largest financial disaster in decades in this country, 58 00:03:55,735 --> 00:03:58,403 and perhaps the end of an era in American business. 59 00:03:58,863 --> 00:04:01,114 JARED: In the end, Lewis Ranieri's mortgage-backed security 60 00:04:01,199 --> 00:04:02,866 mutated into a monstrosity that 61 00:04:02,992 --> 00:04:04,660 collapsed the whole world economy. 62 00:04:05,328 --> 00:04:07,287 And none of the experts or leaders or talking heads 63 00:04:07,372 --> 00:04:08,664 had a clue it was coming. 64 00:04:10,166 --> 00:04:13,126 I'm guessing most of you still don't really know what happened. 65 00:04:13,628 --> 00:04:16,421 Yeah, you got a soundbite you repeat so you don't sound dumb, but come on. 66 00:04:16,506 --> 00:04:18,924 Our financial institutions are strong. 67 00:04:20,176 --> 00:04:22,594 But there were some who saw it coming. 68 00:04:22,679 --> 00:04:24,763 While the whole world was having a big old party, 69 00:04:24,847 --> 00:04:28,100 a few outsiders and weirdos saw what no one else could. 70 00:04:28,184 --> 00:04:31,770 Not me. I'm not a weirdo. I'm pretty fucking cool. 71 00:04:31,854 --> 00:04:33,855 But we'll meet again later. 72 00:04:34,357 --> 00:04:37,109 These outsiders saw the giant lie at the heart of the economy. 73 00:04:37,193 --> 00:04:38,610 And they saw it by doing something 74 00:04:38,695 --> 00:04:41,488 the rest of the suckers never thought to do. 75 00:04:42,407 --> 00:04:43,740 They looked. 76 00:04:49,998 --> 00:04:51,999 (TAPPING) 77 00:04:56,546 --> 00:04:58,880 MIKE: During the 1930s, 78 00:05:00,508 --> 00:05:05,178 the housing market collapsed nationwide 79 00:05:06,556 --> 00:05:08,682 by roughly 80%. 80 00:05:08,766 --> 00:05:13,895 I mean, half of all mortgage debt was in default. 81 00:05:13,980 --> 00:05:16,648 And, I mean, there were very 82 00:05:17,775 --> 00:05:21,278 specific identifiers, extremely recognizable. 83 00:05:24,198 --> 00:05:25,240 I mean, for instance, 84 00:05:25,366 --> 00:05:28,577 (STAMMERING) one of the hallmarks of mania 85 00:05:28,911 --> 00:05:30,245 is the rapid rise 86 00:05:30,371 --> 00:05:32,414 in complexity and the rates of fraud. 87 00:05:32,498 --> 00:05:35,917 And did you know that they're going up? 88 00:05:36,461 --> 00:05:38,754 (CHEERLEADERS CHEERING) 89 00:05:39,756 --> 00:05:40,756 MAN: Whoo! 90 00:05:45,595 --> 00:05:47,095 (INAUDIBLE) 91 00:05:55,438 --> 00:05:57,356 MIKE: I've always been 92 00:05:57,440 --> 00:05:59,441 more comfortable alone. 93 00:05:59,567 --> 00:06:00,776 (GIRLS TALKING INDISTINCTLY) 94 00:06:00,902 --> 00:06:02,110 (GIRLS LAUGHING) 95 00:06:06,741 --> 00:06:11,370 I believe maybe it's because of my glass eye. 96 00:06:13,790 --> 00:06:16,583 I lost the eye in a childhood illness. 97 00:06:20,922 --> 00:06:23,256 It separates me from people. 98 00:06:27,303 --> 00:06:29,679 And did you know that they are going 99 00:06:29,764 --> 00:06:30,889 up? 100 00:06:30,973 --> 00:06:34,476 The highest fraud rates since the 1930s. 101 00:06:34,560 --> 00:06:36,895 MIKE'S MOM: Hey, hey, it's okay. It's okay. 102 00:06:36,979 --> 00:06:38,438 No, I didn't know that. 103 00:06:38,564 --> 00:06:40,023 (MIKE STUTTERING) 104 00:06:40,733 --> 00:06:42,651 (MIKE CHUCKLING) 105 00:06:43,152 --> 00:06:47,322 In 1933, the fourth year of the Great Depression. 106 00:06:47,490 --> 00:06:49,157 Let's wash it off and put it back in. 107 00:06:49,242 --> 00:06:51,201 MIKE'S DAD: You were playing so great, son. 108 00:06:51,327 --> 00:06:53,328 I even heard the coach say it. 109 00:06:54,497 --> 00:06:56,748 Can we just go home? 110 00:06:56,833 --> 00:07:01,002 MIKE: Most social interactions are awkward for me and for the person. 111 00:07:01,087 --> 00:07:04,589 Even when I try to compliment someone, 112 00:07:04,674 --> 00:07:06,049 it comes out wrong. 113 00:07:06,968 --> 00:07:10,554 You have a very nice haircut. Did you do it yourself? 114 00:07:10,972 --> 00:07:12,639 (CHUCKLES) What? 115 00:07:12,723 --> 00:07:15,225 (STAMMERING) No. No, I... 116 00:07:16,227 --> 00:07:17,561 (SPLASHING) 117 00:07:20,606 --> 00:07:21,731 (TELEPHONE RINGING IN DISTANCE) 118 00:07:23,860 --> 00:07:25,694 I'm sorry. I'm just... 119 00:07:28,906 --> 00:07:30,198 (SIGHS) 120 00:07:31,409 --> 00:07:32,576 I'm going on and on. 121 00:07:32,702 --> 00:07:34,327 My wife told me I need to share more. 122 00:07:34,412 --> 00:07:35,412 Mmm. 123 00:07:36,372 --> 00:07:38,206 - That seems healthy. - Yeah. 124 00:07:38,291 --> 00:07:39,291 Mmm-hmm. 125 00:07:43,629 --> 00:07:44,796 (CHUCKLES) 126 00:07:48,801 --> 00:07:49,801 Uh... 127 00:07:51,012 --> 00:07:52,387 So do I get the job? 128 00:07:52,513 --> 00:07:54,848 I really think I could help your fund. 129 00:07:56,225 --> 00:07:57,601 Yeah. 130 00:07:57,685 --> 00:07:59,311 Yeah, sure. Go on. 131 00:07:59,979 --> 00:08:01,146 (BOTH CHUCKLING) 132 00:08:02,023 --> 00:08:05,275 - You're... - David. Great. 133 00:08:05,359 --> 00:08:07,194 I guess I'll go find a desk. 134 00:08:07,278 --> 00:08:09,863 Is there anything you want me to work on for start... 135 00:08:10,364 --> 00:08:11,364 Uh... 136 00:08:12,909 --> 00:08:14,284 Yeah. 137 00:08:14,368 --> 00:08:16,077 DAVID: You could let me know later. I could come back. 138 00:08:16,370 --> 00:08:18,330 (STUTTERING) 139 00:08:18,789 --> 00:08:23,335 Did you think it was strange when, um, 140 00:08:23,419 --> 00:08:25,921 the tech bubble burst in 2001 141 00:08:26,005 --> 00:08:28,798 and the housing market in San Jose, 142 00:08:28,883 --> 00:08:31,092 the tech capital of the world, 143 00:08:32,595 --> 00:08:34,346 went up? 144 00:08:34,430 --> 00:08:35,472 Wasn't that strange? 145 00:08:35,556 --> 00:08:36,515 DAVID: No. 146 00:08:36,599 --> 00:08:39,184 No, it's housing. Housing is always stable. 147 00:08:39,268 --> 00:08:40,310 Low risk. It's solid. 148 00:08:40,394 --> 00:08:42,354 That's the idea, yeah. 149 00:08:42,438 --> 00:08:44,189 I want you to get me 150 00:08:44,273 --> 00:08:47,484 the top 20 selling mortgage bonds. 151 00:08:47,568 --> 00:08:50,403 So you want to know what the top 20 selling mortgage bonds are? 152 00:08:50,488 --> 00:08:54,824 No, no, no, I want to know what mortgages are in each one. 153 00:08:56,244 --> 00:08:57,827 (CHUCKLING) Okay, aren't those mortgages made up of... 154 00:08:57,954 --> 00:08:59,204 (ROCK MUSIC PLAYING) 155 00:08:59,288 --> 00:09:00,747 Wait, aren't those bonds made up 156 00:09:00,831 --> 00:09:02,874 of thousands and thousands of mortgages? 157 00:09:02,959 --> 00:09:04,417 Yeah. 158 00:09:08,464 --> 00:09:09,965 DAVID: Right away, Dr. Burry. 159 00:09:29,026 --> 00:09:33,363 I am a nice guy all day long. 160 00:09:33,447 --> 00:09:36,116 Ask anyone, I'm a pleasure to work with. 161 00:09:38,035 --> 00:09:42,372 But the second my son screws up, I am... 162 00:09:43,040 --> 00:09:45,542 ...yelling at him just like my dad did to me. 163 00:09:48,588 --> 00:09:50,255 I hear the words that are coming out of my mouth and... 164 00:09:50,339 --> 00:09:51,590 (DOOR OPENS) 165 00:09:51,674 --> 00:09:54,467 - MARK: Sorry I'm late! No cabs. - (DOOR CLOSES) 166 00:09:55,177 --> 00:09:56,177 Oh... 167 00:09:56,637 --> 00:09:58,221 So, get this. 168 00:09:58,973 --> 00:10:01,474 I met with this retail banker yesterday. 169 00:10:01,726 --> 00:10:04,144 I'm supposed to be getting him to invest in a fund, 170 00:10:04,228 --> 00:10:05,562 but instead 171 00:10:05,646 --> 00:10:08,523 I start grilling him about overdraft penalties 172 00:10:08,608 --> 00:10:11,610 and how his bank will let a customer write 10-12 checks 173 00:10:11,694 --> 00:10:12,944 before they tell them they're overdrawn. 174 00:10:13,029 --> 00:10:16,948 And this creep is making billions off screwing over people this way. 175 00:10:17,033 --> 00:10:18,825 And I'm getting madder and madder. 176 00:10:18,909 --> 00:10:22,287 And I ask him, I look him in the face and I say, 177 00:10:22,371 --> 00:10:24,205 "How can you sleep at night 178 00:10:24,707 --> 00:10:28,168 "knowing that you are ripping off working people?" 179 00:10:28,252 --> 00:10:29,961 And you know what he did? He left. 180 00:10:30,046 --> 00:10:32,756 He just walks out of the lunch, doesn't say a word. 181 00:10:32,840 --> 00:10:33,840 What the fuck is that? 182 00:10:33,924 --> 00:10:36,259 Who's fucked up in that scenario? Am I? 183 00:10:36,344 --> 00:10:38,803 Or is this douchebag, who leaves me hanging? 184 00:10:38,888 --> 00:10:40,138 Is he the fucked up one? 185 00:10:40,222 --> 00:10:43,016 We have talked about this numerous times. 186 00:10:43,100 --> 00:10:46,227 You can't come in late and hijack the entire session. 187 00:10:46,312 --> 00:10:47,771 MARK: What do you mean? I didn't hijack the meeting. 188 00:10:47,855 --> 00:10:48,938 Did I hijack the session? 189 00:10:49,065 --> 00:10:50,190 Yeah. 190 00:10:50,650 --> 00:10:51,816 What do you do? 191 00:10:51,942 --> 00:10:53,109 MAN: I'm in commodities. 192 00:10:53,194 --> 00:10:54,486 Good luck with that. 193 00:10:54,570 --> 00:10:58,156 THERAPIST: Mark, I know you suffered a terrible loss. 194 00:10:58,240 --> 00:10:59,616 Maybe you want to talk about that. 195 00:10:59,700 --> 00:11:00,784 - I don't talk about that. - (CELL PHONE CHIMING) 196 00:11:00,868 --> 00:11:02,285 Hold on. 197 00:11:02,370 --> 00:11:03,703 Hold on... 198 00:11:03,788 --> 00:11:06,623 Shit, I have to take this. Sorry. Sorry. 199 00:11:07,541 --> 00:11:09,668 No... (SIGHS) I don't care, Porter. 200 00:11:09,752 --> 00:11:11,336 This guy's whole business is built on ripping people off. 201 00:11:11,420 --> 00:11:13,004 How long can that last? 202 00:11:14,465 --> 00:11:15,632 Bye, everybody! 203 00:11:16,717 --> 00:11:18,385 MIKE: (SOFTLY) 95... 204 00:11:18,636 --> 00:11:20,762 That's 30 days late... Sixty days late... 205 00:11:23,224 --> 00:11:25,684 They pay on time... 206 00:11:25,768 --> 00:11:26,768 (TYPING ON KEYBOARD) 207 00:11:28,604 --> 00:11:30,230 These FICO scores... 208 00:11:31,816 --> 00:11:32,816 (SIGHS) 209 00:11:34,110 --> 00:11:35,110 (TELEPHONE RINGING) 210 00:11:36,821 --> 00:11:38,947 Late. And they caught up on their payments... 211 00:11:39,031 --> 00:11:40,532 Another 30 days late... 212 00:11:40,616 --> 00:11:43,868 LTV, 95... LTV, 90... They caught up on their payments... 213 00:11:43,953 --> 00:11:45,495 Sixty days late? Jesus! 214 00:11:45,579 --> 00:11:47,706 LTV, 110? I've never heard of that! 215 00:11:47,790 --> 00:11:49,124 Thirty days late, rate adjusts... 216 00:11:50,126 --> 00:11:51,376 In '07 rate adjusts... 217 00:11:51,460 --> 00:11:52,627 In '06 rate adjusts... 218 00:11:52,753 --> 00:11:55,046 95... 90... Jesus! 219 00:11:55,131 --> 00:11:56,464 (WHIRRING) 220 00:11:56,757 --> 00:11:58,383 (WHISPERING) He hasn't moved all day. 221 00:11:58,467 --> 00:12:00,802 He does this every few days. 222 00:12:00,886 --> 00:12:02,554 He hasn't spoken to me since he hired me. 223 00:12:02,638 --> 00:12:04,055 MIKE: Maybe the LTV's at... High-risk, 224 00:12:04,140 --> 00:12:06,391 interest-only... I never heard of that mortgage history, 225 00:12:06,475 --> 00:12:09,227 I never heard of that... How? 226 00:12:09,311 --> 00:12:10,603 Michael, how are you, guy? 227 00:12:10,688 --> 00:12:13,732 MIKE: Lawrence, I found something really interesting. 228 00:12:13,816 --> 00:12:15,734 Great, Michael. Whenever you find something interesting, 229 00:12:15,818 --> 00:12:17,026 we all tend to make money. 230 00:12:17,111 --> 00:12:18,486 What stock are you valuing? 231 00:12:18,612 --> 00:12:19,946 No, no, no, no. No stocks. 232 00:12:20,030 --> 00:12:22,073 I want to short the housing market. 233 00:12:22,408 --> 00:12:23,408 (BRUSHING) 234 00:12:23,492 --> 00:12:26,161 Really? But the housing market is rock solid. 235 00:12:26,662 --> 00:12:28,079 Greenspan just said 236 00:12:28,164 --> 00:12:30,707 bubbles are regional, defaults are rare. 237 00:12:30,833 --> 00:12:32,959 Tell them I'll be there in a minute. 238 00:12:33,043 --> 00:12:34,836 - Say again? - Look, look... 239 00:12:34,920 --> 00:12:36,755 (MUFFLED) Greenspan's wrong. 240 00:12:36,839 --> 00:12:40,258 I don't think you mean to do this, but sometimes you sound very 241 00:12:40,342 --> 00:12:42,635 dismissive and superior. 242 00:12:42,720 --> 00:12:43,887 It's a fact. Greenspan's wrong. 243 00:12:43,971 --> 00:12:46,306 (MUFFLED) I don't know how else you want me to say... 244 00:12:46,390 --> 00:12:47,766 Look, Michael. 245 00:12:47,850 --> 00:12:49,476 Metro Capital backed you four years ago 246 00:12:49,560 --> 00:12:51,352 when you were a doctor with a 247 00:12:51,437 --> 00:12:53,772 dinky webpage and some inheritance money. 248 00:12:53,856 --> 00:12:54,856 We've all done very well. 249 00:12:54,940 --> 00:12:56,065 Why don't you just stick with stocks? 250 00:12:56,150 --> 00:12:58,276 Look. You know me. I, I, I... 251 00:12:58,360 --> 00:13:02,113 I look for value wherever it can be found. 252 00:13:02,198 --> 00:13:03,281 And the fact is 253 00:13:03,365 --> 00:13:06,576 that these mortgage-backed securities are filled 254 00:13:06,702 --> 00:13:10,121 with extremely risky subprime adjustable-rate loans. 255 00:13:10,206 --> 00:13:12,707 And when the majority of the adjustable rates 256 00:13:12,792 --> 00:13:15,043 kick in, in '07, 257 00:13:15,211 --> 00:13:16,377 they will begin to fail. 258 00:13:16,462 --> 00:13:19,798 And if they fail above 15%, the whole bond is worthless. 259 00:13:19,882 --> 00:13:22,050 Michael, just take a beat. 260 00:13:22,134 --> 00:13:23,343 We'll talk about this later, okay? 261 00:13:23,427 --> 00:13:26,471 Lawrence, please, don't patronize me. Listen... 262 00:13:26,555 --> 00:13:28,014 JARED: Mortgage-backed securities. 263 00:13:28,098 --> 00:13:29,390 It, it, it... 264 00:13:29,517 --> 00:13:31,309 - Subprime loans. Tranches. - (QUACKING) 265 00:13:31,393 --> 00:13:33,061 It's pretty confusing, right? 266 00:13:33,145 --> 00:13:35,772 Does it make you feel bored? Or stupid? 267 00:13:35,856 --> 00:13:38,149 Well, it's supposed to. 268 00:13:38,234 --> 00:13:39,818 Wall Street loves to use confusing terms 269 00:13:39,902 --> 00:13:42,570 to make you think only they can do what they do. 270 00:13:42,905 --> 00:13:44,113 Or, even better, 271 00:13:44,198 --> 00:13:46,574 for you to just leave them the fuck alone. 272 00:13:46,659 --> 00:13:48,618 So here's Margot Robbie in a bubble bath to explain. 273 00:13:48,702 --> 00:13:49,786 (POPS) 274 00:13:49,870 --> 00:13:52,872 Basically, Lewis Ranieri's mortgage bonds 275 00:13:52,957 --> 00:13:55,250 were amazingly profitable for the big banks. 276 00:13:55,334 --> 00:13:59,295 They made billions and billions on their 2*% fee 277 00:13:59,380 --> 00:14:01,589 they got for selling each of these bonds. 278 00:14:01,674 --> 00:14:03,466 But then they started running out of mortgages 279 00:14:03,551 --> 00:14:05,093 to put in them. 280 00:14:05,177 --> 00:14:07,846 After all, there are only so many homes 281 00:14:07,930 --> 00:14:11,683 and so many people with good enough jobs to buy them, right? 282 00:14:11,767 --> 00:14:13,852 So the banks started filling these bonds 283 00:14:13,936 --> 00:14:16,104 with riskier and riskier mortgages. 284 00:14:16,188 --> 00:14:17,355 Thank you, Benter. 285 00:14:17,439 --> 00:14:21,985 That way they can keep that profit machine churning, right? 286 00:14:22,069 --> 00:14:26,447 By the way, these risky mortgages are called subprime. 287 00:14:26,532 --> 00:14:28,908 So whenever you hear "subprime", think 288 00:14:28,993 --> 00:14:30,451 "shit". 289 00:14:30,536 --> 00:14:34,080 Our friend Michael Burry found out that these mortgage bonds 290 00:14:34,164 --> 00:14:37,375 that were supposedly 65% AAA 291 00:14:37,459 --> 00:14:40,211 were actually just mostly full of shit. 292 00:14:40,796 --> 00:14:43,548 So now he's going to "short" the bonds. 293 00:14:43,632 --> 00:14:45,633 Which means to "bet against". 294 00:14:46,468 --> 00:14:47,510 Got it? 295 00:14:48,220 --> 00:14:49,470 Good. 296 00:14:52,558 --> 00:14:53,850 Now fuck off. 297 00:14:53,934 --> 00:14:56,269 It's only a matter of time before someone else sees this investment. 298 00:14:56,353 --> 00:14:58,062 - We have to act now! - (BANGING TABLE) 299 00:14:58,147 --> 00:15:00,398 How do you know the bonds are worthless? 300 00:15:00,482 --> 00:15:02,692 Aren't they filled with fucking thousands 301 00:15:02,776 --> 00:15:03,902 of pages of mortgages? 302 00:15:03,986 --> 00:15:06,237 I read them. 303 00:15:06,322 --> 00:15:08,239 - You read them? - I read... Yes. 304 00:15:08,324 --> 00:15:11,534 No one reads them. Only the lawyers who put them together read them. 305 00:15:11,619 --> 00:15:16,331 Look, I don't think that they even know what they've made. 306 00:15:16,457 --> 00:15:19,709 The housing market is propped up on these 307 00:15:20,002 --> 00:15:22,670 bad loans, and I'm... (SIGHS) 308 00:15:22,755 --> 00:15:24,797 It's a time bomb, and I want to short it. 309 00:15:24,882 --> 00:15:27,175 Through what instrument, Michael? 310 00:15:27,259 --> 00:15:30,261 There are no insurance contracts or options for mortgage bonds. 311 00:15:30,346 --> 00:15:31,596 The bonds are too stable. 312 00:15:31,722 --> 00:15:33,014 Lawrence... 313 00:15:34,141 --> 00:15:36,017 (STUTTERS) 314 00:15:36,352 --> 00:15:40,188 This is what I'm gonna do. I am gonna get a bank 315 00:15:40,522 --> 00:15:42,565 to make me one. 316 00:15:43,192 --> 00:15:44,859 And then 317 00:15:45,694 --> 00:15:47,403 I'm gonna buy it. 318 00:15:47,738 --> 00:15:48,738 (CAR HONKING) 319 00:15:48,822 --> 00:15:50,573 MARK: I don't want that kind of business. 320 00:15:50,658 --> 00:15:53,326 Money is not money. That's bad money. 321 00:15:53,994 --> 00:15:56,204 Hey! Excuse me! 322 00:15:57,581 --> 00:16:00,500 Let me ask you this. What company treats its customers 323 00:16:00,584 --> 00:16:03,169 that shittily and succeeds? 324 00:16:04,046 --> 00:16:05,880 - Fine. Okay, Goldman. You're right. - (HORN HONKING) 325 00:16:05,965 --> 00:16:07,298 JARED: Mark Baum had built his career 326 00:16:07,383 --> 00:16:09,425 on never assuming anyone or any company 327 00:16:09,510 --> 00:16:11,177 was legit without proving it. 328 00:16:11,261 --> 00:16:12,762 When he was a kid he excelled at studying 329 00:16:12,846 --> 00:16:14,889 the Talmud in Yeshiva. Whatever. 330 00:16:14,974 --> 00:16:16,849 But one day his rabbi told his mom why. 331 00:16:16,934 --> 00:16:17,934 (HORN HONKING) 332 00:16:18,060 --> 00:16:21,062 Paul is a fine boy, and Mark is an excellent student 333 00:16:21,188 --> 00:16:23,773 of the Torah and the Talmud. 334 00:16:23,857 --> 00:16:25,817 Then what's the problem, rabbi? 335 00:16:25,901 --> 00:16:29,070 It's the reason Mark is studying so hard. 336 00:16:29,905 --> 00:16:33,074 He's looking for inconsistencies in the word of God! 337 00:16:35,828 --> 00:16:37,996 - So has he found any? - (SCOFFS) 338 00:16:39,081 --> 00:16:42,333 JARED: Later, Baum started his own fund on Wall Street. 339 00:16:42,418 --> 00:16:43,835 He had an amazing nose for bullshit. 340 00:16:43,919 --> 00:16:45,920 And he wasn't afraid to let anyone know when and where 341 00:16:46,005 --> 00:16:48,631 the bull had gone number two. 342 00:16:48,716 --> 00:16:50,341 But then a tragedy happened to Mark, 343 00:16:50,426 --> 00:16:51,884 and it turned his world view dark 344 00:16:51,969 --> 00:16:54,303 and ready to believe the whole system was a lie. 345 00:16:54,388 --> 00:16:55,930 - (PHONE CHIMES) - Hold on. 346 00:16:56,015 --> 00:16:58,850 It's Cynthia. I'll be in the office in 20 minutes. 347 00:16:59,768 --> 00:17:00,935 Hi, honey. 348 00:17:01,061 --> 00:17:02,353 (SIRENS WAILING) 349 00:17:02,438 --> 00:17:06,107 The therapist called. You did it again. 350 00:17:06,525 --> 00:17:09,277 There were no cabs. What was I supposed to do? 351 00:17:09,361 --> 00:17:11,029 I worry about you, Mark. 352 00:17:11,113 --> 00:17:12,447 At least I went. 353 00:17:13,741 --> 00:17:15,700 You're running around like you have to right 354 00:17:15,784 --> 00:17:17,618 - every wrong in the world. - Okay. 355 00:17:17,745 --> 00:17:18,911 You're so angry. 356 00:17:18,996 --> 00:17:20,413 Fine. You know what? 357 00:17:20,497 --> 00:17:23,416 I'm a mean guy and I'm pissed off. 358 00:17:23,500 --> 00:17:25,418 But it is a shit storm out here, sweetie. 359 00:17:25,502 --> 00:17:28,796 You have no idea the kind of crap people are pulling. 360 00:17:28,881 --> 00:17:31,549 And everyone's walking around like they're in a goddamn Enya video. 361 00:17:31,633 --> 00:17:33,176 (BIRDS CHIRPING) 362 00:17:33,260 --> 00:17:34,719 They're all getting screwed, you know. 363 00:17:34,803 --> 00:17:37,388 You know what they care about? They care about the ballgame. 364 00:17:37,473 --> 00:17:40,349 Or they care about what actress just went into rehab. 365 00:17:40,434 --> 00:17:42,477 I think you should try medication. 366 00:17:42,561 --> 00:17:45,730 No, no. We agreed. If it interfered with work. 367 00:17:45,814 --> 00:17:47,648 You hate Wall Street. Maybe it's time to quit. 368 00:17:48,150 --> 00:17:50,109 - I love my job. - You hate yourjob. 369 00:17:50,194 --> 00:17:51,194 I love my job. 370 00:17:51,278 --> 00:17:52,236 You're miserable. 371 00:17:52,321 --> 00:17:54,322 I love my job. I love my job, honey. 372 00:17:55,282 --> 00:17:56,574 Mark... 373 00:17:57,785 --> 00:18:00,870 I am sad every day about what happened. 374 00:18:00,954 --> 00:18:04,290 I know you must feel the same, but you never show it. 375 00:18:10,547 --> 00:18:13,049 I know how close you were to your brother. 376 00:18:16,428 --> 00:18:17,512 MARK: Paul. 377 00:18:18,555 --> 00:18:20,181 Where'd you go, Paul? 378 00:18:25,437 --> 00:18:26,687 Paul! 379 00:18:32,361 --> 00:18:35,113 Every day I think you're gonna talk about it, but you never do. 380 00:18:35,405 --> 00:18:37,657 - (TV PLAYING) - (TYPING ON LAPTOP) 381 00:18:37,741 --> 00:18:38,741 (BEEPING) 382 00:18:38,992 --> 00:18:42,745 Will you at least think about the idea of making a change? 383 00:18:42,830 --> 00:18:45,665 Fine. Fine. Honey, you know what? I will consider it. 384 00:18:45,749 --> 00:18:49,127 But, honestly, Cynthia. I'm okay. I really am. 385 00:18:49,211 --> 00:18:51,170 Hey, hey, hey! No, no. 386 00:18:51,255 --> 00:18:54,632 My cab. That's my cab. That's my cab. That is my cab. 387 00:18:54,716 --> 00:18:56,300 MARK: Schmuck. Fuck you. MAN: Fuck you. 388 00:18:56,385 --> 00:18:57,885 MARK: Fuck you. MAN: Fuck you. 389 00:18:57,970 --> 00:18:58,970 (PHONE BEEPS) 390 00:18:59,054 --> 00:19:00,555 I'll call you later. 391 00:19:03,267 --> 00:19:04,350 (HORN HONKING) 392 00:19:07,938 --> 00:19:12,024 I want to buy swaps on mortgage bonds. 393 00:19:12,109 --> 00:19:14,443 A credit default swap that will pay off 394 00:19:15,487 --> 00:19:17,989 if the underlying bond fails. 395 00:19:18,824 --> 00:19:20,324 You want to bet against the housing market? 396 00:19:20,409 --> 00:19:22,368 - Yes. - Why? 397 00:19:22,452 --> 00:19:23,619 Those bonds only fail 398 00:19:23,704 --> 00:19:26,164 if millions ofAmericans don't pay their mortgages. 399 00:19:26,248 --> 00:19:28,666 That's never happened in history. 400 00:19:28,750 --> 00:19:31,669 If you'll excuse me, Dr. Burry, it seems like a foolish investment. 401 00:19:31,753 --> 00:19:34,505 Well, based on prevailing sentiment 402 00:19:34,590 --> 00:19:36,632 of the market and banks in popular culture, 403 00:19:36,717 --> 00:19:39,010 yes, it's a foolish investment. 404 00:19:39,094 --> 00:19:41,596 But, uh... Everyone's wrong. 405 00:19:41,722 --> 00:19:43,097 (BOTH LAUGHING) 406 00:19:43,182 --> 00:19:44,682 That's a good one. 407 00:19:45,517 --> 00:19:46,517 (LAUGHS) 408 00:19:47,019 --> 00:19:48,686 This is Wall Street, Dr. Burry. 409 00:19:48,770 --> 00:19:50,730 If you offer us free money, we are going to take it. 410 00:19:50,814 --> 00:19:55,443 My one concern is that when the bonds fail, 411 00:19:56,570 --> 00:20:00,114 uh, I want to be certain, um, of payment 412 00:20:00,199 --> 00:20:02,950 um, in case of solvency issues with your bank. 413 00:20:03,952 --> 00:20:06,329 I'm sorry, are you for real? 414 00:20:06,413 --> 00:20:08,039 You wanna bet against the housing market 415 00:20:08,123 --> 00:20:09,457 and you're worried we won't pay you? 416 00:20:09,541 --> 00:20:11,125 Yes, that's correct. 417 00:20:11,835 --> 00:20:12,960 (LUCY CLEARS THROAT) 418 00:20:15,505 --> 00:20:16,881 (WHISPERING) 419 00:20:22,471 --> 00:20:24,347 LUCY: (WHISPERING) ... unless the market crashes. 420 00:20:24,473 --> 00:20:26,682 DEEB: (WHISPERS) The market on housing's never gonna crash 421 00:20:26,767 --> 00:20:29,560 because it's so solid right now. 422 00:20:29,645 --> 00:20:32,396 I mean, who doesn't pay their mortgages? 423 00:20:36,318 --> 00:20:37,318 Mmm-hmm. 424 00:20:39,613 --> 00:20:40,655 (CLEARS THROAT) Dr. Burry, 425 00:20:40,739 --> 00:20:43,074 we could work out a pay-as-we-go structure 426 00:20:43,158 --> 00:20:45,159 that would pay out if the bonds fail. 427 00:20:45,244 --> 00:20:46,744 But it would also apply to your payments 428 00:20:46,828 --> 00:20:48,788 if the value of the mortgage bond goes up. 429 00:20:48,872 --> 00:20:51,582 You'd have to pay us monthly premiums. 430 00:20:51,667 --> 00:20:54,377 LUCY: Is that acceptable, Dr. Burry? 431 00:20:56,838 --> 00:20:58,172 Yes. Yes. 432 00:20:59,049 --> 00:21:01,592 Um, I have prospectuses on six 433 00:21:01,677 --> 00:21:04,553 mortgage-backed securities I want to short. 434 00:21:06,974 --> 00:21:08,266 (DEEB READING SOFTLY) 435 00:21:09,017 --> 00:21:10,768 LUCY: (WHISPERING) Majority of the mortgages... 436 00:21:11,436 --> 00:21:12,728 (CHUCKLES) 437 00:21:12,854 --> 00:21:14,188 (LUCY AND DEEB WHISPERING) 438 00:21:15,274 --> 00:21:16,274 (PAGES FLIPPING) 439 00:21:22,072 --> 00:21:24,615 DEEB: (WHISPERING) I don't see us losing any money on these at all. 440 00:21:24,700 --> 00:21:25,866 (PRINTER WHIRRING) 441 00:21:35,294 --> 00:21:36,294 (INHALES) 442 00:21:38,088 --> 00:21:40,756 Dr. Burry, these should be fine. 443 00:21:40,841 --> 00:21:42,758 Yeah. We're prepared to sell you $5 million 444 00:21:42,843 --> 00:21:44,719 in credit default swaps on these mortgage bonds. 445 00:21:45,929 --> 00:21:47,346 Can we make it $100 million? 446 00:21:50,225 --> 00:21:52,601 Uh, absolutely, we can make it $100 million. 447 00:21:54,187 --> 00:21:57,398 LUCY: We'll be in touch, send some paperwork over. 448 00:21:58,233 --> 00:21:59,233 DEEB: Um... 449 00:22:00,360 --> 00:22:01,736 (SIGHING) I like these cups. 450 00:22:01,820 --> 00:22:03,487 (STUTTERING) Can I take one for my son? 451 00:22:03,572 --> 00:22:05,323 LUCY: Have... Yes. Yes. 452 00:22:05,407 --> 00:22:06,907 Thank you. 453 00:22:06,992 --> 00:22:08,367 LUCY: Have two. 454 00:22:13,790 --> 00:22:16,542 (INAUDIBLE) 455 00:22:16,960 --> 00:22:18,544 (HIP HOP MUSIC PLAYING) 456 00:22:28,347 --> 00:22:31,349 Is there any way to do $200 million? 457 00:22:32,809 --> 00:22:35,436 I mean, we can. But are you sure? 458 00:22:36,355 --> 00:22:39,523 Absolutely. Absolutely, we can do that. 459 00:22:53,246 --> 00:22:56,624 We do different projects. We do gardening. 460 00:22:56,708 --> 00:22:59,960 The bonds I'd like to bet against. 461 00:23:00,170 --> 00:23:01,670 It's not bad seeing yourself on the big screen. 462 00:23:01,755 --> 00:23:02,755 It's very cool. 463 00:23:03,799 --> 00:23:07,468 I ordered the 24-ounce T-bone, which was choice. 464 00:23:07,552 --> 00:23:09,011 - I went for volume... - WOMAN: Yeah. 465 00:23:09,096 --> 00:23:10,721 ...rather than prime. 466 00:23:10,806 --> 00:23:13,474 I went for subprime, and the gist was... 467 00:23:18,939 --> 00:23:19,939 (HORN HONKING) 468 00:23:20,816 --> 00:23:23,317 MAN: Can I have like, lettuce, tomato, no onions? 469 00:23:23,944 --> 00:23:27,238 WOMAN: So, no onions. Lettuce, tomato, Thousand Island okay? 470 00:23:27,322 --> 00:23:28,322 MAN: Yeah. 471 00:23:32,160 --> 00:23:33,702 (INDISTINCT CONVERSATIONS) 472 00:23:35,372 --> 00:23:37,081 Hey, Randall! What's with the Dom? 473 00:23:37,165 --> 00:23:39,041 Bonuses aren't for three months. 474 00:23:39,126 --> 00:23:43,087 We just sold $200 million in credit swaps for mortgage bonds. 475 00:23:43,171 --> 00:23:45,339 Some fund manager from California. 476 00:23:45,465 --> 00:23:46,799 It's fucking crazy, right? 477 00:23:46,883 --> 00:23:47,967 A whole new way to make money, Doug. 478 00:23:48,051 --> 00:23:50,302 Wait, wait. I didn't know there were swaps on mortgages. 479 00:23:50,387 --> 00:23:52,972 (LAUGHS) There are now. We made it for him. 480 00:23:53,056 --> 00:23:54,723 He must have gone off his Zoloft or something. 481 00:23:54,808 --> 00:23:56,142 I don't know. (CHUCKLES) 482 00:23:56,226 --> 00:23:57,977 - Want to join? No? - Just a second. 483 00:23:58,061 --> 00:23:59,061 Oh... 484 00:23:59,229 --> 00:24:00,646 DOUG: Hey, Jared. 485 00:24:00,730 --> 00:24:02,189 Did you hear about the deal that Randall just did 486 00:24:02,274 --> 00:24:03,482 with some fund manager? 487 00:24:03,567 --> 00:24:05,359 JARED: Randall? Bullshit. 488 00:24:05,819 --> 00:24:07,653 He's a foot soldier. I'm sure it's a shit deal. 489 00:24:07,737 --> 00:24:08,988 No, it's for real. 490 00:24:10,198 --> 00:24:11,615 I told you we'd meet later. 491 00:24:11,700 --> 00:24:14,118 Unfortunately, it's in a place like this which I would never be. 492 00:24:14,202 --> 00:24:16,871 I never hung out with these idiots after work, ever. 493 00:24:16,955 --> 00:24:18,747 I had fashion friends. 494 00:24:19,166 --> 00:24:22,501 Apparently, this guy wanted $200 mil in credit default swaps. 495 00:24:22,586 --> 00:24:24,336 Randall made the sale. Can you believe it? 496 00:24:24,421 --> 00:24:26,630 Somebody shorted $200 mil on mortgage bonds? 497 00:24:26,715 --> 00:24:30,134 That was just with Deutsche. Word is he hit half the town. 498 00:24:31,011 --> 00:24:32,136 How much in total? 499 00:24:32,220 --> 00:24:33,929 $1.3 billion. 500 00:24:34,014 --> 00:24:37,850 LAWRENCE: What? That's pretty much all of Scion's liquidity. 501 00:24:37,934 --> 00:24:40,019 Michael, this is highly distressing. 502 00:24:40,103 --> 00:24:41,520 Lawrence, that is not 503 00:24:41,605 --> 00:24:44,148 all of our liquidity. 504 00:24:44,232 --> 00:24:45,441 And I'm not certain 505 00:24:45,525 --> 00:24:47,735 that you really understand this trade. 506 00:24:47,861 --> 00:24:48,903 This is a certainty. 507 00:24:48,987 --> 00:24:52,072 Mike, I consider myself a mentor to you. 508 00:24:52,157 --> 00:24:55,993 But our company is not comfortable with this investment. Am I being clear? 509 00:24:56,077 --> 00:24:58,329 Lawrence, I have full autonomy 510 00:24:58,413 --> 00:25:01,332 when it comes to investment strategy. 511 00:25:01,416 --> 00:25:02,541 (SIGHS) You can read our agreement. 512 00:25:02,626 --> 00:25:05,961 Do not throw our inception agreement in my face, Michael. 513 00:25:06,046 --> 00:25:08,422 - We had an underlying understanding - (COMPUTER BEEPS) 514 00:25:08,590 --> 00:25:09,798 you wouldn't act like a goddamn crazy man. 515 00:25:09,883 --> 00:25:11,467 This is not crazy. 516 00:25:11,551 --> 00:25:13,010 It's all very logical. 517 00:25:13,094 --> 00:25:15,304 So, now we pay up premiums on these swaps 518 00:25:15,889 --> 00:25:18,641 against the housing market until the mortgages fail? 519 00:25:18,725 --> 00:25:20,392 In other words, we lose millions 520 00:25:20,519 --> 00:25:23,187 until something that's never happened before happens? 521 00:25:27,067 --> 00:25:28,067 That's correct. 522 00:25:32,364 --> 00:25:34,073 (TELEPHONES RINGING) 523 00:26:01,601 --> 00:26:02,851 KATHY: Hello, Mark Baum. 524 00:26:02,936 --> 00:26:05,020 Oh, hey, Kathy, you busted me. 525 00:26:05,105 --> 00:26:06,063 I had a personal thing this afternoon. 526 00:26:06,147 --> 00:26:07,147 I'm not your babysitter. 527 00:26:07,232 --> 00:26:09,858 If FrontPoint makes money for Morgan Stanley, I'm happy. 528 00:26:09,943 --> 00:26:12,236 Okay. Hey, did I hear you're expecting? 529 00:26:12,320 --> 00:26:13,696 We're expecting to be expecting. 530 00:26:13,780 --> 00:26:15,447 IVF's are cleaning us out but we're staying positive... 531 00:26:15,532 --> 00:26:17,032 That's exciting! 532 00:26:18,326 --> 00:26:19,326 (CHUCKLES) 533 00:26:21,162 --> 00:26:24,164 ...lump on my ball. And I go in for a scan. 534 00:26:24,291 --> 00:26:25,291 Mmm-hmm. 535 00:26:25,375 --> 00:26:29,086 Turns out that I have a very large thing called an epididymis. 536 00:26:29,170 --> 00:26:31,714 Which is a thing that goes around the ball 537 00:26:31,798 --> 00:26:33,507 and is like a sac underneath. 538 00:26:33,592 --> 00:26:34,633 I have an extremely 539 00:26:34,718 --> 00:26:36,552 - pronounced epididymis. - PORTER: I'm riveted... 540 00:26:36,636 --> 00:26:38,679 I'm riveted by this. Do you have any pictures? 541 00:26:38,763 --> 00:26:42,308 DANNY: It's almost as large as another testicle unto itself. 542 00:26:42,392 --> 00:26:44,476 So get this. Cynthia... 543 00:26:44,561 --> 00:26:47,605 Guys. Cynthia wants me to quit and open a B&B in Vermont. 544 00:26:47,689 --> 00:26:48,814 (VINNIE LAUGHING) 545 00:26:48,898 --> 00:26:52,276 That sounds great. I'd love to see Mark Baum run a bed and breakfast. 546 00:26:52,360 --> 00:26:54,320 Like, "Here's your steel-cut oatmeal, asshole. " 547 00:26:54,404 --> 00:26:56,989 JARED: Mark refused to kiss the ring of the people with the checkbooks, 548 00:26:57,073 --> 00:27:00,117 so he had to set up his fund under Morgan Stanley's umbrella. 549 00:27:00,201 --> 00:27:01,285 (LAUGHING) 550 00:27:01,369 --> 00:27:03,912 His small team reflected his distrust of the system. 551 00:27:03,997 --> 00:27:05,414 You guys are sick. You're sick. 552 00:27:05,540 --> 00:27:07,666 She says this job is making me unhappy. 553 00:27:07,751 --> 00:27:08,792 VINNIE: But you're happy when you're unhappy. 554 00:27:08,877 --> 00:27:10,377 I am happy when I'm unhappy. 555 00:27:10,462 --> 00:27:11,462 JARED: Vinnie Daniel. 556 00:27:11,546 --> 00:27:12,671 You know how to make a muffin? 557 00:27:12,756 --> 00:27:14,465 - Mark's numbers guy. - Do you even know how 558 00:27:14,549 --> 00:27:16,008 - to do laundry? Make a bed? - MARK: Okay... 559 00:27:16,092 --> 00:27:18,719 Vinnie lost his father to a violent crime when he was young. 560 00:27:18,803 --> 00:27:20,638 Just like Mark, he didn't talk about it. 561 00:27:20,722 --> 00:27:21,972 I don't talk about that. 562 00:27:22,057 --> 00:27:24,391 Cynthia's no joke. She could actually make him move to Vermont. 563 00:27:24,476 --> 00:27:26,143 I mean, she made me start wearing a seatbelt. 564 00:27:26,227 --> 00:27:27,936 - Hey, you want me to... - JARED: Porter Collins. 565 00:27:28,063 --> 00:27:30,230 Former Olympic rower who went to Brown. 566 00:27:30,315 --> 00:27:31,982 He worked with Baum at a previous firm 567 00:27:32,067 --> 00:27:33,984 and couldn't figure out why no one listened to Baum. 568 00:27:34,069 --> 00:27:36,153 The guy with all the good ideas. 569 00:27:36,237 --> 00:27:38,030 Sorry. I think you have the wrong FrontPoint. 570 00:27:38,156 --> 00:27:40,908 'Cause there is another FrontPoint in this same building that is bonds. 571 00:27:40,992 --> 00:27:43,744 And Danny Moses. The optimist of the bunch. 572 00:27:44,663 --> 00:27:45,871 And a hell of a trader. 573 00:27:45,955 --> 00:27:49,083 Which is the only reason they put up with his bullshit optimism. 574 00:27:49,167 --> 00:27:50,417 DANNY: That was a weird call. 575 00:27:50,502 --> 00:27:53,796 You take longer with a wrong number than anybody else. 576 00:27:53,880 --> 00:27:56,507 It was this guy from Deutsche 577 00:27:56,591 --> 00:27:59,176 who was talking about shorting housing bonds. 578 00:28:00,553 --> 00:28:01,720 And then in the middle of the call 579 00:28:01,846 --> 00:28:03,013 I realized he had the wrong FrontPoint. 580 00:28:03,098 --> 00:28:05,432 And then... 'Cause he wanted the one on the 8th floor. 581 00:28:06,101 --> 00:28:08,018 He wanted to short housing bonds? 582 00:28:08,103 --> 00:28:09,144 Uh-huh. That happens like five times a day 583 00:28:09,229 --> 00:28:10,688 that somebody gets the wrong FrontPoint. 584 00:28:10,772 --> 00:28:12,940 - We should change our name. - VINNIE: Wait. Wait. 585 00:28:13,024 --> 00:28:14,983 He wanted to short housing bonds? 586 00:28:15,276 --> 00:28:17,069 - Who bets against housing? - (TYPING ON COMPUTER) 587 00:28:18,029 --> 00:28:19,238 VINNIE: What's the ABX at? 588 00:28:19,364 --> 00:28:20,531 What's ABX? 589 00:28:20,615 --> 00:28:23,450 It tracks subprime mortgage bond value. Go back to sleep. 590 00:28:23,868 --> 00:28:26,161 - The ABX is at, uh... - (BEEPING) 591 00:28:26,287 --> 00:28:29,540 Wow, it's down! It's down three points since last year. 592 00:28:29,624 --> 00:28:31,875 That's weird. I haven't heard a peep about that. 593 00:28:31,960 --> 00:28:33,001 What was this guy's name? 594 00:28:33,086 --> 00:28:35,212 Jared Vennett. Vennett. 595 00:28:35,296 --> 00:28:37,548 JARED: That's right. These lucky sons of bitches 596 00:28:37,632 --> 00:28:40,384 caught wind of one of the best trades in Wall Street history 597 00:28:40,468 --> 00:28:42,052 from a wrong number. 598 00:28:42,137 --> 00:28:44,388 They should have paid 10% to my fuckstick assistant. 599 00:28:44,472 --> 00:28:46,807 DANNY: His name was Jared Vennett. Vennett. 600 00:28:46,891 --> 00:28:48,726 Jared Vennett from Deutsche. Sounded very sketchy. 601 00:28:48,810 --> 00:28:49,810 VINNIE: Sounds like a douchebag. 602 00:28:50,645 --> 00:28:52,438 (WHISPERING) Do you smell that? 603 00:28:52,522 --> 00:28:53,856 Do you smell that? 604 00:28:53,982 --> 00:28:55,232 I smell money. 605 00:28:56,025 --> 00:28:57,443 This is your basic mortgage... 606 00:29:01,239 --> 00:29:03,407 Okay, hi. How are you? 607 00:29:03,950 --> 00:29:05,159 Have a seat. 608 00:29:05,243 --> 00:29:07,995 MARK: Okay, Mr. Vennett from Deutsche Bank. What do we have? 609 00:29:12,542 --> 00:29:14,126 There you go. 610 00:29:17,589 --> 00:29:20,132 MARK: So, how many people have you talked to about this trade? 611 00:29:20,216 --> 00:29:22,968 A few. There's definitely some interest. 612 00:29:23,052 --> 00:29:24,470 - No! - My boss would have my ass... 613 00:29:24,554 --> 00:29:25,971 - N.O.! - You crazy, Jared? 614 00:29:26,055 --> 00:29:27,598 - Get lost. - Fuck you. 615 00:29:28,349 --> 00:29:31,143 Which is why you're here talking to us, a wrong number. 616 00:29:31,227 --> 00:29:32,644 Sounds like there's a lot of interest. 617 00:29:32,729 --> 00:29:35,063 All right. A few people have invited us in 618 00:29:35,148 --> 00:29:37,524 just to laugh at me on this deal. Is that you? 619 00:29:37,609 --> 00:29:38,609 Is that what this is? 620 00:29:38,693 --> 00:29:39,735 VINNIE: That's not what this is. 621 00:29:39,819 --> 00:29:41,612 That's just how Mark is. 622 00:29:41,696 --> 00:29:42,988 - Let's see what you got. - I'm sorry. 623 00:29:43,072 --> 00:29:44,740 You smell that? What is that? 624 00:29:44,866 --> 00:29:46,283 - MARK: What? - What's that smell? 625 00:29:46,701 --> 00:29:47,701 Your cologne? 626 00:29:47,786 --> 00:29:48,827 JARED: No. 627 00:29:51,080 --> 00:29:52,372 Opportunity. 628 00:29:52,499 --> 00:29:53,791 No. Money. 629 00:29:53,875 --> 00:29:55,167 - Oh... - MARK: Okay. 630 00:29:55,251 --> 00:29:56,794 - I smell money. - Okay. 631 00:29:57,295 --> 00:29:59,963 - Chris, God damn it. - Sorry. 632 00:30:03,176 --> 00:30:05,594 JARED: This is your basic mortgage bond. 633 00:30:05,678 --> 00:30:07,930 All right? The originals were simple. 634 00:30:08,014 --> 00:30:11,683 They were just thousands ofAAA mortgages bundled together, 635 00:30:11,768 --> 00:30:13,519 guaranteed by the U.S. government. 636 00:30:13,603 --> 00:30:15,437 The modern ones are different. 637 00:30:15,522 --> 00:30:18,440 They're private. And they're made up of layers of tranches. 638 00:30:23,696 --> 00:30:26,114 The highest level, AAA, is getting paid first. 639 00:30:26,199 --> 00:30:29,368 The lowest rated, B, is getting paid last, taking on defaults first. 640 00:30:29,452 --> 00:30:32,120 Now, obviously, if you're buying B's, you could make more money. 641 00:30:32,205 --> 00:30:33,372 But they're a little risky. 642 00:30:33,456 --> 00:30:35,624 Sometimes they fail. 643 00:30:36,876 --> 00:30:38,210 Chris? 644 00:30:42,048 --> 00:30:44,299 Somewhere along the line, these B's and BB's 645 00:30:44,384 --> 00:30:45,843 went from a little risky 646 00:30:45,927 --> 00:30:48,345 to dog shit. Where's the trash? 647 00:30:48,429 --> 00:30:49,429 PORTER: It's right behind you. 648 00:30:49,806 --> 00:30:52,683 I'm talking rock-bottom FICO scores. 649 00:30:52,767 --> 00:30:53,767 (THUNKING) 650 00:30:53,893 --> 00:30:55,394 No income verification. 651 00:30:55,478 --> 00:30:56,520 (THUNKING) 652 00:30:56,604 --> 00:30:59,439 Adjustable rates. Dog shit! 653 00:31:00,900 --> 00:31:03,735 The default rates are already up from 1 % to 4%, fellas. 654 00:31:03,820 --> 00:31:06,029 And if they rise to 8%, and they will, 655 00:31:06,823 --> 00:31:09,074 a lot of these BBB's are going to zero, too. 656 00:31:09,158 --> 00:31:10,576 And that... You're too close. 657 00:31:12,328 --> 00:31:13,328 ...is an opportunity. 658 00:31:13,413 --> 00:31:14,371 - (EXHALES) - MARK: Okay. 659 00:31:14,455 --> 00:31:18,083 You're saying that at 8% the bonds fail and we are already at 4%? 660 00:31:18,167 --> 00:31:19,167 That's right. 661 00:31:19,252 --> 00:31:21,044 If they go to 8%, it's Armageddon? 662 00:31:21,129 --> 00:31:22,129 Yeah. That's right. 663 00:31:22,255 --> 00:31:23,964 How come nobody's talking about this? 664 00:31:24,090 --> 00:31:26,216 You're completely sure of the math? 665 00:31:26,301 --> 00:31:28,886 Look at him. That's my quant. 666 00:31:28,970 --> 00:31:30,012 MARK: Your what? 667 00:31:30,096 --> 00:31:31,889 My quantitative! 668 00:31:31,973 --> 00:31:34,641 My math specialist. Look at him. 669 00:31:34,767 --> 00:31:37,102 You notice anything different about him? Look at his face. 670 00:31:37,186 --> 00:31:38,228 MARK: That's pretty racist. 671 00:31:38,313 --> 00:31:40,814 JARED: Look at his eyes! I'll give you a hint. 672 00:31:40,899 --> 00:31:42,441 His name's Yang! 673 00:31:43,610 --> 00:31:46,904 He won a national math competition in China! 674 00:31:46,988 --> 00:31:49,489 He doesn't even speak English! 675 00:31:49,574 --> 00:31:51,241 Yeah, I'm sure of the math. 676 00:31:52,952 --> 00:31:56,747 Actually, my name's Jiang and I do speak English. 677 00:31:56,831 --> 00:31:58,290 Jared likes to say I don't because he thinks 678 00:31:58,374 --> 00:32:00,208 it makes me seem more authentic. 679 00:32:00,293 --> 00:32:02,836 And I got second in that national math competition. 680 00:32:03,421 --> 00:32:08,300 So you're offering us a chance to short this pile of blocks? How? 681 00:32:08,384 --> 00:32:10,844 With something called a credit default swap. 682 00:32:10,929 --> 00:32:12,054 (CLAPS HANDS) 683 00:32:12,138 --> 00:32:14,640 It's like insurance on the bond, and if it goes bust 684 00:32:14,724 --> 00:32:17,893 you can make 10-to-1, even 20-to-1 return. 685 00:32:17,977 --> 00:32:20,103 And it's already slowly going bust! 686 00:32:20,355 --> 00:32:22,439 10-to-1? 20-to-1? No way. 687 00:32:22,523 --> 00:32:24,483 JARED: And no one's paying attention. 688 00:32:24,984 --> 00:32:27,402 No one is paying attention! 689 00:32:27,487 --> 00:32:30,948 Because the banks are too busy getting paid obscene fees 690 00:32:31,032 --> 00:32:32,324 to sell these bonds. 691 00:32:32,408 --> 00:32:35,160 But wait. You are the bank. You work for the bank. 692 00:32:35,244 --> 00:32:37,287 I bet your margins are pretty nice and fat. 693 00:32:37,372 --> 00:32:39,665 Let's not talk about my margins, by the way. 694 00:32:39,749 --> 00:32:41,792 Being nice and fat, that's a nice shirt. Do they make it for men? 695 00:32:41,876 --> 00:32:43,085 (DANNY AND PORTER SNICKERING) 696 00:32:43,169 --> 00:32:44,127 VINNIE: Aren't you the bank? 697 00:32:44,212 --> 00:32:47,130 I work for the bank. I don't think like a bank. 698 00:32:47,215 --> 00:32:51,093 Big bank, small bank, I like to make money. All right? 699 00:32:51,177 --> 00:32:53,887 Let me put it this way. I'm standing in front of a burning house... 700 00:32:54,013 --> 00:32:56,765 And I'm offering you fire insurance on it. 701 00:32:56,849 --> 00:32:59,351 How can these underlying bonds be as bad as you say? 702 00:32:59,477 --> 00:33:00,686 It wouldn't be legal. (CLEARS THROAT) 703 00:33:00,770 --> 00:33:02,729 Nobody knows what's in them. 704 00:33:02,814 --> 00:33:04,314 Nobody knows what's in the bonds. 705 00:33:04,399 --> 00:33:07,484 I've seen some that are 65*% AAA-rated 706 00:33:07,568 --> 00:33:10,529 that I know for a fact are filled with 95*% 707 00:33:10,613 --> 00:33:13,407 subprime shit with FICOs below 550! 708 00:33:13,866 --> 00:33:14,992 Get the fuck out of here. 709 00:33:15,076 --> 00:33:16,451 You want me to really blow your mind? 710 00:33:16,536 --> 00:33:18,078 When the market deems a bond too risky to buy, 711 00:33:18,162 --> 00:33:20,372 what do you think we do with it? 712 00:33:20,456 --> 00:33:21,581 Take a guess. 713 00:33:21,666 --> 00:33:23,083 I don't know. You tell me. 714 00:33:23,167 --> 00:33:27,087 All right. You think we just warehouse it on the books? No. 715 00:33:27,171 --> 00:33:29,089 We just repackage it with a bunch of other shit 716 00:33:29,173 --> 00:33:31,258 that didn't sell and put it into a CDO. 717 00:33:32,093 --> 00:33:34,136 MARK: A CDO? JARED: Yes. A CDO. 718 00:33:34,929 --> 00:33:36,680 - What is that? - This is where we take a bunch of B's, 719 00:33:36,764 --> 00:33:38,932 BB's and BBB's that haven't sold, 720 00:33:39,017 --> 00:33:40,684 - and we put them in a pile. - (CLATTERING) 721 00:33:42,228 --> 00:33:44,187 JARED: And when the pile gets large enough, 722 00:33:44,313 --> 00:33:46,857 the whole thing is suddenly considered diversified 723 00:33:46,941 --> 00:33:51,653 and the whores at the rating agency give it a 92%-93% AAA rating, 724 00:33:51,738 --> 00:33:53,739 no questions asked. 725 00:33:54,157 --> 00:33:55,157 (EXHALES) 726 00:33:55,408 --> 00:33:57,909 Hold it. What? Say that again. 727 00:33:58,202 --> 00:34:00,454 A collateralized debt obligation. 728 00:34:00,538 --> 00:34:02,039 It's important to understand because it's what allowed 729 00:34:02,123 --> 00:34:06,251 a housing crisis to become a nationwide economic disaster. 730 00:34:06,335 --> 00:34:09,546 Here's world-famous chef Anthony Bourdain to explain. 731 00:34:09,672 --> 00:34:11,048 (LAUGHS) 732 00:34:14,135 --> 00:34:15,802 ANTHONY: Okay, I'm a chef on a Sunday afternoon 733 00:34:15,970 --> 00:34:17,637 setting the menu at a big restaurant. 734 00:34:17,805 --> 00:34:19,222 I ordered my fish on Friday, 735 00:34:19,307 --> 00:34:22,017 which is the mortgage bond that Michael Burry shorted. 736 00:34:22,226 --> 00:34:24,227 But some of the fresh fish doesn't sell. 737 00:34:24,312 --> 00:34:25,937 I don't know why. Maybe it just came out 738 00:34:26,064 --> 00:34:27,689 halibut has the intelligence of a dolphin. 739 00:34:27,774 --> 00:34:29,483 So, what am I going to do? 740 00:34:29,567 --> 00:34:33,070 Throw all this unsold fish, which is the BBB level of the bond, 741 00:34:33,154 --> 00:34:35,614 in the garbage and take the loss? 742 00:34:36,574 --> 00:34:37,574 No way. 743 00:34:37,658 --> 00:34:40,077 Being the crafty and morally onerous chef that I am, 744 00:34:40,161 --> 00:34:42,829 whatever crappy levels of the bond I don't sell, 745 00:34:42,955 --> 00:34:44,915 I throw into a seafood stew. 746 00:34:44,999 --> 00:34:48,418 See, it's not old fish. It's a whole new thing! 747 00:34:48,503 --> 00:34:52,214 And the best part is they're eating 3-day-old halibut. 748 00:34:52,298 --> 00:34:53,965 That is a CDO. 749 00:34:54,092 --> 00:34:56,927 PORTER: I just need to know, how could these possibly be collated? 750 00:34:57,011 --> 00:34:59,429 Somehow you're like Dora the Explorer 751 00:34:59,514 --> 00:35:00,764 and you're the first person 752 00:35:00,848 --> 00:35:02,182 - who found this thing. - Hold on. Hold on. 753 00:35:02,266 --> 00:35:04,142 So mortgage bonds are dog shit, 754 00:35:04,227 --> 00:35:06,436 CDOs are dog shit wrapped in cat shit. 755 00:35:06,521 --> 00:35:07,521 (BUZZING) 756 00:35:07,980 --> 00:35:09,815 Yeah, that's right. 757 00:35:09,899 --> 00:35:13,401 Institutions treat these CDOs like they're as solid as treasury bonds, 758 00:35:13,486 --> 00:35:14,736 and they're going to zero. 759 00:35:14,821 --> 00:35:15,862 (CLATTERING) 760 00:35:15,947 --> 00:35:18,156 DANNY: No. That can't be right. There were $500 billion 761 00:35:18,241 --> 00:35:20,575 in housing bonds sold last year alone. 762 00:35:20,868 --> 00:35:23,495 The rating agencies, the banks, the fucking government, 763 00:35:23,579 --> 00:35:25,580 you're saying they're all asleep at the wheel? 764 00:35:25,665 --> 00:35:29,126 Yeah. My whole department's long on this stuff. 765 00:35:30,002 --> 00:35:33,880 They call me Chicken Little. They call me Bubble Boy. 766 00:35:36,551 --> 00:35:39,970 - A's, zero. B's, zero. - (CLATTERING) 767 00:35:40,263 --> 00:35:43,515 BB's, zero. BBB's, zero. 768 00:35:45,935 --> 00:35:47,310 And then that happens. 769 00:35:47,395 --> 00:35:49,062 What is that? 770 00:35:50,940 --> 00:35:52,649 That's America's housing market. 771 00:35:55,611 --> 00:35:56,653 Thank you. 772 00:35:56,737 --> 00:35:57,737 Fuckin' A, Jared. 773 00:35:57,822 --> 00:35:59,823 Shut your fucking mouth. 774 00:35:59,907 --> 00:36:02,075 - ... hang out with you. - MARK: Good. Okay. 775 00:36:02,201 --> 00:36:04,327 JARED: Sack up, do the deal. Let's be friends. 776 00:36:04,412 --> 00:36:05,620 MARK: We will see. Thank you. 777 00:36:05,705 --> 00:36:06,746 JARED: Don't bullshit me. MARK: All right. 778 00:36:06,831 --> 00:36:07,914 JARED: You're gonna say no, aren't you? 779 00:36:08,040 --> 00:36:10,500 MIKE: No. No, I'm just evaluating right now. 780 00:36:10,585 --> 00:36:12,294 - Thank you. Thank you for coming in. - (DOOR OPENS) 781 00:36:13,379 --> 00:36:14,713 Bye, Jared. 782 00:36:20,761 --> 00:36:22,179 VINNIE: I don't like it. 783 00:36:23,139 --> 00:36:24,806 He's playing us. 784 00:36:25,933 --> 00:36:27,767 He's playing us. He's got too much skin in the game 785 00:36:27,852 --> 00:36:29,519 and he's dumping his position. 786 00:36:30,479 --> 00:36:31,980 What if he's right? 787 00:36:32,064 --> 00:36:33,148 You want him to be right. 788 00:36:33,232 --> 00:36:34,774 MARK: Yes, I do. 789 00:36:35,359 --> 00:36:38,445 The banks have given us 25*% interest rates on credit cards. 790 00:36:38,529 --> 00:36:40,238 They have screwed us on student loans 791 00:36:40,323 --> 00:36:42,073 that we can never get out from under. 792 00:36:42,158 --> 00:36:45,368 Then this guy walks into my office and says 793 00:36:45,453 --> 00:36:48,413 those same banks got greedy, they lost track of the market, 794 00:36:48,497 --> 00:36:50,540 and I can profit off of their stupidity? 795 00:36:50,625 --> 00:36:52,876 Fuck, yeah, I want him to be right! 796 00:36:52,960 --> 00:36:54,211 VINNIE: How come you don't hate this guy? 797 00:36:54,295 --> 00:36:55,962 He's everything you taught us not to trust. 798 00:36:56,047 --> 00:36:57,756 I can't hate him. He is so transparent 799 00:36:57,840 --> 00:37:00,217 in his self-interest that I kind of respect him. 800 00:37:00,301 --> 00:37:03,386 - Would I buy a car from him? No. - (PORTER CHUCKLES) 801 00:37:03,638 --> 00:37:04,888 Is he right about the mortgage market? 802 00:37:04,972 --> 00:37:07,182 - No. - Let's find out. Let's find out. 803 00:37:08,768 --> 00:37:10,602 Look. It's two very simple questions. 804 00:37:10,686 --> 00:37:12,187 Is there a housing bubble? 805 00:37:12,271 --> 00:37:14,856 And if there is, how exposed are the banks? 806 00:37:14,941 --> 00:37:15,982 PORTER: Yeah. Okay. 807 00:37:16,067 --> 00:37:17,484 Let's get on this quickly too. 808 00:37:17,568 --> 00:37:18,944 Because if he's right, 809 00:37:19,028 --> 00:37:22,489 every loser with a couple million bucks and a fund is gonna be jumping on this. 810 00:37:23,032 --> 00:37:24,032 Let's go. 811 00:37:25,034 --> 00:37:26,034 (ELEVATOR DINGS) 812 00:37:26,327 --> 00:37:27,827 WOMAN: Just that morning... 813 00:37:29,330 --> 00:37:31,122 (BREATHING DEEPLY) 814 00:37:31,999 --> 00:37:35,335 JPMorgan Chase. JPMorgan Chase. 815 00:37:37,171 --> 00:37:39,464 JAMIE: Okay. Stop saying "JPMorgan Chase". 816 00:37:39,548 --> 00:37:40,966 I got a good feeling about this. 817 00:37:41,050 --> 00:37:42,133 It's just a meeting though, you know? 818 00:37:43,261 --> 00:37:44,761 It's just a meeting. It's something like... 819 00:37:44,845 --> 00:37:46,972 People have meetings all the time. You know? 820 00:37:47,056 --> 00:37:48,682 People drink their coffee, they have a meeting. 821 00:37:48,766 --> 00:37:50,100 CHRIS: Brownfield Fund? JAMIE: Yes! 822 00:37:50,184 --> 00:37:52,060 - Hey. Hello. - CHARLIE: Ted. 823 00:37:52,144 --> 00:37:53,478 Chris. I'm on Ted's desk. 824 00:37:53,604 --> 00:37:54,938 Chris. Okay. 825 00:37:55,022 --> 00:37:56,189 - I'm Charlie, Charlie Geller. - Charlie. 826 00:37:56,274 --> 00:37:57,899 - Jamie Shipley. Hi. - Jamie. 827 00:37:57,984 --> 00:38:00,944 We're so excited to get set up on your trading platform. 828 00:38:01,028 --> 00:38:02,153 Cool. 829 00:38:02,238 --> 00:38:04,030 Here, have a seat a second. 830 00:38:04,782 --> 00:38:05,782 All right. 831 00:38:06,867 --> 00:38:09,786 So, I... Ted had asked me to do some meeting prep. 832 00:38:09,870 --> 00:38:13,248 But I couldn't find any marketing material on you guys. 833 00:38:13,332 --> 00:38:15,166 We just moved here from Boulder. 834 00:38:15,251 --> 00:38:16,751 - Yeah. - Got it. 835 00:38:16,836 --> 00:38:19,212 Could we see some of your offering documents? 836 00:38:19,297 --> 00:38:21,798 Well, Brownfield is its own money. 837 00:38:22,383 --> 00:38:24,092 - It's our money. - Yeah. 838 00:38:24,176 --> 00:38:25,969 Can you tell us how much you manage? 839 00:38:26,053 --> 00:38:29,514 Of course. We're doing $30 million right now. 840 00:38:29,598 --> 00:38:30,807 Um, but we started 841 00:38:30,891 --> 00:38:33,643 - four years ago with $110,000. - CHRIS: Wow. 842 00:38:33,728 --> 00:38:38,356 So, as you can see, that's pretty phenomenal returns. 843 00:38:38,441 --> 00:38:41,651 We want to get an ISDA agreement with JPMorgan so we can 844 00:38:41,777 --> 00:38:44,279 deal in long-term options. 845 00:38:44,363 --> 00:38:45,697 - That's really cool. - Yeah. 846 00:38:58,586 --> 00:39:00,378 That is so cool. 847 00:39:00,463 --> 00:39:01,546 Thank you. 848 00:39:01,630 --> 00:39:05,800 But you guys are under the capital requirements for an ISDA. 849 00:39:05,926 --> 00:39:06,926 By how much? 850 00:39:07,595 --> 00:39:08,595 Uh... 851 00:39:08,804 --> 00:39:12,182 One billion four hundred seventy million, so... 852 00:39:13,184 --> 00:39:14,726 ...a lot. 853 00:39:15,978 --> 00:39:17,437 This makes us look bad, doesn't it, 854 00:39:17,521 --> 00:39:20,690 that we didn't know what the capital requirements were? 855 00:39:20,775 --> 00:39:21,775 Uh... 856 00:39:22,360 --> 00:39:23,777 It's not great. 857 00:39:24,278 --> 00:39:25,570 But, uh, 858 00:39:25,654 --> 00:39:28,114 keep up those returns and give us a call 859 00:39:28,199 --> 00:39:29,991 way down the line. You know. 860 00:39:30,076 --> 00:39:31,076 Okay? 861 00:39:31,160 --> 00:39:32,452 - Okay. - Thanks, Chris. 862 00:39:32,578 --> 00:39:33,536 Have a good one, guys. 863 00:39:33,621 --> 00:39:34,662 CHARLIE: Thank you, Chris. 864 00:39:37,166 --> 00:39:38,166 (SIGHS) 865 00:39:38,959 --> 00:39:39,959 Shit! 866 00:39:41,128 --> 00:39:42,379 Who the fuck schedules a meeting 867 00:39:42,463 --> 00:39:44,589 - at 4:50 in the afternoon? - Oh, my, God. 868 00:39:44,673 --> 00:39:46,424 That was so painful. 869 00:39:46,509 --> 00:39:50,136 Dude, B ofA and Bear didn't even return our calls. 870 00:39:50,221 --> 00:39:52,389 And even fucking Wachovia 871 00:39:52,473 --> 00:39:54,140 - blew us off, man! - I know. 872 00:39:54,308 --> 00:39:56,559 Here's the prospectuses of all the other losers 873 00:39:56,644 --> 00:39:58,353 who didn't make it past the lobby. 874 00:39:58,437 --> 00:40:00,313 JAMIE: I don't think I can do this anymore. You know. 875 00:40:00,398 --> 00:40:03,233 I'm young, yet. I can still do something with my life. 876 00:40:03,317 --> 00:40:05,402 I miss Colorado anyway. The weed's better. 877 00:40:06,362 --> 00:40:08,363 Gentlemen, I need you to leave. 878 00:40:08,489 --> 00:40:09,864 Yep, yep, we're going. Let's go. 879 00:40:09,990 --> 00:40:11,116 Look at this. Look at this. 880 00:40:11,200 --> 00:40:12,534 This guy 881 00:40:12,618 --> 00:40:15,537 says that the housing market's a giant bubble. 882 00:40:16,831 --> 00:40:17,831 (INHALES) 883 00:40:17,915 --> 00:40:20,083 Okay, so this part isn't totally accurate, you know. 884 00:40:20,167 --> 00:40:22,252 We didn't find Jared Vennett's housing bubble pitch 885 00:40:22,336 --> 00:40:24,254 in the lobby of a bank that rejected us. 886 00:40:24,338 --> 00:40:25,797 The truth is, um, 887 00:40:25,881 --> 00:40:28,758 a friend had told Charlie about it, and I read about it 888 00:40:28,843 --> 00:40:30,260 in Grant's Interest Rate Observer. 889 00:40:30,344 --> 00:40:31,678 This is crazy. 890 00:40:31,762 --> 00:40:34,264 This is crazy stuff. 891 00:40:34,348 --> 00:40:37,016 Shit, he's saying that there's 10-to-1 returns 892 00:40:37,101 --> 00:40:40,728 on credit default swaps for mortgage-backed securities? 893 00:40:40,855 --> 00:40:43,481 And the whole housing market is about to collapse? 894 00:40:44,191 --> 00:40:45,942 JARED: For Jamie and Charlie, the housing market 895 00:40:46,026 --> 00:40:48,445 doomsday prediction was music to their ears. 896 00:40:48,529 --> 00:40:50,238 (SINGING) 897 00:40:56,078 --> 00:40:58,037 They had started working out of Jamie's garage 898 00:40:58,122 --> 00:41:00,039 with $110,000 Jamie had saved 899 00:41:00,124 --> 00:41:02,208 taking sailboats up and down the East Coast. 900 00:41:04,128 --> 00:41:05,920 Our investment strategy was simple. 901 00:41:06,005 --> 00:41:08,047 People hate to think about bad things happening, 902 00:41:08,132 --> 00:41:10,467 so they always underestimate their likelihood. 903 00:41:10,551 --> 00:41:13,052 JARED: Theirstrategy was simple and brilliant. 904 00:41:13,596 --> 00:41:14,679 What he said. 905 00:41:14,763 --> 00:41:17,474 Jamie and Charlie found markets will sell options very cheaply 906 00:41:17,558 --> 00:41:19,767 on things they think will never happen. 907 00:41:19,852 --> 00:41:21,436 So when they were wrong, they were wrong small, 908 00:41:21,520 --> 00:41:23,480 but when they were right, they were right big. 909 00:41:23,564 --> 00:41:24,898 (IMITATING EXPLOSION) 910 00:41:30,321 --> 00:41:34,073 Within a few years they had turned $110,000 into $30 million. 911 00:41:34,158 --> 00:41:35,825 But then it was time to go to New York City. 912 00:41:35,910 --> 00:41:38,536 And so far, it wasn't going very well. 913 00:41:38,621 --> 00:41:40,371 So what if it does seem interesting. No... 914 00:41:40,456 --> 00:41:43,958 No bank will give us our ISDA. We're dead in the water. 915 00:41:45,461 --> 00:41:47,879 These kind of trades are totally out of the question. 916 00:41:47,963 --> 00:41:49,589 We got to call Ben. 917 00:41:50,716 --> 00:41:51,716 (EXHALES) 918 00:41:51,800 --> 00:41:53,301 Let's call Ben! 919 00:41:54,178 --> 00:41:56,262 JARED: Ben Rickert was a former trader in Singapore 920 00:41:56,347 --> 00:41:59,098 for Chase who quit the whole game in disgust. 921 00:41:59,183 --> 00:42:01,518 He happened to be Jamie's neighbor when they were in Colorado 922 00:42:01,602 --> 00:42:03,770 and they met walking dogs. 923 00:42:03,854 --> 00:42:05,313 But Ben was dark. 924 00:42:05,439 --> 00:42:07,482 He didn't just think the whole system would fail. 925 00:42:07,566 --> 00:42:09,776 He thought the whole world was going down. 926 00:42:11,820 --> 00:42:13,905 Every one of these vegetables is fresh from my garden. 927 00:42:14,949 --> 00:42:16,074 (CHOPPING) 928 00:42:16,408 --> 00:42:17,700 BEN: You guys should start your own garden. 929 00:42:17,785 --> 00:42:20,119 What you got to do is get your soil off the petrochemicals. 930 00:42:20,204 --> 00:42:21,246 JAMIE: Hmm. 931 00:42:21,330 --> 00:42:23,540 I used wood ash and urine to help restore the soil. 932 00:42:23,624 --> 00:42:25,208 It creates ammonium nitrate. 933 00:42:25,292 --> 00:42:27,043 Seeds are gonna be the new currency. 934 00:42:27,169 --> 00:42:29,170 And not those Franken-seeds from Monsanto. 935 00:42:29,255 --> 00:42:31,839 I'm talking about good, healthy, organic seeds. 936 00:42:31,924 --> 00:42:33,049 Make yourself a garden. 937 00:42:33,133 --> 00:42:34,592 - Learn to live off the land. - You're a fucking lunatic. 938 00:42:34,677 --> 00:42:36,886 JARED: Ben had real experience in a big bank. 939 00:42:36,971 --> 00:42:40,640 Jamie and Charlie had never even been in a Manhattan bank bathroom. 940 00:42:40,766 --> 00:42:42,433 But Ben was done with the banking world. 941 00:42:42,518 --> 00:42:43,851 He was very clear. 942 00:42:43,936 --> 00:42:45,520 JAMIE: All right, let's crunch some numbers 943 00:42:45,604 --> 00:42:47,981 and then maybe we'll talk about calling Ben. 944 00:42:48,065 --> 00:42:49,107 We're always crunching numbers. 945 00:42:49,191 --> 00:42:50,233 When haven't we crunched the numbers? 946 00:42:50,317 --> 00:42:51,359 We're gonna crunch the numbers like harder... 947 00:42:51,485 --> 00:42:52,443 GUARD: I need you out of here. 948 00:42:52,528 --> 00:42:54,320 Of course. One second. Yes, ma'am. We're going. 949 00:42:57,533 --> 00:42:59,826 PORTER: Oh, God. I hate this. This is a total waste of time. 950 00:43:00,035 --> 00:43:02,370 Oh, come on. Would you relax? 951 00:43:03,122 --> 00:43:06,249 There's a housing development 45 minutes outside town. 952 00:43:06,333 --> 00:43:08,209 Mark wants us to check that out first. 953 00:43:08,294 --> 00:43:10,295 Well, I hope there are some Cuban restaurants on the way there. 954 00:43:10,379 --> 00:43:13,006 Because I heard the Cuban food is amazing in Miami. 955 00:43:13,090 --> 00:43:15,800 Please don't be chipper in the face of me being miserable. 956 00:43:15,884 --> 00:43:17,552 It really makes me hate you. 957 00:43:17,636 --> 00:43:20,179 How is wanting to eat good food being chipper? 958 00:43:21,890 --> 00:43:25,727 Hello? 959 00:43:26,520 --> 00:43:27,854 PORTER: What do these go for? 960 00:43:29,523 --> 00:43:31,232 DANNY: $425,000 each? 961 00:43:31,817 --> 00:43:33,443 (DOG BARKING) 962 00:43:44,997 --> 00:43:46,247 (KNOCKING ON DOOR) 963 00:43:53,088 --> 00:43:54,672 What's up, man? What do you want? 964 00:43:54,757 --> 00:43:58,092 Hello. I'm surveying mortgage owners who are over 90 days delinquent. 965 00:43:58,177 --> 00:44:00,720 I'm looking for a Harvey Humpsey. 966 00:44:00,804 --> 00:44:01,971 You want my landlord's dog? 967 00:44:04,141 --> 00:44:05,600 Your landlord filled out his mortgage application 968 00:44:05,684 --> 00:44:08,144 using his dog's name? 969 00:44:08,228 --> 00:44:09,687 I guess so. 970 00:44:09,772 --> 00:44:12,273 Wait, has that asshole not been paying his mortgage? 971 00:44:12,358 --> 00:44:13,691 'Cause I've been paying my rent. 972 00:44:13,776 --> 00:44:15,693 Well, yeah, he is over 90 days delinquent. 973 00:44:16,070 --> 00:44:17,654 Seriously, man, 974 00:44:17,738 --> 00:44:19,530 am I gonna have to leave? 975 00:44:19,615 --> 00:44:21,157 (FOOTSTEPS APPROACHING) 976 00:44:22,076 --> 00:44:24,452 'Cause my kid just got settled in school, man. 977 00:44:24,536 --> 00:44:26,704 Hey. How are ya? 978 00:44:27,373 --> 00:44:28,539 My name's Ken. 979 00:44:28,666 --> 00:44:29,874 You're Ken? 980 00:44:29,958 --> 00:44:31,751 Um, you should talk to your landlord about that. 981 00:44:31,835 --> 00:44:33,336 I'm sorry, I don't have any more information. 982 00:44:33,420 --> 00:44:34,796 But you, um... 983 00:44:35,464 --> 00:44:37,048 You have a great day. See ya, Ken. 984 00:44:37,132 --> 00:44:38,549 KEN: There's books everywhere! 985 00:44:38,634 --> 00:44:40,885 Books everywhere? 986 00:44:40,969 --> 00:44:44,222 Seriously, man, is everything gonna be okay? 987 00:44:44,306 --> 00:44:47,392 You should... You should call him. 988 00:44:47,476 --> 00:44:48,518 You should give him a call. 989 00:44:48,602 --> 00:44:50,269 It's not my fault, dude. I've been paying... 990 00:44:50,354 --> 00:44:51,896 (DOOR CREAKING) 991 00:44:54,149 --> 00:44:55,233 Hello! 992 00:44:59,154 --> 00:45:01,280 Looks like the Mary Celeste. 993 00:45:01,365 --> 00:45:04,117 Look. All they took was the TV. 994 00:45:04,910 --> 00:45:06,869 DANNY: It's weird. 995 00:45:06,954 --> 00:45:09,288 PORTER: They didn't even clean out the cat litter. 996 00:45:17,840 --> 00:45:18,881 PORTER: Oh, God. 997 00:45:30,519 --> 00:45:32,437 It's like Chernobyl. 998 00:45:32,521 --> 00:45:35,940 There's like a hundred houses. There can't be four people living here. 999 00:45:37,985 --> 00:45:40,153 - Oh, fuck that! - Shit! 1000 00:45:46,493 --> 00:45:48,661 (HEAVY METAL MUSIC PLAYING) 1001 00:45:55,043 --> 00:45:56,169 MAN: He's been in there for seven hours. 1002 00:45:56,295 --> 00:45:57,879 Where does he go to the bathroom? 1003 00:45:58,505 --> 00:45:59,589 I heard he had a breakdown. 1004 00:45:59,673 --> 00:46:01,632 - He's letting the fund tank. - (TELEPHONE RINGING) 1005 00:46:01,717 --> 00:46:03,176 My buddy in Manhattan said... 1006 00:46:03,302 --> 00:46:04,844 Dr. Burry's office. 1007 00:46:05,179 --> 00:46:06,804 No, he actually prefers that you email him. 1008 00:46:06,889 --> 00:46:08,181 Excuse me. 1009 00:46:08,515 --> 00:46:09,515 Mr. Fields, Mr... 1010 00:46:13,645 --> 00:46:15,396 - Hi, Lawrence. - (WHISPERING) Holy shit! 1011 00:46:17,024 --> 00:46:20,568 We have no confidence in your ability to identify 1012 00:46:20,652 --> 00:46:22,236 macroeconomic trends. 1013 00:46:22,362 --> 00:46:23,946 (MUSIC STOPPING) 1014 00:46:24,573 --> 00:46:27,116 MIKE: You flew here to tell me that? Why? 1015 00:46:27,201 --> 00:46:30,620 Anyone can see that there is a real estate bubble. 1016 00:46:30,704 --> 00:46:32,538 Actually, no one can see a bubble. 1017 00:46:32,623 --> 00:46:33,831 That's what makes it a bubble. 1018 00:46:33,916 --> 00:46:36,209 That's dumb, Lawrence. 1019 00:46:36,293 --> 00:46:37,877 There's always markers. 1020 00:46:38,629 --> 00:46:41,088 Mortgage fraud has 1021 00:46:41,173 --> 00:46:42,924 quintupled since 2000 1022 00:46:43,050 --> 00:46:45,885 and the average take-home pay is flat, 1023 00:46:45,969 --> 00:46:47,428 but home prices are soaring. 1024 00:46:47,513 --> 00:46:49,597 That means the homes are debt, not assets. 1025 00:46:49,681 --> 00:46:51,891 So Mike Burry of San Jose, a guy who 1026 00:46:52,893 --> 00:46:56,270 gets his hair cut at Supercuts and doesn't wear shoes, 1027 00:46:56,396 --> 00:46:59,232 knows more than Alan Greenspan and Hank Paulson. 1028 00:46:59,399 --> 00:47:00,399 Well... 1029 00:47:01,109 --> 00:47:03,736 Dr. Mike Burry, yes, he does. (CHUCKLES) 1030 00:47:04,947 --> 00:47:06,739 That's cute. That's cute. 1031 00:47:06,824 --> 00:47:09,158 Are you being sarcastic with us, Mike? 1032 00:47:11,203 --> 00:47:12,203 (SIGHS) 1033 00:47:12,287 --> 00:47:13,704 Lawrence, 1034 00:47:13,789 --> 00:47:16,290 I don't know how to be sarcastic. 1035 00:47:16,959 --> 00:47:19,752 I don't know how to be funny. I don't know how to 1036 00:47:20,420 --> 00:47:21,879 work people. 1037 00:47:21,964 --> 00:47:23,130 I... 1038 00:47:23,215 --> 00:47:25,550 I just know how to read numbers. 1039 00:47:25,634 --> 00:47:28,135 How big is your short position right now? 1040 00:47:28,512 --> 00:47:29,554 Um... 1041 00:47:29,638 --> 00:47:31,222 Just $1.3 billion. 1042 00:47:31,807 --> 00:47:33,182 And the premiums? 1043 00:47:33,308 --> 00:47:34,642 Well, we pay, uh, 1044 00:47:35,102 --> 00:47:38,437 - roughly $80 to 90 million - (MARTIN LAUGHING) 1045 00:47:38,564 --> 00:47:40,022 each year, which is high, 1046 00:47:40,107 --> 00:47:42,191 but I was the first to do this trade. 1047 00:47:42,276 --> 00:47:45,736 Watch. It will pay. I may have been early, but I'm not wrong. 1048 00:47:45,821 --> 00:47:48,155 It's the same thing. It's the same thing, Mike! 1049 00:47:48,991 --> 00:47:53,119 You're managing a fund of, what, $555 million? 1050 00:47:53,662 --> 00:47:57,164 In six years, it'll all be gone. 1051 00:47:57,958 --> 00:47:59,375 On one bet. 1052 00:47:59,459 --> 00:48:02,628 No, the second quarter of '07 is when the adjustable rates kick in. 1053 00:48:02,754 --> 00:48:04,255 The defaults will skyrocket. 1054 00:48:04,339 --> 00:48:06,048 Yeah. Says you. 1055 00:48:06,133 --> 00:48:08,593 LAWRENCE: How much is eligible for withdrawal before they do? 1056 00:48:08,677 --> 00:48:10,595 Say, in the next two quarters. 1057 00:48:11,305 --> 00:48:13,306 If your investors panic. 1058 00:48:16,852 --> 00:48:17,894 $302 million? 1059 00:48:17,978 --> 00:48:18,978 I... 1060 00:48:19,855 --> 00:48:21,480 My God, Mike. 1061 00:48:22,566 --> 00:48:23,941 (MIKE CHUCKLES) 1062 00:48:26,320 --> 00:48:28,237 No one will pull out. That would be suicide. 1063 00:48:28,322 --> 00:48:30,740 I mean, I'm down 17% for the year. 1064 00:48:30,866 --> 00:48:33,159 But if they trust me, and they trust me, because... 1065 00:48:33,243 --> 00:48:35,870 No one trusts you! No one! 1066 00:48:35,954 --> 00:48:38,372 I sent several emails to my investors 1067 00:48:38,498 --> 00:48:40,541 letting them know that the... 1068 00:48:41,043 --> 00:48:42,084 (EXHALES) 1069 00:48:42,169 --> 00:48:44,587 ...the second quarter of '07 is when our 1070 00:48:44,713 --> 00:48:47,173 housing positions show returns and... 1071 00:48:48,550 --> 00:48:49,800 I've been very clear. 1072 00:48:50,594 --> 00:48:53,429 People will withdraw their money. 1073 00:48:54,014 --> 00:48:57,475 Lawrence, that would be so stupid. I mean, the... 1074 00:48:57,559 --> 00:49:01,062 (STUTTERS) If the fund's capitals drop too much, 1075 00:49:01,521 --> 00:49:04,607 then the swaps contracts are voided. 1076 00:49:04,691 --> 00:49:07,944 And then the banks get to keep all of the collateral. 1077 00:49:08,028 --> 00:49:10,237 - MARTIN: Wait a minute. Wait. - All of it. 1078 00:49:10,364 --> 00:49:14,367 The contracts are voided? 1079 00:49:15,077 --> 00:49:16,744 Holy shit! 1080 00:49:17,204 --> 00:49:18,204 Oh, motherfucker! 1081 00:49:18,872 --> 00:49:20,373 - Michael? - (TAPPING) 1082 00:49:20,749 --> 00:49:22,416 Give me my money back. 1083 00:49:25,837 --> 00:49:29,215 Michael, do you hear me? I want my money back. 1084 00:49:31,718 --> 00:49:34,053 Give me my fucking money back... 1085 00:49:35,097 --> 00:49:36,514 (LAUGHS)... you motherfucker. 1086 00:49:37,432 --> 00:49:40,559 The market's in an itsy-bitsy little gully right now. 1087 00:49:40,686 --> 00:49:42,937 It's like everybody said, "Okay, that was crazy. 1088 00:49:43,021 --> 00:49:44,897 "Let's just all calm down. " 1089 00:49:46,733 --> 00:49:49,944 I sold that house for $350,000 the year it was built. 1090 00:49:50,612 --> 00:49:52,780 Two years later, $480,000. 1091 00:49:52,906 --> 00:49:56,075 Then $585,000 maybe 18 months ago. 1092 00:49:56,201 --> 00:49:58,744 This couple bought it for $650,000 last year. 1093 00:49:59,246 --> 00:50:01,080 He'd let it go for that. 1094 00:50:01,164 --> 00:50:02,832 Hi, John. 1095 00:50:02,916 --> 00:50:03,958 (MOUTHING) No, no, no. 1096 00:50:04,584 --> 00:50:05,960 It will break his heart, but he'll let it go. 1097 00:50:06,086 --> 00:50:07,837 Why is he selling? 1098 00:50:07,921 --> 00:50:09,755 MARLENE: Neither one's working right now. 1099 00:50:10,757 --> 00:50:13,384 Marlene, you'd say they're motivated, right? 1100 00:50:13,468 --> 00:50:16,470 As motivated as one can be in this neighborhood. 1101 00:50:16,555 --> 00:50:19,098 This house on the left, I would say they're probably motivated. 1102 00:50:19,182 --> 00:50:21,142 Wow, a lot of people seem very motivated. 1103 00:50:21,226 --> 00:50:22,309 MARLENE: Oh, it's just the gully. 1104 00:50:22,602 --> 00:50:24,353 That's all. Just... 1105 00:50:24,438 --> 00:50:25,855 Just nerves. 1106 00:50:25,939 --> 00:50:27,648 So where do we stand? 1107 00:50:28,817 --> 00:50:31,318 I need to talk to my wife. Um... 1108 00:50:31,403 --> 00:50:32,695 MAN: This market won't last. 1109 00:50:32,779 --> 00:50:34,572 MARK: Actually, could I talk to a mortgage broker? 1110 00:50:34,656 --> 00:50:36,490 Anybody you recommend? Anybody you like. 1111 00:50:36,575 --> 00:50:38,576 MARLENE: Yes, yes, I have someone. Absolutely. 1112 00:50:38,660 --> 00:50:39,910 Yeah, bitch better like me. 1113 00:50:39,995 --> 00:50:41,245 Sent her ass to Cabo. 1114 00:50:41,455 --> 00:50:42,788 (ALL LAUGHING) 1115 00:50:42,873 --> 00:50:45,458 So is Morgan Stanley recruiting us? Is that it? 1116 00:50:45,751 --> 00:50:48,711 Oh, no. No. The bank owns our hedge fund, 1117 00:50:48,795 --> 00:50:49,837 but we're not really part of it. 1118 00:50:49,963 --> 00:50:52,423 We invest in financial service companies 1119 00:50:52,507 --> 00:50:55,468 and we're trying to understand the residential mortgage business. 1120 00:50:55,552 --> 00:50:58,471 How many loans do you write each month? 1121 00:50:58,597 --> 00:51:00,139 - (BLOWS AIR) About 60. - Yeah. 1122 00:51:00,223 --> 00:51:01,682 What was it four years ago? 1123 00:51:02,642 --> 00:51:03,976 - Ten... - (PORTER WHISTLES) 1124 00:51:04,061 --> 00:51:05,311 Maybe 15. 1125 00:51:05,395 --> 00:51:07,688 Yeah, I was a bartender. Now I own a boat. 1126 00:51:07,773 --> 00:51:08,731 (LAUGHING) You own a... 1127 00:51:08,815 --> 00:51:12,068 So how many of these are adjustable-rate mortgages? 1128 00:51:12,152 --> 00:51:13,819 - MAN IN BLACK: Well, most. - Oh, yeah. 1129 00:51:13,904 --> 00:51:15,863 Yeah, I'd say about 90%. 1130 00:51:15,947 --> 00:51:19,075 The bonuses on those skyrocketed a few years ago. 1131 00:51:19,159 --> 00:51:20,451 Adjustable's our bread and honey. 1132 00:51:20,535 --> 00:51:23,079 So do applicants ever get rejected? 1133 00:51:23,163 --> 00:51:24,580 (BOTH LAUGHING) 1134 00:51:27,417 --> 00:51:28,626 Seriously? 1135 00:51:29,503 --> 00:51:31,587 Look, if they get rejected, I suck at my job. 1136 00:51:31,671 --> 00:51:33,172 DANNY: Even if they have no money? 1137 00:51:33,256 --> 00:51:36,133 Well, my firm offers NINJA loans. 1138 00:51:36,218 --> 00:51:38,677 - PORTER: Okay. - "No Income, No Job. " 1139 00:51:39,012 --> 00:51:41,222 I just leave the income section blank if I want. 1140 00:51:41,306 --> 00:51:42,556 Corporate doesn't care. 1141 00:51:42,641 --> 00:51:45,935 These people just want homes. And they go with the flow. 1142 00:51:46,019 --> 00:51:47,019 PORTER: Good for you. 1143 00:51:47,104 --> 00:51:48,145 Your companies don't verify? 1144 00:51:51,858 --> 00:51:53,859 If I write a loan on Friday afternoon, 1145 00:51:54,736 --> 00:51:56,737 a big bank will buy it by Monday lunch. 1146 00:51:57,280 --> 00:51:58,614 Yeah. Same here. 1147 00:52:00,408 --> 00:52:01,784 Could you hold on a second? 1148 00:52:01,910 --> 00:52:03,285 Yeah. 1149 00:52:08,959 --> 00:52:11,627 I don't get it. Why are they confessing? 1150 00:52:11,711 --> 00:52:13,671 They're not confessing. 1151 00:52:13,797 --> 00:52:15,464 They're bragging. 1152 00:52:22,889 --> 00:52:24,140 (MARK CLEARS THROAT) 1153 00:52:24,224 --> 00:52:28,227 Do people have any idea what they are buying? 1154 00:52:29,187 --> 00:52:31,438 (CHUCKLES) I focus on the immigrants, you know. 1155 00:52:31,523 --> 00:52:32,940 Once they find out they're getting a home, 1156 00:52:33,024 --> 00:52:34,608 they sign where you tell them to sign. 1157 00:52:34,693 --> 00:52:36,819 Don't ask questions. Don't understand the rates. 1158 00:52:36,903 --> 00:52:38,362 - Fucking idiots. - Yeah. 1159 00:52:38,446 --> 00:52:39,864 And you target immigrants, too? 1160 00:52:39,948 --> 00:52:42,783 Well, their credit actually isn't bad enough for him. 1161 00:52:42,909 --> 00:52:43,909 (CHUCKLES) 1162 00:52:44,703 --> 00:52:46,370 Look, I'm a yield guy. 1163 00:52:46,872 --> 00:52:47,913 Okay... 1164 00:52:48,999 --> 00:52:52,418 I make $2,000 on a fixed-rate prime loan, right? 1165 00:52:52,502 --> 00:52:56,130 But I can make $10,000 on a subprime adjustable. 1166 00:52:56,214 --> 00:52:59,175 Trust me, I'm not driving a 7 Series without strippers. 1167 00:52:59,259 --> 00:53:02,553 No one on the pole has good credit and they're all cash rich. 1168 00:53:02,637 --> 00:53:04,972 I think I read Warren Buffett say something like that. 1169 00:53:05,473 --> 00:53:07,725 What? Who's Warren Buffett? 1170 00:53:08,268 --> 00:53:10,978 Okay, so strippers. Like exotic dancers? 1171 00:53:11,062 --> 00:53:12,271 Yeah, yeah, yeah. 1172 00:53:12,355 --> 00:53:14,315 Nude, you know, topless. 1173 00:53:14,399 --> 00:53:16,233 - Strippers. - Yeah. 1174 00:53:19,821 --> 00:53:21,030 Can you introduce us? 1175 00:53:21,114 --> 00:53:23,532 Yes! Yes. 1176 00:53:23,617 --> 00:53:24,867 (AUDIENCE CHEERING) 1177 00:53:25,619 --> 00:53:28,537 I always get option-pay adjustables. I'm a private contractor. 1178 00:53:28,622 --> 00:53:30,289 MARK: What? I can't hear you. I'm sorry. 1179 00:53:30,373 --> 00:53:32,208 I always get option-pay adjustables. 1180 00:53:32,292 --> 00:53:34,543 I'm a private contractor. I need flexibility. 1181 00:53:34,628 --> 00:53:37,213 And you tell the mortgage company what you do? 1182 00:53:37,297 --> 00:53:39,298 I write "therapist". 1183 00:53:39,382 --> 00:53:40,841 - You can touch me. - Always? 1184 00:53:41,468 --> 00:53:42,509 Only in V.I.P. 1185 00:53:42,594 --> 00:53:45,221 No, no, no, you say you always do adjustables. 1186 00:53:45,305 --> 00:53:47,097 And you have more than one loan on a property? 1187 00:53:47,182 --> 00:53:49,391 Everybody does. At least down here. 1188 00:53:49,476 --> 00:53:50,476 MARK: I'm sorry, what? 1189 00:53:50,560 --> 00:53:53,145 Everybody does. At least down here. 1190 00:53:53,230 --> 00:53:55,397 That way you only put down, like, 5%. 1191 00:53:55,482 --> 00:53:57,274 Prices have leveled off, though, right? 1192 00:53:57,359 --> 00:53:59,193 Yeah. There's a gully. 1193 00:53:59,277 --> 00:54:02,988 Would you mind not moving anymore? I'll still pay you. 1194 00:54:06,785 --> 00:54:09,495 Sorry. We're not alone. 1195 00:54:09,579 --> 00:54:12,206 Okay, look. If home prices don't go up, 1196 00:54:12,290 --> 00:54:14,583 you are not going to be able to refinance. 1197 00:54:14,668 --> 00:54:17,795 And you'll be stuck paying whatever your monthly payment is 1198 00:54:17,879 --> 00:54:20,589 once it jumps up after your teaser rate expires. 1199 00:54:21,007 --> 00:54:23,050 Your monthlies could go up 200%-300%. 1200 00:54:23,468 --> 00:54:25,511 James says I can always refinance. 1201 00:54:25,595 --> 00:54:27,388 Well, he's a liar. 1202 00:54:27,472 --> 00:54:30,599 Actually, in this particular case, James probably is wrong. 1203 00:54:30,684 --> 00:54:33,978 200 percent? On all my loans? 1204 00:54:34,062 --> 00:54:35,437 What do you mean "all" your loans? 1205 00:54:35,522 --> 00:54:37,940 We're talking about two loans on one house, right? 1206 00:54:38,775 --> 00:54:40,734 I have five houses. 1207 00:54:40,860 --> 00:54:42,820 And a condo. 1208 00:54:44,698 --> 00:54:46,198 Hey, there's a bubble. 1209 00:54:46,283 --> 00:54:47,283 VINNIE: How do you know? 1210 00:54:47,367 --> 00:54:50,786 Trust me. Call Vennett, buy $50 million in swaps on the MBS. 1211 00:54:50,870 --> 00:54:53,789 What do we got? Garibaldi IV, BBB. 1212 00:54:53,873 --> 00:54:55,374 Mark, are you sure? 1213 00:54:55,458 --> 00:54:57,293 Yeah. Yeah, it's time to call bullshit. 1214 00:54:57,377 --> 00:55:00,045 - Bullshit on what? - Every fucking thing. 1215 00:55:06,177 --> 00:55:07,553 (TYPING) 1216 00:55:09,055 --> 00:55:10,389 (COMPUTER CHIMES) 1217 00:55:24,237 --> 00:55:25,904 FrontPoint! FrontPoint! 1218 00:55:27,741 --> 00:55:29,533 Is this America's angriest hedge fund? 1219 00:55:29,617 --> 00:55:31,744 VINNIE: All right, listen. I got one last question for you. 1220 00:55:32,912 --> 00:55:34,747 How are you fucking us? 1221 00:55:36,583 --> 00:55:38,125 There's a nicer way to say that, Vinnie. 1222 00:55:38,209 --> 00:55:39,752 I'm serious. 1223 00:55:39,836 --> 00:55:42,921 We'll buy your swaps, but only if you say how you're fucking us. 1224 00:55:43,006 --> 00:55:45,507 I'm not fucking you, Vinnie. I'm kissing you. 1225 00:55:45,592 --> 00:55:48,344 I'm looking deep into your eyes as I make love to you, Vinnie. 1226 00:55:48,428 --> 00:55:51,764 I'm handing you the deal of the century on a fucking platter. 1227 00:55:51,848 --> 00:55:54,224 What do I get out of it? Easy. 1228 00:55:54,309 --> 00:55:56,727 I got a $20-million-a-month negative carry. 1229 00:55:56,811 --> 00:55:58,187 I got bosses trying to pull the plug 1230 00:55:58,271 --> 00:56:00,689 because they think I'm out of my fucking mind. 1231 00:56:00,774 --> 00:56:01,774 All right? 1232 00:56:01,858 --> 00:56:02,941 We make this trade, 1233 00:56:03,026 --> 00:56:05,361 those problems aren't so big anymore. 1234 00:56:05,445 --> 00:56:09,198 And sure, swaps are a dark market, so I set the price. 1235 00:56:09,282 --> 00:56:10,783 Whatever price I want. 1236 00:56:10,867 --> 00:56:12,284 And when you come for the payday, 1237 00:56:12,410 --> 00:56:14,620 I'm gonna rip your eyes out, I'm gonna make a fortune. 1238 00:56:15,747 --> 00:56:17,247 But the good news is, Vinnie, you're not gonna care 1239 00:56:17,332 --> 00:56:19,541 because you're gonna make so much fucking money. 1240 00:56:19,626 --> 00:56:20,918 That's what I get out of it. 1241 00:56:21,002 --> 00:56:22,294 Want to know what you get out of it? 1242 00:56:22,379 --> 00:56:25,881 You get the ice cream, the hot fudge, the banana, and the nuts. 1243 00:56:25,965 --> 00:56:27,716 Right now, I get the sprinkles, and, yeah, 1244 00:56:27,801 --> 00:56:30,427 if this goes through, I get the cherry. 1245 00:56:30,512 --> 00:56:32,721 But you get the sundae, Vinnie. 1246 00:56:32,806 --> 00:56:34,473 You get the sundae. 1247 00:56:36,935 --> 00:56:39,728 All right, I buy that. Thank you. 1248 00:56:39,813 --> 00:56:41,980 So what do you say? 1249 00:56:42,065 --> 00:56:43,941 - You want me to make you a market? - Yeah. 1250 00:56:44,025 --> 00:56:47,528 We'll take $50 million, Garibaldi IV, BBB. 1251 00:56:48,988 --> 00:56:51,031 Sharpen your pencils. I'll get the paperwork ready. 1252 00:56:52,534 --> 00:56:53,659 (SIGHS) 1253 00:56:53,743 --> 00:56:55,244 Fuck you, too. 1254 00:56:57,205 --> 00:56:58,705 Yes! 1255 00:57:00,667 --> 00:57:01,667 That's right. 1256 00:57:03,795 --> 00:57:05,712 - Oh, man. - (EXHALES DEEPLY) 1257 00:57:05,797 --> 00:57:10,008 He has so many numbers, and I always forget 1258 00:57:10,135 --> 00:57:11,760 which one he prefers, because he's very specific. 1259 00:57:11,845 --> 00:57:13,053 Start with the first one. 1260 00:57:13,138 --> 00:57:14,346 I don't know if it's the first one. 1261 00:57:14,472 --> 00:57:15,764 Just try it. 1262 00:57:15,849 --> 00:57:17,391 Okay. I... Okay. 1263 00:57:18,184 --> 00:57:19,768 (COUNTRY MUSIC PLAYING) 1264 00:57:19,853 --> 00:57:21,270 (LINE RINGING) 1265 00:57:21,354 --> 00:57:23,021 (BIRD SCREECHING) 1266 00:57:26,151 --> 00:57:27,151 (PHONE RINGING) 1267 00:57:35,034 --> 00:57:37,786 - Ben Rickert. - Hey, Ben. It's Jamie. 1268 00:57:39,330 --> 00:57:41,206 Jamie, you know you're not supposed to use this line. 1269 00:57:41,624 --> 00:57:42,916 (DIAL TONE) 1270 00:57:43,668 --> 00:57:44,918 Told you. 1271 00:57:46,296 --> 00:57:48,964 Okay, let's try number two out of 14. 1272 00:57:52,218 --> 00:57:54,261 (LINE RINGING) 1273 00:57:54,721 --> 00:57:55,721 (PHONE RINGING) 1274 00:57:59,434 --> 00:58:00,476 (DIAL TONE) 1275 00:58:00,560 --> 00:58:01,560 Ben Rickert. 1276 00:58:01,644 --> 00:58:03,645 Ben, why do you do that, man? I mean... 1277 00:58:03,730 --> 00:58:06,148 You're a retired trader, okay? No one is listening to your calls. 1278 00:58:06,232 --> 00:58:07,941 The NSA has a $52 billion budget and the ability 1279 00:58:08,026 --> 00:58:09,401 to monitor tens of millions of calls a second. 1280 00:58:09,486 --> 00:58:11,820 You think they're not using it? 1281 00:58:11,905 --> 00:58:14,740 Hey, I promise I will refrain from saying 1282 00:58:14,824 --> 00:58:16,992 "Ben Rickert" and "dirty bomb" in the same sent... 1283 00:58:17,577 --> 00:58:18,577 (BEEPS) 1284 00:58:18,870 --> 00:58:20,537 - Jesus fucking Christ. - I'm sorry, dude. 1285 00:58:20,622 --> 00:58:22,080 - (PHONE RINGING) - (BEEPS) 1286 00:58:22,165 --> 00:58:23,248 Ben Rickert. 1287 00:58:23,374 --> 00:58:25,751 Did you get a chance to look at what we sent you, Ben? 1288 00:58:25,835 --> 00:58:28,003 It's Charlie. I'm here, too. 1289 00:58:28,755 --> 00:58:31,089 Hi, Charlie. Yeah, I did. Hold on. 1290 00:58:37,096 --> 00:58:38,180 Ben, you still there? 1291 00:58:38,306 --> 00:58:39,431 Yeah. 1292 00:58:40,183 --> 00:58:42,226 I'll be honest, gentlemen. 1293 00:58:42,310 --> 00:58:44,228 It scared the shit out of me. 1294 00:58:44,354 --> 00:58:45,729 But that's a good thing, right? 1295 00:58:45,813 --> 00:58:48,607 That means this Vennett guy's not wrong. 1296 00:58:49,317 --> 00:58:50,400 No, he's not. 1297 00:58:53,112 --> 00:58:54,112 Cool. 1298 00:58:54,197 --> 00:58:55,781 Tell me more about these CDOs. 1299 00:58:55,865 --> 00:58:59,618 JAMIE: Yeah, yeah. Okay, so, you know, Vennett mentions the CDOs, 1300 00:58:59,744 --> 00:59:01,286 but actually, we took a look 1301 00:59:01,371 --> 00:59:02,996 and they're way worse than even he realizes. 1302 00:59:03,122 --> 00:59:04,540 These things don't make any sense! 1303 00:59:04,624 --> 00:59:05,874 JAMIE: We can't even model them. 1304 00:59:05,959 --> 00:59:08,669 These are 100 times bigger than the MBS. 1305 00:59:08,753 --> 00:59:10,337 And 90*% AAA-rated. 1306 00:59:10,421 --> 00:59:12,172 - Yes! Exactly! - Over 90*%. 1307 00:59:12,298 --> 00:59:13,382 It's incredible. 1308 00:59:13,466 --> 00:59:16,635 I took a good hard look at the CDOs you want to short. 1309 00:59:17,387 --> 00:59:19,805 They're brilliant. Worthless. Total crap. 1310 00:59:20,473 --> 00:59:22,641 - Jamie. Very good. - (LAUGHS) 1311 00:59:22,725 --> 00:59:26,228 What can I say? I'm good at finding shit. 1312 00:59:26,312 --> 00:59:29,064 CHARLIE: So, Ben, we shorted the BB's and the BBB's, 1313 00:59:29,148 --> 00:59:31,233 and the risk is relatively low. 1314 00:59:31,317 --> 00:59:33,986 - Payoff is, like, 25-to-1. - Yeah. 1315 00:59:36,322 --> 00:59:38,407 Okay, so, why are you calling me? I don't do this anymore. 1316 00:59:38,491 --> 00:59:39,658 Look, Ben? 1317 00:59:40,994 --> 00:59:44,746 We need you to help us get the ISDA. 1318 00:59:44,831 --> 00:59:47,916 If we get a hunting license, we can short this crap. 1319 00:59:48,001 --> 00:59:49,167 And we know you hate Wall Street. 1320 00:59:49,294 --> 00:59:50,460 We're not asking you to do the trading. 1321 00:59:50,545 --> 00:59:54,506 We're simply asking you to help us get a seat 1322 00:59:54,591 --> 00:59:57,759 at the fucking table. 1323 00:59:57,844 --> 00:59:59,761 It's a pretty ugly table, guys. 1324 00:59:59,846 --> 01:00:04,850 Look, Ben, the system fucked up in a big, big way here, okay? 1325 01:00:04,934 --> 01:00:07,019 And somehow, uh, 1326 01:00:07,353 --> 01:00:10,022 we know before anyone else. 1327 01:00:10,356 --> 01:00:13,275 You know? This is a once-in-a-lifetime deal. 1328 01:00:15,862 --> 01:00:16,862 I'm thinking. 1329 01:00:21,951 --> 01:00:23,869 Okay. I'll call Deutsche Bank. 1330 01:00:23,953 --> 01:00:26,204 Thank you, Ben. Thank you. 1331 01:00:26,289 --> 01:00:29,875 And Bear. What about Bear? They have some reprehensible product. 1332 01:00:30,209 --> 01:00:32,544 Okay. Bear will trade with anybody. 1333 01:01:20,677 --> 01:01:23,428 All right. I'll see if I can push it through. 1334 01:01:23,513 --> 01:01:25,347 Thank you, Noah. And thank Jared for us. 1335 01:01:27,308 --> 01:01:28,517 Couldn't we go inside? 1336 01:01:28,643 --> 01:01:29,851 Yeah, me, too. 1337 01:02:13,980 --> 01:02:16,314 Hi. It's Mark. I need to talk to Vinnie right now. 1338 01:02:16,399 --> 01:02:19,818 We're just asking you to explain to us 1339 01:02:19,986 --> 01:02:22,446 just how it is that you are fucking us, 1340 01:02:22,530 --> 01:02:23,780 because what we are seeing... 1341 01:02:26,659 --> 01:02:27,993 Morgan Stanley building, fast. 1342 01:02:28,953 --> 01:02:31,413 Are we hooked up to the same computer screen? 1343 01:02:31,497 --> 01:02:33,165 It doesn't make any sense. 1344 01:02:33,374 --> 01:02:35,167 (INDISTINCT CONVERSATIONS) 1345 01:02:36,002 --> 01:02:37,461 MARK: Vinnie, you there? 1346 01:02:37,879 --> 01:02:38,879 Mark, you there? 1347 01:02:38,963 --> 01:02:39,921 Yeah, did you hear? 1348 01:02:40,006 --> 01:02:41,757 Mortgage defaults have gone through the roof. 1349 01:02:41,841 --> 01:02:43,300 Is anybody jumping off of buildings yet? 1350 01:02:43,384 --> 01:02:45,594 Why would they? Subprime mortgage bond prices are up. 1351 01:02:45,678 --> 01:02:46,720 What? 1352 01:02:46,804 --> 01:02:50,098 Vennett wants $1.9 million more in collateral by close. 1353 01:02:50,183 --> 01:02:51,475 Vennett's asking us to post collateral. 1354 01:02:51,559 --> 01:02:52,976 What the hell is going on? 1355 01:02:53,060 --> 01:02:55,020 We don't know, but Deutsche's on the phone demanding payment. 1356 01:02:55,104 --> 01:02:56,938 Call Vennett. Call that little shit. 1357 01:02:57,023 --> 01:02:58,982 Call Vennett. Tell him to get his ass down here. 1358 01:02:59,066 --> 01:03:00,859 So subprime loans go bad, 1359 01:03:00,943 --> 01:03:04,154 but subprime bonds, which are made up of subprime loans, are more valuable? 1360 01:03:04,238 --> 01:03:06,698 I know. They want another $1.9 million by market close. 1361 01:03:06,824 --> 01:03:08,950 What about the ratings agencies? Moody's, S&P... 1362 01:03:09,035 --> 01:03:11,453 Are they downgrading the CDOs and mortgage bonds? 1363 01:03:11,537 --> 01:03:12,621 Where are the ratings agencies at? 1364 01:03:12,705 --> 01:03:14,206 They're the fucking same. 1365 01:03:14,332 --> 01:03:15,791 No, they're all still AAA. 1366 01:03:15,875 --> 01:03:18,376 What the hell? Are you fucking kidding me? 1367 01:03:18,461 --> 01:03:20,545 Those fuckers! Those motherfuckers! 1368 01:03:20,630 --> 01:03:23,590 They go public, and all they care about is their bottom line and their shit. 1369 01:03:23,674 --> 01:03:25,425 Hey, Mark, that's not all. 1370 01:03:25,510 --> 01:03:26,802 The Morgan Stanley risk guys are here. 1371 01:03:26,886 --> 01:03:28,261 They called in Kathy Tao. 1372 01:03:28,346 --> 01:03:30,472 They're trying to convince her to make us sell our swaps. 1373 01:03:30,556 --> 01:03:32,808 Apparently, tying up six years of insurance payments 1374 01:03:32,892 --> 01:03:34,643 in hopes of a housing Armageddon 1375 01:03:34,727 --> 01:03:35,977 is not prudent investing. 1376 01:03:36,103 --> 01:03:37,354 What did Kathy say? 1377 01:03:37,438 --> 01:03:40,148 Nothing yet. She keeps asking if this is one of your crusades. 1378 01:03:40,233 --> 01:03:42,150 Okay, I want you to walk back in there 1379 01:03:42,235 --> 01:03:43,902 and very calmly, very politely, 1380 01:03:43,986 --> 01:03:46,655 tell the risk assessors to fuck off. 1381 01:03:46,781 --> 01:03:48,406 And then meet me over at Standard & Poor's. 1382 01:03:48,533 --> 01:03:50,033 We're gonna talk to Georgia. 1383 01:03:50,117 --> 01:03:51,159 VINNIE: All right. Okay. 1384 01:03:51,244 --> 01:03:53,161 Get that fuck Jared Vennett in this office. 1385 01:03:53,246 --> 01:03:55,038 I'm gonna bash his fucking head in. 1386 01:03:56,415 --> 01:03:58,667 (INAUDIBLE) 1387 01:04:00,044 --> 01:04:01,628 Uh, gentlemen? 1388 01:04:01,712 --> 01:04:04,756 I spoke with Mark Baum. He says to fuck off. 1389 01:04:18,563 --> 01:04:20,897 I can't see a damn thing. 1390 01:04:22,275 --> 01:04:24,776 (SIGHS) My eye doctor's always busy. 1391 01:04:24,861 --> 01:04:26,653 I end up taking any appointment they'll give me, 1392 01:04:26,737 --> 01:04:29,072 and then the whole morning gets shot to hell! 1393 01:04:30,241 --> 01:04:31,741 So... 1394 01:04:32,243 --> 01:04:33,743 All righty, 1395 01:04:34,120 --> 01:04:36,621 FrontPoint Partners, 1396 01:04:37,164 --> 01:04:39,541 how can Standard & Poor's help you? 1397 01:04:39,625 --> 01:04:40,876 VINNIE: Well, we don't understand why 1398 01:04:40,960 --> 01:04:43,587 the ratings agencies haven't downgraded subprime bonds 1399 01:04:43,671 --> 01:04:46,715 since the underlying loans are clearly deteriorating. 1400 01:04:46,799 --> 01:04:49,217 Well, the delinquency rates do have people worried, 1401 01:04:49,302 --> 01:04:51,094 but they're actually within our models. 1402 01:04:51,178 --> 01:04:53,138 - So... - VINNIE: Says you. 1403 01:04:54,307 --> 01:04:56,725 ...you're convinced the underlying mortgages 1404 01:04:56,809 --> 01:04:59,227 in these bonds are solid loans. 1405 01:04:59,353 --> 01:05:01,229 GEORGIA: That is our opinion, yes. 1406 01:05:01,314 --> 01:05:03,398 Have you looked at the loan-level data? 1407 01:05:03,482 --> 01:05:05,233 I mean, they're giving these loans 1408 01:05:05,318 --> 01:05:06,568 to anybody with a credit score and a pulse. 1409 01:05:06,652 --> 01:05:09,237 Excuse me, sir. What do you think we do here all day? 1410 01:05:09,322 --> 01:05:10,363 VINNIE: We're not sure. That's why we're here. 1411 01:05:10,448 --> 01:05:11,573 Here's what I don't understand... 1412 01:05:11,657 --> 01:05:13,366 We check, recheck, recheck again. 1413 01:05:13,492 --> 01:05:14,784 MARK: If these mortgage bonds are so stable... 1414 01:05:14,869 --> 01:05:16,578 Perhaps you could check your friend. 1415 01:05:16,662 --> 01:05:18,663 MARK:... have you ever refused to rate... 1416 01:05:18,748 --> 01:05:20,081 VINNIE: Ma'am, that's delusional. 1417 01:05:20,166 --> 01:05:21,291 GEORGIA: We stand behind them. 1418 01:05:21,375 --> 01:05:22,959 MARK: Georgia, have you ever refused to rate 1419 01:05:23,044 --> 01:05:26,338 any of these bonds upper tranches AAA? 1420 01:05:26,422 --> 01:05:28,006 Can we see the paperwork on those deals? 1421 01:05:28,090 --> 01:05:30,091 I am under no obligation to share that information 1422 01:05:30,176 --> 01:05:31,259 with you, whoever you might be. 1423 01:05:31,344 --> 01:05:33,053 Just answer the question, Georgia. 1424 01:05:33,179 --> 01:05:35,138 Can you name one time in the past year 1425 01:05:35,222 --> 01:05:36,556 where you checked the tape 1426 01:05:36,641 --> 01:05:40,852 and you didn't give the banks the AAA percentage they wanted? 1427 01:05:43,105 --> 01:05:44,272 If we don't give them the ratings, 1428 01:05:44,357 --> 01:05:46,274 they'll go to Moody's, right down the block. 1429 01:05:47,193 --> 01:05:50,528 If we don't work with them, they will go to our competitors. 1430 01:05:51,197 --> 01:05:54,366 Not our fault. Simply the way the world works. 1431 01:05:58,704 --> 01:06:01,206 - VINNIE: Holy shit. - Yes, now you see. 1432 01:06:02,249 --> 01:06:04,292 And I never said that. 1433 01:06:04,377 --> 01:06:06,795 They're selling ratings for fees. 1434 01:06:06,879 --> 01:06:07,837 A ratings shop. 1435 01:06:07,922 --> 01:06:10,757 You can afford to make less. Make less. 1436 01:06:10,841 --> 01:06:12,717 Nobody said that. 1437 01:06:12,802 --> 01:06:14,970 And it is not my decision. I have a boss. 1438 01:06:15,054 --> 01:06:16,388 Are you kidding me? 1439 01:06:16,555 --> 01:06:17,847 No, I am not "kidding you". 1440 01:06:17,932 --> 01:06:20,225 How'd your boss do on the IPO? 1441 01:06:20,309 --> 01:06:21,518 MARK: Is that the angle you're taking? 1442 01:06:21,602 --> 01:06:25,146 So, now, anyone who has a boss can't be held responsible 1443 01:06:25,231 --> 01:06:26,648 for doing shitty and illegal things. 1444 01:06:26,732 --> 01:06:28,316 What are you, four? 1445 01:06:28,401 --> 01:06:32,696 No, I am not four, Mr. Baum. I am not, no. 1446 01:06:32,780 --> 01:06:36,157 And I wonder what your incentives might be. 1447 01:06:36,283 --> 01:06:37,826 Is it maybe in your best interest 1448 01:06:37,910 --> 01:06:40,912 to have the ratings change? Is it, perhaps? 1449 01:06:42,707 --> 01:06:45,250 How many credit default swaps do you own? Hmm? 1450 01:06:47,294 --> 01:06:49,170 It doesn't make me wrong. 1451 01:06:49,255 --> 01:06:50,380 No. 1452 01:06:50,464 --> 01:06:52,590 It just makes you a hypocrite. 1453 01:06:59,598 --> 01:07:01,266 (HEAVY METAL MUSIC PLAYING) 1454 01:07:33,215 --> 01:07:35,216 Fuck! 1455 01:07:35,301 --> 01:07:36,426 BEN: Mortgage delinquencies went up 1456 01:07:36,510 --> 01:07:38,553 and the CDOs got more valuable. Unbelievable. 1457 01:07:38,637 --> 01:07:40,889 - Unbelievable. - We know. It's completely backwards. 1458 01:07:40,973 --> 01:07:42,557 I just called an old friend at Bear. 1459 01:07:42,641 --> 01:07:44,309 He didn't even know what a CDO is. 1460 01:07:44,393 --> 01:07:48,730 JAMIE: Yeah, I just had to wire Bear and Deutsche $70,000. 1461 01:07:48,814 --> 01:07:51,149 It's like two plus two equals 1462 01:07:51,650 --> 01:07:52,817 fish. 1463 01:07:52,902 --> 01:07:55,570 CHARLIE: It's rigged. We bought into a rigged game. 1464 01:07:55,654 --> 01:07:57,447 We're gonna lose everything. 1465 01:07:57,531 --> 01:07:59,991 I'm gonna have to move back in with my mom. 1466 01:08:00,534 --> 01:08:01,910 Can't do that. 1467 01:08:01,994 --> 01:08:04,162 BEN: All right. Well, I got a colonic appointment. 1468 01:08:04,246 --> 01:08:05,914 Wait a minute. Hold on, Ben. 1469 01:08:05,998 --> 01:08:07,332 Ben, look. 1470 01:08:07,416 --> 01:08:09,793 Either the banks are clueless 1471 01:08:09,877 --> 01:08:12,170 and they don't know how to value these CDOs, 1472 01:08:12,254 --> 01:08:17,258 or they're such crooks that the CDOs are worth shit 1473 01:08:17,426 --> 01:08:19,010 and they're hiding it. 1474 01:08:21,347 --> 01:08:22,806 I think we should buy more swaps. 1475 01:08:23,349 --> 01:08:24,390 What? 1476 01:08:24,475 --> 01:08:26,476 Suck it up and pay up, fellas. We made a deal. 1477 01:08:26,560 --> 01:08:28,603 No way! No! 1478 01:08:28,687 --> 01:08:30,105 Are you fucking kidding me? 1479 01:08:30,189 --> 01:08:32,524 Are you serious? You think this is a game? 1480 01:08:32,608 --> 01:08:33,858 No. No. No. No. No. 1481 01:08:34,026 --> 01:08:35,276 Yeah. Yeah. 1482 01:08:35,778 --> 01:08:37,862 (ALL SHOUTING) 1483 01:08:41,826 --> 01:08:43,493 No! No! No! 1484 01:08:43,619 --> 01:08:45,286 BEN: No, seriously, a colonic once a year. 1485 01:08:45,371 --> 01:08:46,371 DANNY: Ass! 1486 01:08:46,455 --> 01:08:48,790 PORTER: And you got a matching little butler boy, you buttfuck! 1487 01:08:48,874 --> 01:08:49,874 (SIGHS) 1488 01:08:53,129 --> 01:08:54,963 - Are you done? - DANNY: I think so, yeah. 1489 01:08:55,047 --> 01:08:57,799 God! I pulled a muscle in my back from yelling. 1490 01:08:58,717 --> 01:08:59,717 Ow! 1491 01:09:00,386 --> 01:09:03,721 VINNIE: Mortgage defaults have done nothing but go up. 1492 01:09:04,056 --> 01:09:07,225 Yet you quote us a higher price on the bonds. 1493 01:09:08,102 --> 01:09:10,228 Please explain that to me. There's no way that makes sense. 1494 01:09:10,312 --> 01:09:13,314 There's no way you're marking these swaps appropriately. 1495 01:09:13,983 --> 01:09:15,900 Why shouldn't we back out of this trade right now? 1496 01:09:18,404 --> 01:09:20,071 JARED: Didn't I say when we made this deal 1497 01:09:20,197 --> 01:09:21,823 that the ratings agencies, the SEC 1498 01:09:21,907 --> 01:09:24,409 and the big banks were clueless? Didn't I say that? 1499 01:09:24,493 --> 01:09:25,785 - CHRIS: Yes. - Didn't I say it? 1500 01:09:25,870 --> 01:09:27,704 Yes, you did. You did. 1501 01:09:27,830 --> 01:09:29,289 Shut up. 1502 01:09:29,373 --> 01:09:30,707 Now their foot's on fire, they think 1503 01:09:30,791 --> 01:09:32,333 their steak is done, and you're surprised? 1504 01:09:32,418 --> 01:09:35,211 That's not stupidity. That's fraud. 1505 01:09:35,296 --> 01:09:37,005 Tell me the difference between stupid and illegal, 1506 01:09:37,089 --> 01:09:39,090 and I'll have my wife's brother arrested. 1507 01:09:39,175 --> 01:09:40,425 (SNICKERS) 1508 01:09:40,968 --> 01:09:41,968 That was funny. 1509 01:09:42,094 --> 01:09:45,763 JARED: I guess you just don't realize how clueless the system really is. 1510 01:09:45,848 --> 01:09:48,183 Yes, there's some shady shit going down, 1511 01:09:48,267 --> 01:09:51,603 but trust me, it's fueled by stupidity! 1512 01:09:52,813 --> 01:09:54,147 Look at yourselves. 1513 01:09:54,940 --> 01:09:58,401 You know, you pass yourself off as cynical people 1514 01:09:58,485 --> 01:10:00,862 but you still have some faith in the system, don't you? 1515 01:10:00,946 --> 01:10:02,238 I don't. 1516 01:10:02,323 --> 01:10:05,200 Well, except for Vinnie. And who gives a shit? 1517 01:10:05,284 --> 01:10:07,035 - JAMIE: No way! - Look... 1518 01:10:07,119 --> 01:10:10,288 Either we're right or we're wrong in a giant, giant way. 1519 01:10:10,372 --> 01:10:12,248 And if we're wrong, then we got to find someone 1520 01:10:12,333 --> 01:10:13,958 to help us get out of this trade. 1521 01:10:14,043 --> 01:10:16,794 I'm not feeling remotely confident that we're right. 1522 01:10:16,879 --> 01:10:20,298 And if we're wrong, who's gonna tell us? 1523 01:10:20,382 --> 01:10:23,801 Who understands this stuff? It makes no sense! 1524 01:10:24,220 --> 01:10:25,220 (STATIC) 1525 01:10:26,263 --> 01:10:28,056 BEN: I think we need to go to Vegas. 1526 01:10:28,140 --> 01:10:30,308 - What's in Vegas? - Vegas? 1527 01:10:30,392 --> 01:10:32,268 What the hell's in Las Vegas? 1528 01:10:33,354 --> 01:10:36,564 The American Securitization Forum is there next week. 1529 01:10:36,649 --> 01:10:39,067 Every bond and CDO salesman, subprime lender 1530 01:10:39,151 --> 01:10:41,236 and swap trader is gonna be there. 1531 01:10:41,320 --> 01:10:44,072 I'm telling you, your bet is against dumb money. 1532 01:10:44,156 --> 01:10:46,991 It's about time you find out just how dumb that money really is. 1533 01:10:47,076 --> 01:10:48,201 PORTER: God, I hate Vegas. 1534 01:10:48,327 --> 01:10:49,744 I hear the food has gotten really good in Vegas. 1535 01:10:49,828 --> 01:10:51,329 They have a Nobu now. 1536 01:10:51,413 --> 01:10:52,789 Would you fucking stop it? 1537 01:11:16,021 --> 01:11:35,623 (INDISTINCT CHATTER) 1538 01:11:39,378 --> 01:11:40,378 CHARLIE: Any sense? 1539 01:11:40,546 --> 01:11:42,046 BEN: And if a bond is "rich" it is... 1540 01:11:42,381 --> 01:11:45,466 - I don't know, loaded with assets? - "Rich" just means overpriced. 1541 01:11:45,551 --> 01:11:47,510 I can't sleep on planes, so I did my homework. 1542 01:11:47,594 --> 01:11:50,013 Okay, let's focus. What's our goal? 1543 01:11:50,097 --> 01:11:52,432 To figure out if this is a deal of a lifetime 1544 01:11:52,516 --> 01:11:54,309 or if everyone here knows something we don't 1545 01:11:54,393 --> 01:11:56,227 and we're gonna get royally screwed. 1546 01:11:56,312 --> 01:11:59,063 Right. Remember that when you meet with the guys from Bear. 1547 01:11:59,231 --> 01:12:00,982 I set you up with a face-to-face. 1548 01:12:01,066 --> 01:12:02,358 - Awesome. - Where is that? 1549 01:12:02,443 --> 01:12:06,779 Holy shit. Five years ago, Securitization was a loser convention. 1550 01:12:06,864 --> 01:12:08,948 100, maybe 200 people would show. 1551 01:12:09,074 --> 01:12:11,200 $500 billion a year later, you get this. 1552 01:12:11,285 --> 01:12:12,952 PORTER: There's a lot of smug-looking people in here, huh? 1553 01:12:13,037 --> 01:12:16,497 It's like someone hit a piñata filled with white people who suck at golf. 1554 01:12:16,582 --> 01:12:18,082 I mean, who are all these clowns? 1555 01:12:18,167 --> 01:12:19,542 DANNY: Oh, come on. I think it looks fun. 1556 01:12:19,626 --> 01:12:23,087 MARK: Certainly. Vennett says these are the people we're betting against. 1557 01:12:23,172 --> 01:12:25,048 - Yeah, here we go. Here we go. - DANNY: There he is. 1558 01:12:25,132 --> 01:12:26,883 Chris, on my left. Chris, on my left. 1559 01:12:27,343 --> 01:12:28,468 Gentlemen. 1560 01:12:28,552 --> 01:12:32,138 When do we get a chance to face time with some of these lovely folks? 1561 01:12:32,222 --> 01:12:33,639 Chris, give him the keycards. 1562 01:12:33,766 --> 01:12:34,974 Do you even know which keycards you're giving out? 1563 01:12:35,059 --> 01:12:36,059 - You're just giving them out? - Thank you. 1564 01:12:36,143 --> 01:12:38,853 First of all, how was your travel? How are you? Uneventful? 1565 01:12:38,937 --> 01:12:40,146 - Uneventful. - Okay. 1566 01:12:40,230 --> 01:12:41,939 I've been here for six hours. I've already been to the gym, 1567 01:12:42,024 --> 01:12:43,358 I had two poached eggs 1568 01:12:43,442 --> 01:12:45,068 and I played blackjack with Harry Dean Stanton. 1569 01:12:45,152 --> 01:12:46,611 MARK: Thank you for your diary. 1570 01:12:47,071 --> 01:12:48,696 Face time. I'd like some face time. 1571 01:12:48,781 --> 01:12:50,239 Just remember. We're here to gather information. 1572 01:12:50,324 --> 01:12:51,741 We're gathering information, okay? 1573 01:12:51,825 --> 01:12:54,202 We're not advertising our short position. All right? 1574 01:12:54,286 --> 01:12:55,912 We don't want to spook everybody. Can you do that? 1575 01:12:55,996 --> 01:12:57,538 I know you got a big mouth, you like to run it. 1576 01:12:57,623 --> 01:12:59,374 Can you just keep it shut for a few days? 1577 01:12:59,458 --> 01:13:00,583 Okay. Okay. 1578 01:13:00,667 --> 01:13:02,502 Yeah, don't worry. We'll play nice. 1579 01:13:02,628 --> 01:13:03,920 Ladies and gentlemen. 1580 01:13:04,004 --> 01:13:06,214 Business is good. 1581 01:13:06,298 --> 01:13:07,715 Profits are strong 1582 01:13:07,800 --> 01:13:10,718 and the mortgage continues to be the bedrock 1583 01:13:10,803 --> 01:13:13,137 on which this economy is built. 1584 01:13:13,430 --> 01:13:14,972 (AUDIENCE APPLAUDING) 1585 01:13:17,810 --> 01:13:19,394 And, yes, we had to take some losses 1586 01:13:19,478 --> 01:13:22,772 in our subprime department last year, but those losses 1587 01:13:22,856 --> 01:13:25,483 will be contained at only 5%. 1588 01:13:25,651 --> 01:13:27,777 Now, in our residential sector... 1589 01:13:27,861 --> 01:13:29,028 VINNIE: Mark, it's not a Q and A. 1590 01:13:29,154 --> 01:13:30,822 ...our rollout of those variable rate packages 1591 01:13:30,906 --> 01:13:32,532 were gobbled up by the consumers! 1592 01:13:32,658 --> 01:13:34,700 MARK: I have a question, please. 1593 01:13:36,495 --> 01:13:37,495 Uh... 1594 01:13:37,663 --> 01:13:39,747 Sir, the Q and A is after my statements. 1595 01:13:39,832 --> 01:13:42,250 But you know what? You seem anxious. How can I help you? 1596 01:13:42,334 --> 01:13:44,252 - Thank you. How are you? - Fine, thank you. 1597 01:13:44,336 --> 01:13:47,463 Would you say that it is a possibility 1598 01:13:47,548 --> 01:13:52,176 or a probability that subprime losses stop at 5%? 1599 01:13:52,386 --> 01:13:53,469 Thank you. 1600 01:13:53,554 --> 01:13:58,349 I would say it is a very strong probability, indeed. 1601 01:13:58,851 --> 01:14:01,394 So back to the residential sector. 1602 01:14:01,520 --> 01:14:03,604 When we rolled out the new variable rates package... 1603 01:14:03,689 --> 01:14:06,190 - MARK: Excuse me. - Um... (CHUCKLES) 1604 01:14:07,693 --> 01:14:08,776 Yes, sir. 1605 01:14:08,861 --> 01:14:12,238 Zero! Zero! 1606 01:14:12,364 --> 01:14:15,116 There is a 0*% chance 1607 01:14:15,200 --> 01:14:18,995 that your subprime losses will stop at 5%. 1608 01:14:19,079 --> 01:14:20,163 - Zero. - (CELL PHONE CHIMES) 1609 01:14:20,247 --> 01:14:21,789 Excuse me. 1610 01:14:21,874 --> 01:14:22,915 I have to take this. 1611 01:14:23,000 --> 01:14:24,959 MAN: He must be from Bank ofAmerica. 1612 01:14:25,043 --> 01:14:26,043 (ALL LAUGHING) 1613 01:14:26,670 --> 01:14:29,338 - MAN: Our subprime department is fine. - No, I'm not doing anything right now. 1614 01:14:29,423 --> 01:14:30,965 MAN: As I was saying, our residential department... 1615 01:14:31,049 --> 01:14:32,216 How are the kids? 1616 01:14:32,342 --> 01:14:34,719 MAN:... consumers reacted to our packages... 1617 01:14:34,803 --> 01:14:36,471 Mark Baum really did that. 1618 01:14:36,555 --> 01:14:37,805 When we were in Vegas, he did that. 1619 01:14:37,890 --> 01:14:40,057 He said that, he took the call. 1620 01:14:40,517 --> 01:14:42,226 Now you see what I had to deal with? 1621 01:14:42,561 --> 01:14:44,437 (GUNFIRE) 1622 01:14:51,028 --> 01:14:52,570 (SHOUTING) 1623 01:14:53,071 --> 01:14:54,572 (WHOOPING) 1624 01:14:55,908 --> 01:14:58,034 Yeah, the Beretta... Meh. 1625 01:14:58,118 --> 01:15:00,328 But this Uzi is fucking awesome! 1626 01:15:00,412 --> 01:15:02,997 I need this CDO machine to run for another two years. 1627 01:15:03,081 --> 01:15:06,334 And then I'm rich as fuck and I got my house in Aspen. 1628 01:15:06,418 --> 01:15:09,629 But do you have any concerns about the performance 1629 01:15:09,713 --> 01:15:11,297 of the underlying securitizations? 1630 01:15:11,381 --> 01:15:13,174 It's easy to see that delinquencies 1631 01:15:13,258 --> 01:15:16,135 and default rates are on the rise right now. 1632 01:15:16,220 --> 01:15:18,387 Could you please stop being such a buzzkill, dude? 1633 01:15:18,764 --> 01:15:21,307 We didn't bring you out here to talk about work, bro. 1634 01:15:21,391 --> 01:15:22,850 Why did you bring us out here? 1635 01:15:22,935 --> 01:15:26,145 Because we need to be able to expense the ammo to a client. 1636 01:15:26,230 --> 01:15:29,232 I'm gonna go shoot some terrorists. Watch how it's done, boys! 1637 01:15:29,441 --> 01:15:30,691 CHARLIE: These guys are morons. 1638 01:15:30,817 --> 01:15:32,443 - Fucking tool. - MAN: Whoo! 1639 01:15:32,778 --> 01:15:33,819 These guys are morons. 1640 01:15:34,947 --> 01:15:36,113 Fuck, yes! Boom! 1641 01:15:36,281 --> 01:15:37,406 Yeah, man! 1642 01:15:37,491 --> 01:15:39,867 We need to be buying up every swap we can get our hands on here. 1643 01:15:39,952 --> 01:15:42,245 Just hold on, okay? Hold on. 1644 01:15:42,329 --> 01:15:44,622 My brother's ex-girlfriend works for the SEC. 1645 01:15:44,748 --> 01:15:46,582 She just told me she's in town, okay? 1646 01:15:46,667 --> 01:15:48,793 So, if we're missing something, maybe she can tell me. 1647 01:15:48,919 --> 01:15:50,545 You know, give me some insight. 1648 01:15:50,629 --> 01:15:52,380 In the meantime, you go to the main floor 1649 01:15:52,464 --> 01:15:54,173 and price some swaps. 1650 01:15:54,633 --> 01:15:56,050 JAMIE: (STAMMERS) Well, actually, we're 1651 01:15:56,134 --> 01:15:58,636 about to invest in housing bonds, and... 1652 01:15:58,720 --> 01:16:01,389 I was wondering if the SEC is worried about them at all. 1653 01:16:01,473 --> 01:16:04,225 I know you're not allowed to tell me specifics, but just generally. 1654 01:16:04,309 --> 01:16:06,519 Oh, we don't investigate mortgage bonds. 1655 01:16:06,603 --> 01:16:09,939 Truth is, since we got our budget cut, we don't investigate much. 1656 01:16:11,984 --> 01:16:14,944 - Then why are you here? I thought... - I'm not here for the SEC. 1657 01:16:15,028 --> 01:16:16,696 I'm here on my own dime. 1658 01:16:17,656 --> 01:16:20,866 I'm floating my resume to some big banks. 1659 01:16:20,951 --> 01:16:22,535 How's your brother, by the way? 1660 01:16:22,619 --> 01:16:24,495 How are you floating your resume to big banks? 1661 01:16:24,580 --> 01:16:25,955 I mean, you're supposed to be the ones, 1662 01:16:26,081 --> 01:16:27,415 you know, policing the big banks. 1663 01:16:27,499 --> 01:16:28,916 Grow up, Jamie. 1664 01:16:29,001 --> 01:16:32,753 There must be some kind of law against working for a financial institution 1665 01:16:32,838 --> 01:16:36,048 right after you've been working in financial regulation, right? 1666 01:16:36,133 --> 01:16:38,217 No. No. 1667 01:16:39,303 --> 01:16:41,846 (GASPS) Hey! Dougie! 1668 01:16:42,681 --> 01:16:45,641 Hey! Come over here. What are you doing at Caesars? 1669 01:16:45,726 --> 01:16:47,226 He's at Goldman. 1670 01:16:47,853 --> 01:16:48,894 See you. 1671 01:16:48,979 --> 01:16:54,025 We can do BBB-level swaps at 500 basis points. Maybe. 1672 01:16:54,109 --> 01:16:57,903 You're pricing the swaps like the bond is gonna collapse 1673 01:16:57,988 --> 01:17:00,364 even though the bond value's going up? Really? 1674 01:17:00,907 --> 01:17:01,991 Sign of the times. 1675 01:17:02,075 --> 01:17:03,075 CHARLIE: What the hell is going on? 1676 01:18:01,968 --> 01:18:05,763 Lewis, can you come in early tomorrow, please? 1677 01:18:05,847 --> 01:18:08,140 I need to unload the AIG and Countrywide 1678 01:18:08,225 --> 01:18:09,684 and Freddie Mac positions 1679 01:18:09,768 --> 01:18:12,269 so that we can afford the premiums on the... 1680 01:18:12,437 --> 01:18:13,437 (SIGHS) 1681 01:18:13,522 --> 01:18:16,440 ...core mortgage shorts on the swaps. 1682 01:18:16,900 --> 01:18:18,401 No problem, Dr. Burry. 1683 01:18:20,445 --> 01:18:21,612 - Dr. Burry? - Hmm? 1684 01:18:23,532 --> 01:18:24,532 (CLEARS THROAT) 1685 01:18:25,200 --> 01:18:26,242 If the investors withdraw, 1686 01:18:26,326 --> 01:18:29,078 what's going to happen here? Are we done? 1687 01:18:29,204 --> 01:18:31,122 Honestly, I don't know. 1688 01:18:35,377 --> 01:18:37,086 (STAMMERS) 1689 01:18:38,797 --> 01:18:41,048 The bonds aren't going down. 1690 01:18:42,300 --> 01:18:44,969 They won't move. It's possible 1691 01:18:45,387 --> 01:18:49,974 that we are in a completely fraudulent system. 1692 01:18:51,393 --> 01:18:54,061 Or... (STAMMERS) You're wrong. 1693 01:18:58,817 --> 01:18:59,900 Sure. 1694 01:19:00,652 --> 01:19:04,655 It's possible I'm wrong. I just don't know how. 1695 01:19:09,369 --> 01:19:13,539 I guess when someone's wrong, they never... 1696 01:19:13,915 --> 01:19:16,167 They never know how. 1697 01:19:20,464 --> 01:19:21,505 LEWIS: See you in the morning. 1698 01:19:21,631 --> 01:19:22,673 Yeah. 1699 01:19:24,468 --> 01:19:26,469 Even Bear upped their prices. 1700 01:19:27,053 --> 01:19:29,555 And they keep calling us Brownhole. 1701 01:19:29,639 --> 01:19:31,265 You just don't have the money or the reputation. 1702 01:19:31,349 --> 01:19:32,683 Don't take it personally. 1703 01:19:32,809 --> 01:19:34,101 I don't think I have the strip club in me tonight. 1704 01:19:34,186 --> 01:19:37,855 I'm just gonna get some ginger ale and watch some pay-per-view. 1705 01:19:37,939 --> 01:19:40,316 I'll book us some flights out for the morning. 1706 01:19:41,735 --> 01:19:44,361 CHARLIE: (STAMMERS) A deal. We need a deal, right? A deal. 1707 01:19:44,446 --> 01:19:46,238 We need a deal we can afford. 1708 01:19:46,364 --> 01:19:48,657 We need a deal that they're not gonna refuse. 1709 01:19:48,742 --> 01:19:52,077 So... What can we do? We can... 1710 01:19:53,371 --> 01:19:56,290 The AA tranches. What if we bet against the AA tranches? 1711 01:19:56,374 --> 01:19:57,708 Who's not gonna take that bet? 1712 01:19:58,418 --> 01:20:01,337 We know they say they're 95% AAA-rated, 1713 01:20:01,421 --> 01:20:03,422 but in reality they're more like 25%. 1714 01:20:03,507 --> 01:20:05,925 Some of them are 0*%! 1715 01:20:06,009 --> 01:20:08,636 We also know that if the bottom tranches fail at over 8%, 1716 01:20:08,720 --> 01:20:09,887 the upper tranches are affected. 1717 01:20:09,971 --> 01:20:11,180 They go to zero. 1718 01:20:11,431 --> 01:20:14,391 I'll bet you right now that those AA's are actually like B's. 1719 01:20:14,851 --> 01:20:17,937 I rarely ever say these words, but I think Charlie's right. 1720 01:20:18,271 --> 01:20:19,939 Look, Ben. 1721 01:20:21,608 --> 01:20:23,025 The payoff 1722 01:20:23,527 --> 01:20:24,944 is 200 to 1. 1723 01:20:25,028 --> 01:20:27,071 But they're all taking the ratings at face value. 1724 01:20:27,197 --> 01:20:30,574 So they're charging pennies on the dollar a bet against the AA's. 1725 01:20:32,202 --> 01:20:35,037 Just when I start thinking you guys are clowns... 1726 01:20:35,121 --> 01:20:37,623 No one on the planet's betting against AA's. 1727 01:20:37,707 --> 01:20:40,626 The banks will think we're either high or having a stroke. 1728 01:20:40,710 --> 01:20:43,045 They'll take every dime we have to offer. 1729 01:20:45,632 --> 01:20:46,966 Kinda brilliant. 1730 01:20:48,760 --> 01:20:50,845 This is what we did that no one else thought of. 1731 01:20:50,929 --> 01:20:53,848 Not even Baum or Burry thought to short the AA's. 1732 01:20:53,932 --> 01:20:55,307 But we did. 1733 01:20:55,392 --> 01:20:56,934 Little Brownhole Capital. 1734 01:20:57,269 --> 01:21:02,189 We're interested in shorting some of the AA tranche of CDOs. 1735 01:21:02,274 --> 01:21:04,066 Come on, guys, what's the angle? 1736 01:21:04,150 --> 01:21:06,443 Oh, got no angle. We're new to this. We're just excited. 1737 01:21:06,570 --> 01:21:10,281 We want to do $15 million in swaps on the AA tranche. 1738 01:21:10,740 --> 01:21:11,824 I don't understand. 1739 01:21:11,908 --> 01:21:14,535 You can buy as much AA tranche as you want. 1740 01:21:16,746 --> 01:21:18,873 $40 million against the AA. 1741 01:21:18,957 --> 01:21:21,166 Brother, I will sell you as much as you want. 1742 01:21:21,459 --> 01:21:23,669 You understand perfectly, Bob. You want the deal? 1743 01:21:24,754 --> 01:21:25,754 (MEN LAUGHING) 1744 01:21:25,839 --> 01:21:27,840 That's cool. That's all right with me. 1745 01:21:30,051 --> 01:21:31,260 Pleasure. 1746 01:21:36,099 --> 01:21:37,975 Oh! (VOCALIZING) 1747 01:21:39,477 --> 01:21:41,395 - Don't do that. Stop. Stop. - (CONTINUES VOCALIZING) 1748 01:21:42,105 --> 01:21:43,314 - Stop that. - Charlie. 1749 01:21:44,024 --> 01:21:45,482 Stop it! Stop. 1750 01:21:47,903 --> 01:21:48,986 What? 1751 01:21:50,405 --> 01:21:51,780 Do you have any idea what you just did? 1752 01:21:52,198 --> 01:21:53,866 Come on. We just made the deal of our lifetimes! 1753 01:21:53,950 --> 01:21:55,117 We should celebrate. 1754 01:21:55,201 --> 01:21:57,119 You just bet against the American economy. 1755 01:21:57,203 --> 01:21:58,704 Fuck, yeah, we did! 1756 01:21:58,788 --> 01:22:00,748 - Fuck, yeah! - Which means... 1757 01:22:00,832 --> 01:22:03,500 Which means if we're right... 1758 01:22:04,544 --> 01:22:07,922 If we're right, people lose homes. People lose jobs. 1759 01:22:08,006 --> 01:22:11,175 People lose retirement savings. People lose pensions. 1760 01:22:11,301 --> 01:22:12,468 You know what I hate about fucking banking? 1761 01:22:12,552 --> 01:22:14,094 It reduces people to numbers. Here's a number. 1762 01:22:14,179 --> 01:22:17,014 Every 1 % unemployment goes up, 40,000 people die. Did you know that? 1763 01:22:17,098 --> 01:22:18,599 - No. - Did you know that? 1764 01:22:18,683 --> 01:22:20,267 No, I didn't know that. 1765 01:22:21,728 --> 01:22:23,395 We were just excited. 1766 01:22:25,815 --> 01:22:27,816 Just don't fucking dance. 1767 01:22:28,485 --> 01:22:30,319 CHARLIE: All right. JAMIE: Where are you going? 1768 01:22:34,699 --> 01:22:36,867 Whoa, I just got really scared. 1769 01:22:38,411 --> 01:22:40,329 First of all, great show today. 1770 01:22:40,413 --> 01:22:41,872 - You were terrific. - Thank you. 1771 01:22:41,957 --> 01:22:43,582 Your big mouth was a revelation. 1772 01:22:43,667 --> 01:22:45,376 I appreciate that. 1773 01:22:45,502 --> 01:22:47,252 You worried you and your swaps are getting played? 1774 01:22:47,337 --> 01:22:50,464 Well, this is an opportunity for you to meet who you're betting against. 1775 01:22:50,548 --> 01:22:52,341 Try not to get too righteous and listen a little. 1776 01:22:52,425 --> 01:22:53,801 Okay, fine. Who is this guy? 1777 01:22:53,927 --> 01:22:55,594 JAMIE: A real solid-gold asshole. 1778 01:22:55,762 --> 01:22:56,845 I'm a CDO manager. 1779 01:22:56,972 --> 01:22:58,013 A "CDO manager"? 1780 01:22:58,098 --> 01:22:59,515 Yeah, at Harding Advisors. 1781 01:23:00,100 --> 01:23:03,227 I didn't realize that there was anything to manage with CDOs. 1782 01:23:04,187 --> 01:23:05,187 MR. CHAU: Oh. 1783 01:23:05,939 --> 01:23:08,482 We select the securities that go into the CDO portfolio 1784 01:23:08,566 --> 01:23:09,942 and monitor the assets. 1785 01:23:10,026 --> 01:23:11,819 I do most of Merrill Lynch's CDOs. 1786 01:23:11,903 --> 01:23:14,863 Do you represent the investors or Merrill Lynch? 1787 01:23:14,948 --> 01:23:15,990 The investors. 1788 01:23:16,074 --> 01:23:17,116 You do. 1789 01:23:17,200 --> 01:23:18,534 - Yeah. - But... 1790 01:23:18,743 --> 01:23:20,619 Merrill Lynch isn't gonna send you any customers 1791 01:23:20,704 --> 01:23:24,248 unless you put Merrill Lynch's bonds in your CDO. 1792 01:23:25,375 --> 01:23:28,085 Good question. Let's just say Merrill and I have, um... 1793 01:23:28,712 --> 01:23:30,796 We have a good relationship. 1794 01:23:30,922 --> 01:23:33,132 You have a good relationship with Merrill Lynch. 1795 01:23:33,216 --> 01:23:34,883 We've been doing business together for a long time. 1796 01:23:34,968 --> 01:23:37,428 And so the CDOs that you create 1797 01:23:37,554 --> 01:23:41,473 are of the highest quality and the highest value. 1798 01:23:41,558 --> 01:23:43,475 - Absolutely. Yep. - Absolutely. 1799 01:23:43,560 --> 01:23:47,104 Are you at all concerned about the rising default rates? 1800 01:23:49,065 --> 01:23:52,234 I assume no risk for these products myself, Mark. 1801 01:23:54,904 --> 01:23:56,071 Okay. 1802 01:23:57,657 --> 01:24:00,826 So let me get this straight. The bank calls you up. 1803 01:24:01,411 --> 01:24:02,953 They give you the bonds they want to sell. 1804 01:24:03,038 --> 01:24:04,371 They give you clients, 1805 01:24:04,456 --> 01:24:06,832 they give you money to run your business. 1806 01:24:06,916 --> 01:24:08,625 Give you fat fees for doing so. 1807 01:24:08,710 --> 01:24:10,711 But you represent the investors? 1808 01:24:10,962 --> 01:24:11,962 (CHUCKLES) 1809 01:24:12,255 --> 01:24:13,297 Is that right? 1810 01:24:13,423 --> 01:24:14,465 Yeah. 1811 01:24:14,549 --> 01:24:16,008 But we're not in the Merrill Lynch building. 1812 01:24:16,092 --> 01:24:17,676 - Okay. Where are you? - We're in New Jersey. 1813 01:24:17,761 --> 01:24:19,845 You're 20 minutes away. 1814 01:24:19,929 --> 01:24:21,847 Well, five if you use a helicopter. 1815 01:24:23,725 --> 01:24:24,850 That's funny, huh? 1816 01:24:24,976 --> 01:24:26,143 That's hilarious. 1817 01:24:26,269 --> 01:24:28,395 (INDISTINCT CHATTER) 1818 01:24:29,355 --> 01:24:30,397 Oh, boy. 1819 01:24:30,774 --> 01:24:32,983 Your boss is about to explode. 1820 01:24:33,068 --> 01:24:34,693 No, he's too curious to explode. 1821 01:24:34,778 --> 01:24:36,236 Hold on. Say that again. 1822 01:24:36,321 --> 01:24:38,447 CDO "A" has parts of CDO "B". 1823 01:24:38,531 --> 01:24:40,449 And CDO "B" has parts of CDO "A". 1824 01:24:40,533 --> 01:24:42,785 But then they both get put inside CDO "C". 1825 01:24:42,869 --> 01:24:44,620 Yeah, that one's called CDO squared. 1826 01:24:44,704 --> 01:24:46,789 A CDO of a CDO. 1827 01:24:47,207 --> 01:24:48,207 All right? 1828 01:24:48,374 --> 01:24:50,334 And then there's CDOs made up of the opposite side 1829 01:24:50,418 --> 01:24:51,960 of the bet you made with your swaps. 1830 01:24:52,212 --> 01:24:54,505 We call them synthetic CDOs. 1831 01:24:54,631 --> 01:24:56,799 What did you say? Synthetic CDOs. 1832 01:24:56,883 --> 01:24:58,592 That is fucking crazy. 1833 01:24:58,718 --> 01:25:00,385 It's not. It's awesome. 1834 01:25:01,805 --> 01:25:05,307 His face is starting to boil. He looks like the bad guy from Dune. 1835 01:25:08,186 --> 01:25:09,311 (INDISTINCT CHATTER) 1836 01:25:09,395 --> 01:25:11,313 All right, let's say 1837 01:25:11,815 --> 01:25:15,150 you have a pool of $50 million in subprime loans. 1838 01:25:15,485 --> 01:25:18,070 How much money could be out there betting on it, 1839 01:25:18,154 --> 01:25:20,948 in your synthetic CDOs and swaps 1840 01:25:21,032 --> 01:25:22,616 right now, tonight? 1841 01:25:22,700 --> 01:25:25,327 Let's see, $50 million... Hmm... 1842 01:25:26,329 --> 01:25:27,287 A billion dollars. 1843 01:25:27,372 --> 01:25:28,372 What? 1844 01:25:29,499 --> 01:25:31,416 JARED: If the mortgage bonds that Michael Burry discovered 1845 01:25:31,501 --> 01:25:32,835 were the match... 1846 01:25:34,254 --> 01:25:36,672 How much bigger is the market for insuring mortgage bonds 1847 01:25:36,756 --> 01:25:38,215 than actual mortgages? 1848 01:25:39,384 --> 01:25:40,551 About 20 times. 1849 01:25:40,718 --> 01:25:42,803 JARED: If the mortgage bonds were the match 1850 01:25:42,887 --> 01:25:45,597 and the CDOs were the kerosene-soaked rags, 1851 01:25:45,682 --> 01:25:47,724 then the synthetic CDO was the atomic bomb 1852 01:25:47,809 --> 01:25:50,769 with the drunk President holding his finger over the button. 1853 01:25:50,854 --> 01:25:53,105 It was at that moment in that dumb restaurant 1854 01:25:53,189 --> 01:25:56,358 with that stupid look on his face that Mark Baum realized 1855 01:25:56,442 --> 01:25:58,861 that the whole world economy might collapse. 1856 01:26:02,490 --> 01:26:04,408 And I know what you're thinking. 1857 01:26:04,492 --> 01:26:06,827 "What the fuck is a synthetic CDO?" 1858 01:26:06,911 --> 01:26:07,911 (CROWD CHEERING) 1859 01:26:09,205 --> 01:26:12,833 Well, here's Dr. Richard Thaler, father of behavioral economics 1860 01:26:12,917 --> 01:26:15,544 and Selena Gomez to explain. 1861 01:26:15,879 --> 01:26:19,047 Okay. So here's how a synthetic CDO works. 1862 01:26:19,132 --> 01:26:22,009 Let's say I bet $10 million on a blackjack hand. 1863 01:26:22,093 --> 01:26:24,595 $10 million because this hand is meant to represent 1864 01:26:24,971 --> 01:26:27,222 a single mortgage bond. 1865 01:26:30,185 --> 01:26:33,604 Okay, Selena has a pretty good hand here, showing 18. 1866 01:26:33,730 --> 01:26:34,730 Dealer showing seven. 1867 01:26:34,814 --> 01:26:36,857 That's a really good hand for Selena. 1868 01:26:36,941 --> 01:26:38,358 Good odds. In fact, her chances of winning 1869 01:26:38,443 --> 01:26:40,819 this hand are 87%. 1870 01:26:40,904 --> 01:26:44,281 So, my odds are good. I'm on a winning streak. 1871 01:26:44,365 --> 01:26:47,034 Everybody in this place wants to get in on the action. 1872 01:26:47,118 --> 01:26:48,493 How could I lose, right? 1873 01:26:48,578 --> 01:26:50,078 Now, this is a classic error. 1874 01:26:50,163 --> 01:26:53,123 In basketball it's called the Hot Hand Fallacy. 1875 01:26:53,208 --> 01:26:55,751 A player makes a bunch of shots in a row. 1876 01:26:55,835 --> 01:26:58,128 People are sure they're gonna make the next one. 1877 01:26:58,213 --> 01:27:00,172 People think that whatever's happening now 1878 01:27:00,256 --> 01:27:03,008 is gonna continue to happen into the future. 1879 01:27:03,092 --> 01:27:06,428 During the real estate boom, markets were going up and up 1880 01:27:06,512 --> 01:27:08,180 and people thought they would never go down. 1881 01:27:08,264 --> 01:27:10,807 So people who are watching and think that I won't lose 1882 01:27:10,892 --> 01:27:12,351 will make a side bet. 1883 01:27:12,435 --> 01:27:14,686 Now, this is the first synthetic CDO. 1884 01:27:14,771 --> 01:27:16,355 I love Selena Gomez. 1885 01:27:16,439 --> 01:27:17,940 I bet you $50 million she wins. 1886 01:27:18,024 --> 01:27:20,108 And I'll give you 3-to-1 odds. 1887 01:27:20,193 --> 01:27:24,029 3- to-1 odds? Okay, I'll take that bet. 1888 01:27:24,113 --> 01:27:27,449 RICHARD: Now, somebody else is gonna want to make a bet 1889 01:27:27,533 --> 01:27:28,659 on the outcome of their bet. 1890 01:27:28,826 --> 01:27:29,952 Bet you 50 million she wins. 1891 01:27:30,036 --> 01:27:32,996 That will lead to synthetic CDO number two. 1892 01:27:33,081 --> 01:27:36,250 Hey, I bet you $200 million that lady in the glasses 1893 01:27:36,417 --> 01:27:37,918 wins that bet. 1894 01:27:38,086 --> 01:27:41,171 She probably will win. So I want a great payoff. 1895 01:27:41,339 --> 01:27:42,422 How about 20-to-1? 1896 01:27:42,548 --> 01:27:43,674 Deal. 1897 01:27:44,008 --> 01:27:48,303 And this will go on and on with more and more synthetic CDOs. 1898 01:27:48,388 --> 01:27:52,432 And we can transform an original $10 million investment 1899 01:27:52,600 --> 01:27:54,518 into billions of dollars. 1900 01:27:55,436 --> 01:27:56,770 You okay? 1901 01:27:58,189 --> 01:27:59,189 No. 1902 01:28:00,566 --> 01:28:02,401 I actually feel pretty sick. 1903 01:28:03,069 --> 01:28:04,569 (ALL GROAN) 1904 01:28:05,697 --> 01:28:07,030 (GROANING CONTINUES) 1905 01:28:07,615 --> 01:28:09,533 So I'm going to leave. 1906 01:28:11,119 --> 01:28:13,370 You think I'm a parasite, don't you, Mr. Baum? 1907 01:28:14,080 --> 01:28:18,000 But, apparently, society values me very much. 1908 01:28:19,043 --> 01:28:20,794 In fact, let's do this. 1909 01:28:22,839 --> 01:28:25,841 I'll tell you how much I'm worth. 1910 01:28:26,384 --> 01:28:27,884 You tell me how much you're worth. 1911 01:28:29,095 --> 01:28:34,182 God, you are an incredibly big piece of shit. 1912 01:28:39,939 --> 01:28:41,815 Short everything that guy has touched. 1913 01:28:41,899 --> 01:28:43,525 I want half a billion more in swaps. 1914 01:28:44,068 --> 01:28:46,278 You sure about that? The collateral calls could bankrupt you. 1915 01:28:46,362 --> 01:28:47,321 MARK: Yeah. Yeah. 1916 01:28:47,405 --> 01:28:48,405 Where are you going? 1917 01:28:48,489 --> 01:28:51,491 I am going to try to find moral redemption 1918 01:28:51,576 --> 01:28:53,410 at the roulette table. 1919 01:29:32,992 --> 01:29:34,618 (INAUDIBLE) 1920 01:29:57,600 --> 01:29:58,975 Hey, hey, hey! 1921 01:30:03,064 --> 01:30:04,523 Things are worse than I thought. 1922 01:30:06,651 --> 01:30:08,568 I honestly think the economy might collapse. 1923 01:30:08,986 --> 01:30:10,112 But you've been saying 1924 01:30:10,196 --> 01:30:13,281 that the system's broken for years, Mark. So... 1925 01:30:13,741 --> 01:30:15,659 Why are you so shocked? 1926 01:30:18,162 --> 01:30:21,581 It's more twisted than I could have imagined. 1927 01:30:21,666 --> 01:30:23,542 You love to be the virtuous one. 1928 01:30:24,001 --> 01:30:25,585 I'm a banker. I'm a part of it. 1929 01:30:25,670 --> 01:30:27,963 You always have, Mark. Like you're untainted. 1930 01:30:28,047 --> 01:30:31,508 It changed me. It changed me into a person 1931 01:30:32,093 --> 01:30:33,927 who is not able to reach out to someone... 1932 01:30:34,011 --> 01:30:35,929 He was in pain. My brother was in real pain. 1933 01:30:36,514 --> 01:30:38,849 There's no perfect way to help. 1934 01:30:41,853 --> 01:30:44,312 It's sad. It's scary. 1935 01:30:44,439 --> 01:30:47,607 So stop trying to fix the world. 1936 01:30:47,692 --> 01:30:48,775 He told me... 1937 01:30:48,860 --> 01:30:50,193 You're not a saint. 1938 01:30:50,278 --> 01:30:52,028 Saints don't live on Park Avenue. 1939 01:30:52,238 --> 01:30:53,864 ...that he was having bad thoughts. 1940 01:30:53,948 --> 01:30:56,741 CYNTHIA: Just feel the feelings like the rest of us. 1941 01:30:57,076 --> 01:31:01,246 MARK: My first response was to offer him some money. 1942 01:31:01,581 --> 01:31:04,082 I offered him fucking money! 1943 01:31:04,500 --> 01:31:06,126 (INAUDIBLE) 1944 01:31:09,755 --> 01:31:12,382 His face was so smashed. 1945 01:31:23,769 --> 01:31:25,562 (SOBBING) 1946 01:31:31,444 --> 01:31:32,777 That's right. 1947 01:31:44,290 --> 01:31:45,540 (ROCK MUSIC PLAYING) 1948 01:31:45,666 --> 01:31:46,917 (MOANING) 1949 01:32:29,919 --> 01:32:32,212 (SCREAMING) 1950 01:32:39,470 --> 01:32:40,804 MIKE'S WIFE: Michael? 1951 01:32:40,888 --> 01:32:42,222 - Michael? - Yes. Yes. 1952 01:32:42,306 --> 01:32:44,391 - Is everything okay? - Yes, honey. 1953 01:32:44,475 --> 01:32:46,601 - You sure? - Yeah, baby. 1954 01:32:48,396 --> 01:32:49,688 I'm fine. (LAUGHS) 1955 01:32:58,656 --> 01:33:00,323 MIKE: To all investors. 1956 01:33:00,408 --> 01:33:01,491 As you may know, 1957 01:33:02,493 --> 01:33:06,079 our agreement allows me to take extraordinary measures 1958 01:33:06,539 --> 01:33:09,457 when markets aren't functioning properly. 1959 01:33:09,542 --> 01:33:13,253 I currently have reason to believe the mortgage bond market 1960 01:33:13,921 --> 01:33:15,672 is fraudulent. 1961 01:33:17,842 --> 01:33:22,596 So, in order to protect investors from this fraudulent market, 1962 01:33:22,680 --> 01:33:25,932 I've decided to restrict investors' withdrawals 1963 01:33:26,017 --> 01:33:27,684 until further notice. 1964 01:33:28,019 --> 01:33:31,688 Sincerely, Dr. Michael J. Burry. 1965 01:33:41,115 --> 01:33:42,866 (HEAVY METAL MUSIC PLAYING) 1966 01:33:43,701 --> 01:33:44,993 (COMPUTER CHIMES) 1967 01:33:51,500 --> 01:33:55,337 (PHONES RINGING) 1968 01:34:06,682 --> 01:34:07,807 (SNIFFLES) 1969 01:34:39,256 --> 01:34:40,840 LAUREN CONRAD: (ON TV) I never would have guessed my life 1970 01:34:40,925 --> 01:34:43,426 could change as much as it has since I moved to L.A. 1971 01:34:43,511 --> 01:34:45,887 JASON WAHLER: It's notjust, like, that easy to, like, not see you. 1972 01:34:45,971 --> 01:34:49,057 REPORTER: He lashed out at rumors he used performance enhancing drugs. 1973 01:34:49,266 --> 01:34:50,684 This record is not tainted. 1974 01:34:50,768 --> 01:34:51,935 Oh, my God, dude. 1975 01:34:52,019 --> 01:34:53,728 Will you please stop changing the channels? 1976 01:34:53,813 --> 01:34:55,438 - You're driving me crazy. - All right. 1977 01:34:55,523 --> 01:34:57,482 - Fine. - Just put the business news on. 1978 01:34:58,442 --> 01:34:59,609 REPORTER:... and the S&P picked up three points. 1979 01:34:59,694 --> 01:35:00,694 Jesus! 1980 01:35:00,778 --> 01:35:02,529 Mortgage meltdown continued today. 1981 01:35:02,613 --> 01:35:05,323 Subprime mortgage lender New Century Financial, 1982 01:35:05,449 --> 01:35:08,076 once the industry leader, by the way, filed for bankruptcy. 1983 01:35:08,160 --> 01:35:09,244 - The company immediately... - Whoa, whoa, whoa. 1984 01:35:09,328 --> 01:35:10,537 (REPORTER CLEARS THROAT) 1985 01:35:10,705 --> 01:35:11,871 Good time for my voice to go... 1986 01:35:11,956 --> 01:35:14,207 Fired 3,200 workers. 1987 01:35:14,291 --> 01:35:16,626 The manufacturing index also fell in the month of March... 1988 01:35:16,711 --> 01:35:17,794 It's starting. 1989 01:35:17,878 --> 01:35:19,462 ...a warning that economic growth could slow. 1990 01:35:19,547 --> 01:35:21,005 The Institute of Supply Management 1991 01:35:21,132 --> 01:35:22,549 also reported a rise in prices... 1992 01:35:22,633 --> 01:35:24,259 I'm gonna call my mom. 1993 01:35:26,512 --> 01:35:29,389 The principal source of the slowdown in economic growth... 1994 01:35:29,473 --> 01:35:31,516 Time and time and time again, 1995 01:35:31,642 --> 01:35:33,768 I have gone to bat for you, Mark! 1996 01:35:33,853 --> 01:35:35,145 We've known each other for seven years... 1997 01:35:35,229 --> 01:35:37,564 She's got some lungs on her. I'm impressed. 1998 01:35:38,733 --> 01:35:40,567 I can't help but enjoy it. 1999 01:35:41,485 --> 01:35:43,111 PORTER: There's no fucking way. There's no fucking way 2000 01:35:43,195 --> 01:35:44,654 that the big banks are that stupid. 2001 01:35:45,656 --> 01:35:47,490 Bye, Kathy! 2002 01:35:52,163 --> 01:35:53,163 VINNIE: Well? 2003 01:35:54,373 --> 01:35:56,374 MARK: (SIGHS) Kathy thinks that it would be a good idea 2004 01:35:56,459 --> 01:35:58,001 if we sold our shorts. 2005 01:35:58,085 --> 01:35:59,085 PORTER: What else is new? 2006 01:35:59,170 --> 01:36:01,045 And she said that Morgan Stanley will buy them. 2007 01:36:01,130 --> 01:36:02,130 DANNY: Holy shit! 2008 01:36:02,840 --> 01:36:04,090 What did you say? 2009 01:36:04,175 --> 01:36:05,842 I told her we're not selling shit. 2010 01:36:07,845 --> 01:36:09,179 (WHISTLES) 2011 01:36:12,016 --> 01:36:15,852 Uh, if you need the files for 2005... 2012 01:36:16,020 --> 01:36:19,022 Mr. Fields' suit is very specific to files from the past year. 2013 01:36:19,774 --> 01:36:22,525 Good. Then get out. Say hi to Lawrence for me. 2014 01:36:22,610 --> 01:36:23,777 Will do. 2015 01:36:23,986 --> 01:36:25,695 (CELL PHONE RINGING) 2016 01:36:26,822 --> 01:36:28,490 You can't call me back for a week? 2017 01:36:28,574 --> 01:36:30,408 LUCY: I am so sorry, Mike. 2018 01:36:30,785 --> 01:36:33,953 Goldman had a systems failure. I lost a ton of messages. 2019 01:36:34,038 --> 01:36:36,080 Yeah, B ofA said they had a power outage, 2020 01:36:36,207 --> 01:36:39,375 and Morgan Stanley said their server crashed. 2021 01:36:39,502 --> 01:36:40,627 Huh. That's weird. 2022 01:36:40,711 --> 01:36:43,254 Well, I would call it improbable. 2023 01:36:43,339 --> 01:36:46,883 So where do you have our position marked? 2024 01:36:47,718 --> 01:36:49,469 I think it's the same, Mike. 2025 01:36:49,553 --> 01:36:51,429 What? Can you explain that to me, please, 2026 01:36:51,514 --> 01:36:54,808 because how can the value of an insurance contract 2027 01:36:54,892 --> 01:36:59,103 not be affected by the demise of the very thing it insures? 2028 01:36:59,188 --> 01:37:01,981 They're independent markets. They're not always correlated. 2029 01:37:02,066 --> 01:37:03,066 I know it sounds odd, 2030 01:37:03,150 --> 01:37:05,610 but these are very complicated products. 2031 01:37:06,445 --> 01:37:08,321 They are correlated. 2032 01:37:08,405 --> 01:37:10,406 They're gonna lose their houses, they're gonna lose theirjobs, 2033 01:37:10,491 --> 01:37:11,491 they're gonna lose their... 2034 01:37:14,370 --> 01:37:16,204 Will you listen to me? 2035 01:37:16,413 --> 01:37:19,040 This is like the end of capitalism. 2036 01:37:19,166 --> 01:37:22,502 This is like the Dark Ages all over again. 2037 01:37:23,546 --> 01:37:24,671 I don't want to talk to Dad. 2038 01:37:24,755 --> 01:37:27,298 Okay, I love you, too. Save your money. 2039 01:37:28,008 --> 01:37:32,011 She says I need to be on Xanax and double my dose of Zoloft. 2040 01:37:32,179 --> 01:37:34,138 I asked Bear Stearns to price our shorts. 2041 01:37:34,223 --> 01:37:35,807 They tell me the CDOs still haven't moved. 2042 01:37:35,891 --> 01:37:37,684 CHARLIE: This is fucking insane! 2043 01:37:37,768 --> 01:37:39,269 You realize that? These people are crooks 2044 01:37:39,353 --> 01:37:41,396 and they should be in prison. 2045 01:37:41,564 --> 01:37:42,689 Look at the TABX. 2046 01:37:42,773 --> 01:37:44,607 You can see that the CDOs are worth zero! 2047 01:37:44,692 --> 01:37:45,692 So you know what they're doing, huh? 2048 01:37:45,818 --> 01:37:46,860 You know what they're doing, right? 2049 01:37:46,986 --> 01:37:48,653 Yeah. They're unloading them. 2050 01:37:48,737 --> 01:37:52,031 They're selling their dog shit CDOs, then they go to another bank 2051 01:37:52,116 --> 01:37:54,158 and short the shit they just fucking sold! 2052 01:37:54,326 --> 01:37:55,910 Let's go to the press, man! 2053 01:37:55,995 --> 01:37:59,289 This is a massive story. Who wouldn't publish it? 2054 01:38:00,249 --> 01:38:01,583 Robert Redford! 2055 01:38:02,001 --> 01:38:03,459 No, you don't understand! 2056 01:38:03,544 --> 01:38:05,086 CASEY: I got it, guys. I got it. 2057 01:38:06,839 --> 01:38:08,423 What am I supposed to do? 2058 01:38:08,507 --> 01:38:10,174 Do you want me to write a piece called "We're All Fucked"? 2059 01:38:10,301 --> 01:38:12,176 Yes! That's a perfect title! 2060 01:38:12,261 --> 01:38:16,431 Casey, right now every bank in town is unloading these shit bonds 2061 01:38:16,599 --> 01:38:18,308 onto unsuspecting customers. 2062 01:38:18,392 --> 01:38:21,394 And they won't devalue them until they get them off their books. 2063 01:38:21,478 --> 01:38:23,938 This level of criminality is unprecedented, 2064 01:38:24,023 --> 01:38:26,274 even on fucking Wall Street. 2065 01:38:27,401 --> 01:38:30,236 Jamie... And this is me being honest here, okay? 2066 01:38:30,529 --> 01:38:33,072 It took me years to build my relationships on Wall Street. 2067 01:38:33,157 --> 01:38:37,327 No bank or ratings agency is going to confirm a story like this 2068 01:38:37,411 --> 01:38:39,913 just because it comes from two guys in a... 2069 01:38:40,039 --> 01:38:43,291 Sorry, garage band hedge fund that thinks it's the apocalypse. 2070 01:38:43,459 --> 01:38:44,459 (SIGHS) 2071 01:38:44,960 --> 01:38:45,960 Wow. 2072 01:38:46,128 --> 01:38:47,378 I thought you were for real, Casey. 2073 01:38:47,504 --> 01:38:48,796 You know, I'll have to say I really did. 2074 01:38:49,048 --> 01:38:50,048 CASEY: Really? 2075 01:38:50,299 --> 01:38:52,383 Yeah, Jamie, you try being for real with a three-year-old 2076 01:38:52,468 --> 01:38:54,302 and a wife getting her master's degree. 2077 01:38:54,553 --> 01:38:57,889 I'm not gonna burn my reputation on your wild hunch. 2078 01:38:58,724 --> 01:38:59,891 Wow. 2079 01:39:00,059 --> 01:39:01,225 - Wow. - (CASEY SIGHS) 2080 01:39:01,393 --> 01:39:02,435 Thanks for coming, guys. 2081 01:39:02,519 --> 01:39:03,686 Totally fucking awesome to see you. 2082 01:39:03,771 --> 01:39:05,772 Yeah, Casey. I've always hated you, 2083 01:39:05,898 --> 01:39:07,899 because you were a prick in college 2084 01:39:07,983 --> 01:39:10,318 and you are a prick today! 2085 01:39:10,778 --> 01:39:13,279 Thanks, Charlie. Still living with your mom? 2086 01:39:13,822 --> 01:39:15,281 JAMIE: Charlie, come on! 2087 01:39:15,366 --> 01:39:17,283 MARK: Mark Baum again. Call me. 2088 01:39:17,868 --> 01:39:19,494 Subprime bonds fell off a cliff. 2089 01:39:19,578 --> 01:39:21,537 Rumor has it the default numbers are huge. 2090 01:39:21,622 --> 01:39:24,415 Who got the remittance data early? I bet it's Goldman. 2091 01:39:24,500 --> 01:39:25,833 VINNIE: Yeah, fuck you very much. 2092 01:39:25,918 --> 01:39:28,753 Jared, it's chaos down here. Where are we? 2093 01:39:29,171 --> 01:39:32,382 "And Caesar wept, for there were no more worlds to conquer. " 2094 01:39:33,968 --> 01:39:36,844 Shane? 2095 01:39:38,430 --> 01:39:41,140 Well, nobody's buying CDO or mortgage bonds anymore 2096 01:39:41,225 --> 01:39:42,517 and everybody wants swaps. 2097 01:39:42,851 --> 01:39:45,186 Swaps are now the most popular product on the street. 2098 01:39:45,270 --> 01:39:47,105 - That's good for us. - Yes and no. 2099 01:39:47,189 --> 01:39:48,606 I heard from somebody who heard from somebody... 2100 01:39:48,691 --> 01:39:51,401 No, Alex, no. Sorry. 2101 01:39:54,571 --> 01:39:56,406 Bennie Cleager over at Morgan is taking on 2102 01:39:56,490 --> 01:39:58,074 some heavy losses in the bond department. 2103 01:39:59,576 --> 01:40:01,119 Your ship might be taking on water. 2104 01:40:01,620 --> 01:40:03,955 It might be time to get our lifejacket and get out. 2105 01:40:04,707 --> 01:40:06,207 I'm jacked. 2106 01:40:06,750 --> 01:40:09,252 I'm jacked! I'm jacked to the tits! 2107 01:40:09,878 --> 01:40:10,920 Good. 2108 01:40:11,005 --> 01:40:13,089 - Do you feel it? - No. 2109 01:40:14,633 --> 01:40:16,426 (TOILET FLUSHING) 2110 01:40:19,263 --> 01:40:20,722 What'd you hear, Tommy? 2111 01:40:22,891 --> 01:40:23,891 It's happening. 2112 01:40:23,976 --> 01:40:25,810 PORTER: Everybody wants our swaps. 2113 01:40:26,020 --> 01:40:28,021 Kathy's office is looking for you. 2114 01:40:28,355 --> 01:40:30,773 DANNY: They're singing a different tune now, aren't they? 2115 01:40:32,109 --> 01:40:33,609 That's not good. 2116 01:40:38,449 --> 01:40:39,824 Maybe later. Not now. 2117 01:40:39,908 --> 01:40:42,285 This is a joke. Never. 2118 01:40:42,453 --> 01:40:43,536 (CELL PHONE RINGING) 2119 01:40:45,789 --> 01:40:46,873 Listening. 2120 01:40:47,291 --> 01:40:48,875 - DEEB: Dr. Burry? - Yeah. 2121 01:40:48,959 --> 01:40:50,376 Deeb Winston, Goldman Sachs. 2122 01:40:50,461 --> 01:40:51,961 Listen, I've been reviewing your position. 2123 01:40:52,046 --> 01:40:54,297 I wanted to discuss your marks and make sure they're fair. 2124 01:40:54,381 --> 01:40:57,216 (STAMMERS) Yeah, I think you mean that you've 2125 01:40:57,301 --> 01:41:00,053 secured a net short position yourselves. 2126 01:41:00,220 --> 01:41:02,972 So you're free to mark my swaps accurately for once 2127 01:41:03,140 --> 01:41:05,808 because it's now in your interest to do so. 2128 01:41:07,978 --> 01:41:10,063 I'm not sure what you want me to say. 2129 01:41:10,230 --> 01:41:11,731 I think that... 2130 01:41:13,233 --> 01:41:15,318 I think that you've already said it. 2131 01:41:23,160 --> 01:41:25,286 You tell Jeff at Goldman that I'm not transferring funds. 2132 01:41:25,370 --> 01:41:26,996 This is bullshit! 2133 01:41:31,585 --> 01:41:32,794 (KNOCKS) 2134 01:41:34,171 --> 01:41:35,922 Okay, we'll talk later. 2135 01:41:36,423 --> 01:41:37,840 Thank you. 2136 01:41:39,259 --> 01:41:40,259 (SIGHS) 2137 01:41:40,344 --> 01:41:42,220 Thanks for coming so quickly, Mark. 2138 01:41:42,304 --> 01:41:43,638 - Yeah. - Um... 2139 01:41:43,931 --> 01:41:45,181 I know you've been hearing rumblings 2140 01:41:45,265 --> 01:41:46,766 about some losses Morgan has suffered. 2141 01:41:46,850 --> 01:41:48,810 - Congratulations. - On what? 2142 01:41:49,436 --> 01:41:50,478 Oh. 2143 01:41:51,188 --> 01:41:52,688 Thanks. Um... 2144 01:41:52,773 --> 01:41:54,107 Having fun? 2145 01:41:55,150 --> 01:41:56,484 Yes. (LAUGHS) 2146 01:41:57,694 --> 01:41:59,028 Tons. Um... 2147 01:41:59,530 --> 01:42:01,864 I just wanted you to know that, um... 2148 01:42:02,449 --> 01:42:04,117 That, yes, Morgan has suffered some losses, 2149 01:42:04,201 --> 01:42:07,995 but our liquidity is strong and there's no cause for concern. 2150 01:42:08,205 --> 01:42:11,040 Would Bennie Cleager be concerned? 2151 01:42:11,375 --> 01:42:12,708 Because word on the street 2152 01:42:12,793 --> 01:42:15,628 is that he took some pretty heavy losses. 2153 01:42:16,964 --> 01:42:18,756 Kathy, come on. We know each other. 2154 01:42:18,841 --> 01:42:21,050 - (SIGHS) - What's going on? 2155 01:42:21,468 --> 01:42:22,969 How bad is this? 2156 01:42:23,137 --> 01:42:24,303 Okay. 2157 01:42:25,097 --> 01:42:28,141 Two years ago, Bennie Cleager in Morgan's bond department 2158 01:42:28,225 --> 01:42:31,769 also started shorting subprime housing, $2 billion in BBBs. 2159 01:42:31,854 --> 01:42:33,104 Bennie is smarter than I thought. 2160 01:42:33,188 --> 01:42:34,605 No, he's not smart at all. 2161 01:42:34,690 --> 01:42:37,066 The premiums on the swap ate into his desk's profit. 2162 01:42:37,151 --> 01:42:39,110 To cover his BBB shorts, 2163 01:42:39,194 --> 01:42:41,696 he sold a lot ofA and AA swaps as protection. 2164 01:42:41,780 --> 01:42:42,780 A lot. 2165 01:42:43,490 --> 01:42:46,659 He believed that there was no way that they could be affected. 2166 01:42:47,244 --> 01:42:50,580 Tell me Morgan Stanley doesn't hold the contracts on these swaps. 2167 01:42:53,917 --> 01:42:55,418 Holy shit. 2168 01:42:56,086 --> 01:42:59,505 All this time I've been trying to figure out who I'm betting against, 2169 01:42:59,756 --> 01:43:01,591 and it's Morgan Stanley. 2170 01:43:02,551 --> 01:43:03,885 Which is me. 2171 01:43:05,596 --> 01:43:07,930 What's your exposure? $3 billion? 2172 01:43:08,849 --> 01:43:10,683 Please, don't tell me it's more than four. 2173 01:43:10,851 --> 01:43:12,476 I can't answer that. I can't answer that. 2174 01:43:12,561 --> 01:43:15,730 Yes, you can answer that, because I walk in here 2175 01:43:15,814 --> 01:43:18,900 and people are crying in your hallway. 2176 01:43:19,276 --> 01:43:20,443 Kathy, 2177 01:43:20,944 --> 01:43:22,987 you bring me in to tell me everything's fine, 2178 01:43:23,071 --> 01:43:24,280 and everything's not fine. 2179 01:43:24,948 --> 01:43:26,824 What, what is happening? 2180 01:43:29,036 --> 01:43:31,204 The long exposure is... 2181 01:43:33,123 --> 01:43:34,624 ...$15 billion. 2182 01:43:40,589 --> 01:43:41,714 Jesus! 2183 01:43:41,798 --> 01:43:44,175 He kept saying defaults over 8% were impossible. 2184 01:43:44,259 --> 01:43:45,259 MARK: Oh, my God. 2185 01:43:45,344 --> 01:43:46,552 That there would be a million homeless! 2186 01:43:48,013 --> 01:43:50,264 Yeah, but we have nothing to do with Morgan Stanley. 2187 01:43:53,185 --> 01:43:54,310 Yeah... 2188 01:43:54,645 --> 01:43:56,479 Tell the bankruptcy court. 2189 01:43:56,730 --> 01:43:59,857 Morgan fails, all our accounts go on their balance sheet. 2190 01:44:00,484 --> 01:44:02,109 DANNY: It's just crazy. 2191 01:44:02,319 --> 01:44:03,653 Morgan makes the sucker's bet 2192 01:44:03,737 --> 01:44:06,072 and we pay their fucking gambling debt? 2193 01:44:06,573 --> 01:44:09,075 Short the bank stocks. Then we wait. 2194 01:44:12,996 --> 01:44:14,997 Or we sell our swaps when the market opens. 2195 01:44:16,750 --> 01:44:19,794 We get our bonuses, our investors get their profits, we get... 2196 01:44:19,878 --> 01:44:22,380 What, 30 cents on the dollar? It's not bad. 2197 01:44:22,673 --> 01:44:24,173 We're three times that. 2198 01:44:24,258 --> 01:44:25,967 Not if there's no market left to sell them in. 2199 01:44:26,051 --> 01:44:27,969 Forget it. We're not giving out any lifeboats. 2200 01:44:28,053 --> 01:44:30,429 VINNIE: If Morgan goes under, we end up with nothing. 2201 01:44:30,514 --> 01:44:31,514 Vinnie. 2202 01:44:33,267 --> 01:44:36,435 Jesus, come on. I say when we sell. 2203 01:44:40,565 --> 01:44:42,942 Look, I get that this is personal for you, 2204 01:44:43,026 --> 01:44:45,319 but we have a fiduciary responsibility. 2205 01:44:45,404 --> 01:44:46,904 No. No, we don't. 2206 01:44:47,197 --> 01:44:49,365 Nobody's acting responsible. 2207 01:44:49,533 --> 01:44:52,285 Fuck responsibility. Are you kidding me? 2208 01:44:52,786 --> 01:44:54,870 The assholes at the big banks will take... 2209 01:44:54,955 --> 01:44:55,997 WOMAN: You boys want any appetizers? 2210 01:44:56,081 --> 01:44:57,832 MARK: We're talking, please! 2211 01:44:58,583 --> 01:45:00,084 - Excuse us. - Sorry. 2212 01:45:02,212 --> 01:45:05,006 We are going to wait, and we are going to wait, 2213 01:45:05,132 --> 01:45:06,632 and we are going to wait 2214 01:45:06,800 --> 01:45:10,553 until they feel the pain, until they start to bleed. 2215 01:45:10,887 --> 01:45:13,014 - That is what I want. - But what about our clients 2216 01:45:13,098 --> 01:45:14,390 who've entrusted us with their savings... 2217 01:45:14,474 --> 01:45:15,641 I say when we sell. 2218 01:45:15,726 --> 01:45:16,767 This isn't about you. 2219 01:45:16,852 --> 01:45:18,102 This isn't about you and your Upper East Side 2220 01:45:18,186 --> 01:45:19,228 - mahogany soapbox. - Hey! Hey! 2221 01:45:19,396 --> 01:45:20,730 I say when we sell! 2222 01:45:22,316 --> 01:45:24,066 DANNY: Whatever you say, Mark. 2223 01:45:30,782 --> 01:45:32,575 Dude, did you hear the news? 2224 01:45:34,411 --> 01:45:36,746 Okay. So, not only do two mortgage hedge funds 2225 01:45:36,830 --> 01:45:38,622 backed by Bear Stearns go belly up, 2226 01:45:38,707 --> 01:45:41,834 but now there's a class-action lawsuit against Bear. 2227 01:45:41,918 --> 01:45:43,085 CHARLIE: Holy shit! 2228 01:45:43,170 --> 01:45:45,671 Let's go! Push! Push! 2229 01:45:45,756 --> 01:45:47,173 So, what? Bear could really collapse here. 2230 01:45:47,257 --> 01:45:49,050 - This is a risk we really shouldn't take. - Then what? 2231 01:45:49,134 --> 01:45:51,135 JAMIE: We bought 80% of our swaps at Bear. 2232 01:45:51,219 --> 01:45:52,803 - We'd lose everything. - So what? 2233 01:45:52,888 --> 01:45:54,305 - Hey, sir? - One second! 2234 01:45:54,431 --> 01:45:55,389 That's my opinion. 2235 01:45:55,474 --> 01:45:56,682 We bought these fucking things. 2236 01:45:56,767 --> 01:45:57,933 We have no clue how to sell them. 2237 01:45:58,018 --> 01:45:59,435 I know. We have to get Ben to do it. 2238 01:45:59,519 --> 01:46:01,520 I've been trying to call him and he won't get back to me. 2239 01:46:01,605 --> 01:46:03,856 No. He's on vacation with his wife's family. 2240 01:46:03,940 --> 01:46:05,107 They're in England. 2241 01:46:06,068 --> 01:46:07,068 What? 2242 01:46:07,194 --> 01:46:08,444 (BELL RINGING SOFTLY) 2243 01:46:08,570 --> 01:46:09,779 (TYPING ON COMPUTER) 2244 01:46:11,615 --> 01:46:13,699 (MEN TALKING INDISTINCTLY) 2245 01:46:14,785 --> 01:46:16,369 JAMIE: Hello, Ben. Hey. BEN: Guys? 2246 01:46:16,453 --> 01:46:18,037 Yeah, we're here. Can you hear us? 2247 01:46:18,121 --> 01:46:19,622 - Guys? - CHARLIE: Yeah, we got you. 2248 01:46:19,790 --> 01:46:22,625 BEN: Yeah. I hardly got cell phone or Wi-Fi service. 2249 01:46:23,752 --> 01:46:26,337 I'm trying to sell $200 million worth of securities. 2250 01:46:26,671 --> 01:46:29,006 In a pub. It smells like sheep. 2251 01:46:29,299 --> 01:46:30,299 You can do this. 2252 01:46:30,425 --> 01:46:31,550 CHARLIE: I don't want to pressure you, Ben 2253 01:46:31,635 --> 01:46:34,220 but if you don't pull this off, we lose everything. 2254 01:46:34,471 --> 01:46:37,765 All right. Let's see what Credit Suisse's appetite is. 2255 01:46:42,938 --> 01:46:44,105 This is Brownfield Fund. 2256 01:46:44,189 --> 01:46:46,107 I want to unload my credit default swaps. 2257 01:46:46,441 --> 01:46:47,983 MAN: All right. What you got? 2258 01:46:48,151 --> 01:46:49,819 Twenty AA tranches ofA.B.S. CDOs. 2259 01:46:50,445 --> 01:46:52,822 MAN: A.B.S.? Are these... These are pretty bad? 2260 01:46:52,989 --> 01:46:54,990 Absolutely. They're complete shit. 2261 01:46:55,283 --> 01:46:56,784 What's your notional value? 2262 01:46:56,868 --> 01:46:59,537 Face value is 205 million. Dollars. 2263 01:46:59,830 --> 01:47:02,415 All right, we could, we could go to forty. 2264 01:47:02,499 --> 01:47:03,791 No. We want at least 100 million. 2265 01:47:03,875 --> 01:47:07,545 100 million? Who are you, a drug dealer or a banker? 2266 01:47:07,671 --> 01:47:10,172 'Cause if you're a banker, you can fuck right off! 2267 01:47:10,257 --> 01:47:11,424 I don't know if we can make a market. 2268 01:47:11,508 --> 01:47:12,633 BEN: Just give me your best price? 2269 01:47:12,717 --> 01:47:15,261 Yeah. Chuck 100 million in for me, mate. 2270 01:47:15,345 --> 01:47:16,595 I think we're far apart. 2271 01:47:17,097 --> 01:47:19,515 Look, if you don't want the deal, you can just hang up. 2272 01:47:21,977 --> 01:47:23,519 That's what I thought. 2273 01:47:24,312 --> 01:47:26,313 -90 million. -70. 2274 01:47:27,315 --> 01:47:29,150 (SIGHS) 85. 2275 01:47:29,359 --> 01:47:31,318 -78. -84. 2276 01:47:32,529 --> 01:47:34,530 -78. - BEN: 84. 2277 01:47:36,366 --> 01:47:37,658 MIKE: It's Dr. Burry. 2278 01:47:38,243 --> 01:47:41,078 Looks like the collapse of the financial sector is imminent. 2279 01:47:42,080 --> 01:47:44,039 Let's start to sell my position. 2280 01:47:44,416 --> 01:47:46,250 It's $1.3 billion. 2281 01:47:47,752 --> 01:47:49,587 Sure, I'll hold. 2282 01:47:50,964 --> 01:47:52,756 (TYPING ON COMPUTER) 2283 01:47:59,639 --> 01:48:01,098 (BEEPING) 2284 01:48:13,403 --> 01:48:14,904 So, I was right. 2285 01:48:15,739 --> 01:48:18,240 I took a rash of shit for two years, but 2286 01:48:18,658 --> 01:48:20,576 I was right. 2287 01:48:20,911 --> 01:48:22,661 And everyone was wrong. 2288 01:48:23,580 --> 01:48:26,749 And, yeah, I got a bonus check for it. Sue me. 2289 01:48:27,417 --> 01:48:28,501 You know? 2290 01:48:28,919 --> 01:48:32,546 It's a lot of money. I get it. I can feel you judging me. 2291 01:48:32,631 --> 01:48:33,923 That's palpable. 2292 01:48:34,633 --> 01:48:38,636 But, hey, I never said I was the hero of this story. 2293 01:48:39,262 --> 01:48:41,805 JAMIE: Hey, Ben. How are we looking? 2294 01:48:43,016 --> 01:48:44,350 BEN: (CUTTING OUT) Eight... on... 2295 01:48:45,101 --> 01:48:46,435 Sorry? 2296 01:48:46,811 --> 01:48:48,938 No. Eighty million. 2297 01:48:49,147 --> 01:48:50,773 $80 million, $80 million, that's good, right? 2298 01:48:50,857 --> 01:48:51,941 - Eighty is great. - Is that good? 2299 01:48:52,025 --> 01:48:53,192 - Eighty is great, Ben. - Okay. 2300 01:48:53,276 --> 01:48:55,611 Thank you. Thank you so much. 2301 01:48:55,946 --> 01:48:57,821 Most of it went to UBS. 2302 01:48:57,948 --> 01:48:59,490 You're very lucky. The largest bank 2303 01:48:59,574 --> 01:49:02,785 in France froze customer's money market accounts today. 2304 01:49:02,911 --> 01:49:04,453 This thing's hitting Europe. 2305 01:49:04,538 --> 01:49:06,372 Greece and Iceland are finished. 2306 01:49:06,456 --> 01:49:07,790 Spain is teetering. 2307 01:49:07,874 --> 01:49:09,458 Are you serious? Fuck. 2308 01:49:09,876 --> 01:49:11,710 CHARLIE: Ben, call us when you get home. 2309 01:49:11,795 --> 01:49:13,087 But, hey, before you go, 2310 01:49:13,171 --> 01:49:15,214 uh, I'm just wondering... 2311 01:49:15,882 --> 01:49:17,132 Um... 2312 01:49:18,301 --> 01:49:20,344 Why did you do this with us? 2313 01:49:21,304 --> 01:49:23,305 You didn't have to. Uh... 2314 01:49:23,640 --> 01:49:27,309 Thank you. But, uh, why? 2315 01:49:28,228 --> 01:49:31,146 You guys said you wanted to get rich. Now you're rich. 2316 01:49:31,690 --> 01:49:32,773 COMMENTATOR: Goal! 2317 01:49:32,857 --> 01:49:34,483 Pamplona puts themselves on the scoreboard. 2318 01:49:38,655 --> 01:49:41,198 JARED: As the housing markets and banks continued to hemorrhage, 2319 01:49:41,283 --> 01:49:43,701 only one of the big shorts refused to sell. 2320 01:49:43,785 --> 01:49:44,994 Mark Baum. 2321 01:49:48,373 --> 01:49:50,416 So it was beyond perfect when he was asked to speak 2322 01:49:50,500 --> 01:49:52,334 at a conference opposite Bruce Miller, 2323 01:49:52,419 --> 01:49:54,878 the famous bullish investor. 2324 01:49:55,255 --> 01:49:57,464 After he and Mark had their debate, Alan Greenspan, 2325 01:49:57,549 --> 01:50:01,010 one of the architects of the whole crisis was scheduled to speak. 2326 01:50:01,261 --> 01:50:03,846 Everyone in Mark's office showed up, he even invited friends. 2327 01:50:04,264 --> 01:50:05,264 (CELL PHONE VIBRATING) 2328 01:50:05,348 --> 01:50:08,642 This was the Ali vs. Foreman of the financial world. 2329 01:50:09,019 --> 01:50:11,020 The realist versus the fools. 2330 01:50:11,479 --> 01:50:15,065 And if it seems almost too perfect, trust me, this happened. 2331 01:50:15,859 --> 01:50:17,026 (CELL PHONE CONTINUES VIBRATING) 2332 01:50:17,193 --> 01:50:23,365 Welcome, everyone. Please give a generous welcome to 2333 01:50:23,700 --> 01:50:27,286 Mr. Bruce Miller and Mark Baum. 2334 01:50:27,662 --> 01:50:29,747 (AUDIENCE APPLAUDING) 2335 01:50:43,219 --> 01:50:44,386 (CELL PHONE VIBRATING) 2336 01:50:44,471 --> 01:50:45,971 - Strap yourself in. - (WOMAN COUGHS) 2337 01:50:47,223 --> 01:50:49,391 So as some of you may know, Bear Stearns 2338 01:50:49,476 --> 01:50:52,061 has just received a loan from JP Morgan. 2339 01:50:52,145 --> 01:50:54,980 Of course, we're gonna have to wait and see how the markets react, 2340 01:50:55,065 --> 01:50:58,776 but that should lay to rest any concerns about the bank's health. 2341 01:50:58,860 --> 01:51:03,572 Now, I take it you have no plans to sell your $200 million in Bear stock? 2342 01:51:03,907 --> 01:51:05,532 No. As a matter of fact, when we're done here, 2343 01:51:05,617 --> 01:51:07,409 I'll probably go out and buy some more. 2344 01:51:07,535 --> 01:51:08,827 - (SCATTERED LAUGHTER) - (CELL PHONES VIBRATING) 2345 01:51:08,912 --> 01:51:12,414 For the opposing view, Mr. Baum. 2346 01:51:14,834 --> 01:51:16,919 I got to stand for this. 2347 01:51:19,673 --> 01:51:21,256 Okay, hi. 2348 01:51:21,675 --> 01:51:24,093 My firm's thesis is pretty simple. 2349 01:51:24,427 --> 01:51:26,261 Wall Street took a good idea, 2350 01:51:26,346 --> 01:51:27,846 Lewis Ranieri's mortgage bond, 2351 01:51:28,098 --> 01:51:30,349 and turned it into an atomic bomb 2352 01:51:30,433 --> 01:51:32,601 of fraud and stupidity 2353 01:51:32,936 --> 01:51:35,604 that's on its way to decimating the world economy. 2354 01:51:35,689 --> 01:51:36,897 How do you really feel? 2355 01:51:37,023 --> 01:51:38,232 (AUDIENCE CHUCKLING) 2356 01:51:38,358 --> 01:51:40,275 MARK: I'm glad you still have a sense of humor. 2357 01:51:40,360 --> 01:51:42,403 I wouldn't if I were you. 2358 01:51:42,779 --> 01:51:46,824 Now, anyone who knows me knows that 2359 01:51:46,908 --> 01:51:49,368 I have no problem telling someone they're wrong. 2360 01:51:49,452 --> 01:51:53,539 PORTER: (WHISPERING) Bear Stearns is denying rumors of liquidity problems. 2361 01:51:53,623 --> 01:51:55,916 (WHISPERING) Holy fuck, it's 39 now! 2362 01:51:58,086 --> 01:52:00,629 We live in an era of fraud in America. 2363 01:52:00,714 --> 01:52:03,090 Not just in banking, but in government, 2364 01:52:03,550 --> 01:52:06,510 education, religion, food, 2365 01:52:06,594 --> 01:52:08,262 even baseball. 2366 01:52:08,763 --> 01:52:09,972 (VIBRATING) 2367 01:52:10,140 --> 01:52:11,348 What bothers me isn't that 2368 01:52:11,975 --> 01:52:15,811 fraud is not nice or that fraud is mean. 2369 01:52:16,104 --> 01:52:17,980 It's that for 15,000 years 2370 01:52:18,815 --> 01:52:20,357 fraud and short-sighted thinking 2371 01:52:20,442 --> 01:52:22,818 have never, ever worked. 2372 01:52:22,944 --> 01:52:25,863 - PORTER: Jesus, Bear at 37... - Not once. 2373 01:52:25,947 --> 01:52:29,199 Eventually, people get caught, things go south. 2374 01:52:29,284 --> 01:52:30,659 DANNY: It's fucking plummeting, man. 2375 01:52:30,827 --> 01:52:33,120 When the hell did we forget all that? 2376 01:52:37,292 --> 01:52:39,793 I thought we were better than this. I really did. 2377 01:52:40,128 --> 01:52:42,171 And the fact that we're not 2378 01:52:42,297 --> 01:52:45,007 doesn't make me feel all right and superior. 2379 01:52:45,091 --> 01:52:47,593 It makes me feel... Sad. 2380 01:52:48,011 --> 01:52:50,345 Every time I fucking hit "refresh" it's dropping, man. 2381 01:52:52,015 --> 01:52:53,682 And as fun as it is to watch 2382 01:52:53,975 --> 01:52:56,268 pompous, dumb Wall Streeters be wildly wrong, 2383 01:52:56,352 --> 01:52:58,645 and you are wrong, sir, 2384 01:52:59,481 --> 01:53:02,483 I just know, that at the end of the day 2385 01:53:03,151 --> 01:53:05,861 average people are going to be the ones 2386 01:53:05,987 --> 01:53:08,155 that are gonna have to pay for all this. 2387 01:53:08,823 --> 01:53:10,949 Because they always, always do. 2388 01:53:11,034 --> 01:53:12,075 DANNY: It's 32. 2389 01:53:12,160 --> 01:53:13,535 VINNIE: It's fucking tanked, man. 2390 01:53:13,661 --> 01:53:15,662 That's my two cents. Thank you. 2391 01:53:16,998 --> 01:53:18,332 DANNY: Let me drop a deuce at Deutsche. 2392 01:53:18,500 --> 01:53:20,501 WOMAN: Does our bull have a response? 2393 01:53:21,503 --> 01:53:25,005 Only that, in the entire history of Wall Street, 2394 01:53:25,131 --> 01:53:27,424 no investment bank has ever failed 2395 01:53:27,509 --> 01:53:29,510 unless caught in criminal activities. 2396 01:53:30,011 --> 01:53:33,514 So, yes, I stand by my Bear Stearns optimism. 2397 01:53:33,848 --> 01:53:35,849 MAN: Mr. Miller, I'm sorry. Quick question. 2398 01:53:36,351 --> 01:53:38,018 From the time you guys started talking, 2399 01:53:38,186 --> 01:53:41,063 Bear Stearns stock has fallen more than 38*%. 2400 01:53:41,147 --> 01:53:42,523 Would you still buy more? 2401 01:53:42,732 --> 01:53:46,860 Yeah, sure, of course I'd buy more. Why not? 2402 01:53:47,320 --> 01:53:48,320 Boom. 2403 01:53:48,404 --> 01:53:50,155 (ALL TALKING INDISTINCTLY) 2404 01:53:51,574 --> 01:53:52,908 DANNY: Jesus Christ! 2405 01:53:54,369 --> 01:53:57,538 WOMAN: That concludes the first part of our presentation. 2406 01:53:58,540 --> 01:54:03,168 Up next, we have the legendary former chairman of the Fed, 2407 01:54:03,253 --> 01:54:05,045 Alan Greenspan. 2408 01:54:05,129 --> 01:54:06,463 Folks? 2409 01:54:24,607 --> 01:54:25,983 MALE REPORTER:... employees of Lehman Brothers today, 2410 01:54:26,067 --> 01:54:29,403 as the Wall Street giant's stock went to zero. 2411 01:54:29,737 --> 01:54:31,655 The collapse of the venerable New York bank 2412 01:54:31,739 --> 01:54:35,367 follows a tumultuous few months of market volatility 2413 01:54:35,451 --> 01:54:38,078 and fear in the world economy. 2414 01:54:38,413 --> 01:54:40,122 I got to see inside. 2415 01:54:40,915 --> 01:54:42,249 How? 2416 01:54:42,959 --> 01:54:43,959 Come on. 2417 01:54:44,794 --> 01:54:47,880 I left my phone in the office. I threw my pass out already. 2418 01:54:47,964 --> 01:54:49,381 Do you mind if I take your pass? 2419 01:54:49,465 --> 01:54:52,050 I don't give a shit anymore. You can do what you want. 2420 01:54:59,934 --> 01:55:01,643 Go directly to your transportation. 2421 01:55:01,728 --> 01:55:03,437 Do not talk to the press. 2422 01:55:03,605 --> 01:55:06,940 After 18 years, I just leave? That's just fucking great! 2423 01:55:07,150 --> 01:55:10,027 I'll talk to whoever the hell I want! 2424 01:55:10,111 --> 01:55:12,446 MAN: Do not talk to the press. 2425 01:55:12,780 --> 01:55:14,740 Go directly to your transportation. 2426 01:55:14,824 --> 01:55:15,908 Do not talk to... 2427 01:55:18,494 --> 01:55:19,661 PORTER: Hey, look, you wanna get a bite tonight? 2428 01:55:19,787 --> 01:55:22,205 There's this, uh, new Cuban place 2429 01:55:22,290 --> 01:55:24,291 just opened on the Lower East Side. It's supposed to be good. 2430 01:55:24,626 --> 01:55:26,293 - Oh, really? - Yeah. 2431 01:55:26,794 --> 01:55:28,128 You and I? 2432 01:55:28,338 --> 01:55:29,922 - Yeah, or other people. - (CELL PHONE VIBRATING) 2433 01:55:30,006 --> 01:55:31,757 - That sounds nice. I would like that. - Yeah. 2434 01:55:31,841 --> 01:55:33,133 Finally. 2435 01:55:33,509 --> 01:55:34,843 Mark, hey. 2436 01:55:35,136 --> 01:55:36,428 VINNIE: It's a bloodbath up here. 2437 01:55:36,512 --> 01:55:38,013 Morgan stock has lost half its value. 2438 01:55:38,097 --> 01:55:40,390 It's down to 23.10. It's in freefall. 2439 01:55:40,475 --> 01:55:43,477 Clients want to talk to you about pulling their money. 2440 01:55:43,686 --> 01:55:47,189 It's now or never, Mark. We got to sell. 2441 01:55:50,485 --> 01:55:51,652 Mark. 2442 01:55:53,029 --> 01:55:54,196 Mark, you hear me? 2443 01:55:54,530 --> 01:55:55,989 MALE AUTOMATED VOICE: Mailbox one. 2444 01:55:56,157 --> 01:55:58,867 You have 15 messages. 2445 01:55:59,202 --> 01:56:00,243 (BEEPING) 2446 01:56:00,328 --> 01:56:01,954 WOMAN: Mike, I can't seem to get ahold of you. 2447 01:56:02,038 --> 01:56:04,498 Will you please call me at your earliest convenience. 2448 01:56:05,833 --> 01:56:08,669 It's Jack. You're buying stocks? 2449 01:56:08,878 --> 01:56:11,838 The market's at an all-time low. This is crazy! 2450 01:56:12,090 --> 01:56:14,424 MIKE: I met my wife on Match. com. 2451 01:56:14,842 --> 01:56:16,176 My profile said, 2452 01:56:16,386 --> 01:56:18,720 "I am a medical student with only one eye, 2453 01:56:18,805 --> 01:56:20,722 "an awkward social manner, 2454 01:56:20,807 --> 01:56:24,393 "and $145,000 in student loans. " 2455 01:56:25,061 --> 01:56:26,520 She wrote back, 2456 01:56:26,813 --> 01:56:28,397 "You're just what I've been looking for. " 2457 01:56:29,357 --> 01:56:31,024 She meant honest. 2458 01:56:31,234 --> 01:56:32,901 So let me be honest. 2459 01:56:33,069 --> 01:56:37,322 The housing crisis represents the greatest financial opportunity of... 2460 01:56:37,407 --> 01:56:40,200 MIKE: Making money is not like I thought it would be. 2461 01:56:40,535 --> 01:56:45,122 This business kills the part of life that is essential. 2462 01:56:45,206 --> 01:56:48,250 The part that has nothing to do with business. 2463 01:56:48,376 --> 01:56:50,085 - (APPLAUDING) - (MAN TALKING INDISTINCTLY) 2464 01:56:50,545 --> 01:56:52,587 For the past two years, my insides... 2465 01:56:52,672 --> 01:56:53,672 (SQUEALS) 2466 01:56:53,756 --> 01:56:56,133 ...have felt like they're eating themselves. 2467 01:56:56,259 --> 01:56:58,552 All the people I respected 2468 01:56:59,053 --> 01:57:01,555 won't talk to me anymore 2469 01:57:01,806 --> 01:57:03,640 except through lawyers. 2470 01:57:07,395 --> 01:57:08,770 - (BABY CRYING) - People 2471 01:57:09,564 --> 01:57:13,233 want an authority to tell them how to value things... 2472 01:57:13,609 --> 01:57:18,697 ...but they choose this authority not based on facts or results. 2473 01:57:19,157 --> 01:57:23,827 They choose it because it seems authoritative and familiar. 2474 01:57:23,911 --> 01:57:26,371 And I am not 2475 01:57:26,456 --> 01:57:29,499 and never have been "familiar". 2476 01:57:31,461 --> 01:57:32,461 So... 2477 01:57:33,337 --> 01:57:36,465 So, I've come to the sullen realization 2478 01:57:36,549 --> 01:57:39,342 that I must close down the fund. 2479 01:57:39,427 --> 01:57:42,512 Sincerely, Michael J. Burry, M.D. 2480 01:58:42,240 --> 01:58:44,324 CHARLIE: This isn't how I pictured it. 2481 01:58:46,327 --> 01:58:47,494 JAMIE: What did you think we'd find? 2482 01:58:47,578 --> 01:58:48,620 I don't know. 2483 01:58:50,498 --> 01:58:51,998 Grownups. 2484 01:58:55,920 --> 01:58:57,420 Mark, you there? 2485 01:59:00,091 --> 01:59:01,341 VINNIE: Mark? 2486 01:59:01,592 --> 01:59:04,511 Paulson and Bernanke just left the White House. 2487 01:59:09,851 --> 01:59:12,018 There's going to be a bailout. 2488 01:59:13,604 --> 01:59:17,023 Well, they had to. Right? 2489 01:59:17,358 --> 01:59:18,525 Paper markets would've collapsed. 2490 01:59:18,609 --> 01:59:19,776 They knew. 2491 01:59:20,027 --> 01:59:21,528 Cash would've stopped coming out of ATMs. 2492 01:59:21,612 --> 01:59:23,155 They had to backstop this. 2493 01:59:23,447 --> 01:59:25,782 They knew the taxpayers would bail them out. 2494 01:59:25,867 --> 01:59:28,285 They weren't being stupid. They just didn't care. 2495 01:59:28,452 --> 01:59:30,620 Yeah. 'Cause they're fucking crooks. 2496 01:59:32,540 --> 01:59:35,083 But at least we're going to see some of them go to jail. 2497 01:59:36,294 --> 01:59:39,546 Right? I mean, they're gonna have to break up the banks. 2498 01:59:40,631 --> 01:59:41,965 I mean, the party's over. 2499 01:59:42,049 --> 01:59:44,718 I don't know. I don't know, Vinnie. 2500 01:59:47,471 --> 01:59:48,972 I have a feeling 2501 01:59:49,056 --> 01:59:50,932 that in a few years people are gonna be doing 2502 01:59:51,017 --> 01:59:54,019 what they always do when the economy tanks. 2503 01:59:54,478 --> 01:59:57,689 They will be blaming immigrants and poor people. 2504 01:59:57,982 --> 01:59:59,316 JARED: But Mark was wrong. 2505 02:00:00,443 --> 02:00:02,402 In the years that followed, hundreds of bankers 2506 02:00:02,486 --> 02:00:05,113 and rating agencies executives went to jail. 2507 02:00:05,281 --> 02:00:07,324 The SEC was completely overhauled. 2508 02:00:07,491 --> 02:00:10,202 And Congress had no choice but to break up the big banks 2509 02:00:10,620 --> 02:00:13,079 and regulate the mortgage and derivatives industries. 2510 02:00:14,498 --> 02:00:16,249 (GLASS SHATTERING) 2511 02:00:17,877 --> 02:00:19,211 Just kidding. 2512 02:00:19,462 --> 02:00:21,671 The banks took the money the American people gave them 2513 02:00:21,756 --> 02:00:24,049 and used it to pay themselves huge bonuses 2514 02:00:24,133 --> 02:00:26,384 and lobby Congress to kill big reform. 2515 02:00:26,552 --> 02:00:28,803 And then they blamed immigrants and poor people. 2516 02:00:28,888 --> 02:00:31,056 And this time, even teachers. 2517 02:00:32,433 --> 02:00:33,642 And when all was said and done, 2518 02:00:33,726 --> 02:00:35,477 only one single banker went to jail. 2519 02:00:36,395 --> 02:00:37,520 This poor schmuck. 2520 02:00:37,605 --> 02:00:40,065 Kareem Serageldin from Credit Suisse. 2521 02:00:40,399 --> 02:00:42,734 He hid a few billion in mortgage bond losses, 2522 02:00:42,818 --> 02:00:46,071 something most of the big banks did on a good day during the crisis. 2523 02:00:47,698 --> 02:00:49,699 Mark, can we sell now? 2524 02:00:51,494 --> 02:00:53,995 The fund will make almost $1 billion. 2525 02:00:54,080 --> 02:00:55,705 You'll clear $200 mil, Mark. 2526 02:00:56,874 --> 02:00:59,125 You know, once we sell, 2527 02:00:59,877 --> 02:01:01,753 we'll be just like the rest of them. 2528 02:01:01,837 --> 02:01:02,963 You know that. 2529 02:01:03,297 --> 02:01:04,881 No, we're not. We're not the bad guys here. 2530 02:01:04,966 --> 02:01:08,468 We didn't defraud the American people and prey on their dreams 2531 02:01:08,552 --> 02:01:10,136 of owning a home. All right? 2532 02:01:10,221 --> 02:01:11,429 They did. 2533 02:01:11,514 --> 02:01:12,555 (HORN HONKING) 2534 02:01:12,640 --> 02:01:14,474 And now we get to kick them in the teeth. 2535 02:01:19,897 --> 02:01:21,898 A billion dollars. 2536 02:01:23,567 --> 02:01:24,818 That's right. 2537 02:01:24,902 --> 02:01:27,737 But we got to close out our position or it could be zero. 2538 02:01:28,239 --> 02:01:31,074 I mean, it's now or never, Mark. 2539 02:01:40,251 --> 02:01:41,668 Okay. 2540 02:01:45,423 --> 02:01:46,840 Sell it all. 2541 02:03:45,584 --> 02:03:47,627 (ROCK MUSIC PLAYING)