1 00:00:00,000 --> 00:00:05,000 Original Data Provided By: Omid Kashan, DM, David McCandless Karl Webster, Dr Stephanie Starling Subtitles Compiled By: BreadCodes 2 00:00:39,000 --> 00:00:49,000 - 3 00:01:06,000 --> 00:01:16,000 TRUE The quote used has a similar meaning to the Tolstoy quote that originally prefaces the book the film is based on. The (long & wordy) Tolstoy quote was in the original screenplay, but was dropped. The quote probably refers to the ignorance in the housing market. The Big Short (2010) by M. Lewis 4 00:02:11,000 --> 00:02:21,000 TRUE Lewis Ranieri is considered the father of mortgage-backed securities. He started out at Salomon Brothers. Wikipedia: Lewis Ranieri 5 00:02:54,000 --> 00:03:04,000 TRUE Business week reported: 'Ranieri's job was to sell those bonds—at a time when only 15 states recognized MBS as legal investments. With a trader's nerve and a salesman's persuasiveness, he did much more' Wikipedia: Lewis Ranieri 6 00:03:08,000 --> 00:03:18,000 TRUE Bankers keep strip clubs going. CNBC 7 00:03:36,000 --> 00:03:46,000 TRUE A few years of easy credit and rising home prices put America on a high, until the bubble burst. Investopedia 8 00:04:36,000 --> 00:04:46,000 TRUE Raneiri has been strongly criticised for his role in the banking crisis. Lehamn Brothers went bankrupt, the DOW dropped massively. Millions lost their jobs. The Guardian 9 00:05:28,000 --> 00:05:38,000 TRUE Burry set up Scion Capital with funds from a payout his family got after misdiagnosis played a part in his father's death. He was certainly eccentric, & always felt himself to be different. The Big Short (2010) by M. Lewis, p26-39 10 00:07:38,000 --> 00:07:48,000 TRUE-ISH Burry understood economic crashes like nobody else. He did have a glass eye, lost to cancer in childhood. He didn't tell all this to a guy looking for a job, but he did have a couple of email-only friends who he disclosed such things to. The Big Short (2010) by M. Lewis, p26-33 11 00:09:15,000 --> 00:09:25,000 TRUE-ISH Although we don't know if Burry had an analyst find this info or if he sourced it himself (he did have a team of staff, though), we do know he scanned & read thousands of pages of financial statements. He was a huge heavy metal fan, too. The Big Short (2010) by M. Lewis, p25-28, 193 12 00:11:05,000 --> 00:11:15,000 TRUE Eisman was in group therapy, & frequently burst in late to the meetings, spouted out his thoughts & then rushed off. The Big Short (2010) by M. Lewis, p21 13 00:12:00,000 --> 00:12:10,000 TRUE Each mortgage bond came with it's own 130-page prospectus. Burry scanned hundreds of them. He figured out how mortgage bonds worked, & how poor lending standards were. The Big Short (2010) by M. Lewis, p25-28 14 00:13:37,000 --> 00:13:47,000 TRUE The Fields character represented Joel Greenblatt of Gotham Capital, who were one of the original Scion investors. Burry saw him as a mentor & had always had his support, but not on this. The Big Short (2010) by M. Lewis, p190 15 00:14:44,000 --> 00:14:54,000 TRUE No Margot Robbie in the book, obviously, but the author explains why mortgage bonds were so weak. They were full of bad loans. The Big Short (2010) by M. Lewis 16 00:15:38,000 --> 00:15:48,000 TRUE There were no instruments through which to bet against the housing market. However, Burry figured out that he could short it through credit default swaps, & decided to persuade Wall Street firms to create them for him. The Big Short (2010) by M. Lewis, p29-30 17 00:16:47,000 --> 00:16:57,000 TRUE Eisman studied the Talmut as a kid purely so he could find the contradictions within it. He always sought out corruption, hypocrisy etc. The Big Short (2010) by M. Lewis, p6 18 00:18:49,000 --> 00:18:59,000 FALSE-ISH Eisman didn't lose a brother, but he did lose an infant son & it changed him. His wife Valerie talks about it in the book, but not in this much detail. The family asked that they leave Eisman's son out of the film, they couldn't bear to re-live his loss onscreen. The Big Short (2010) by M. Lewis, p12 19 00:22:12,000 --> 00:22:22,000 TRUE Burry's first really huge subprime mortgage deal was with Goldman Sachs, who let him buy $100m in credit default swaps. They didn't seem to care which bonds he bought or why. The Big Short (2010) by M. Lewis, p49-60 20 00:22:28,000 --> 00:22:38,000 TRUE Deutsche let them buy $200m in swaps. The Big Short (2010) by M. Lewis, p52-53 21 00:23:18,000 --> 00:23:28,000 TRUE Burry harrassed all the major banks to sell him as many credit default swaps as possible. They were happy to take his money, didn't ask too many questions. The Big Short (2010) by M. Lewis, p49-60 22 00:24:16,000 --> 00:24:26,000 TRUE One of Burry's investors told him Lippmann (Vennett in the movie), the head subprime mortgage trader at Deutsche Bank, was shorting $1bn dollars through credit default swaps. He'd apparently heard about Burry's move & decided to give it a try. The Big Short (2010) by M. Lewis, p49-60 23 00:25:44,000 --> 00:25:54,000 TRUE Greenblatt, along with most of Burry's other investors, were furious. He recieved all kinds of threats from them. The Big Short (2010) by M. Lewis, p186-193 24 00:26:06,000 --> 00:26:16,000 FALSE Unclear whether Kathy Tao was a real person, but her character isn't mentioned in the book. The Big Short (2010) by M. Lewis 25 00:28:35,000 --> 00:28:45,000 TRUE-ISH They break the fourth wall to tell the audience this bit is really truly true, but we can't find confirmation. 26 00:33:54,000 --> 00:34:04,000 TRUE Lippmann presented the concept of betting against the housing market to Eisman & his team. He'd already pitched to a load of other banks, who rejected his offer for a multitude of reasons, e.g. - 'I talked to Bear Stearns & they said you were crazy'. The Big Short (2010) by M. Lewis, p61-68, 80-83 27 00:34:39,000 --> 00:34:49,000 TRUE No Anthony Bourdain, but the author describes collateralized debt obligations in great depth in the book. The Big Short (2010) by M. Lewis 28 00:35:46,000 --> 00:35:56,000 TRUE Lippmann presented the buying of credit default swaps to Eisman & team as his own original idea. Lippmann was really skeptical. Eisman was interested, although he didn't understand Lippmann's motives. They asked him back repeatedly to explain it all again. The Big Short (2010) by M. Lewis, p61-68, 90-95 29 00:37:10,000 --> 00:37:20,000 TRUE Eisman & his team did research the housing market to try & figure out if Lippmann was right, & if he was, if it was in their interest to work with the guy. The Big Short (2010) by M. Lewis, p90-95 30 00:39:23,000 --> 00:39:33,000 TRUE Geller & Shipley were actually Ledley & Mai, & their fund was called Cornwall Capital Management. The pestered banks for an ISDA for 2 years to no avail. JP Morgan actually fired them as customer, saying they caused too much trouble. The Big Short (2010) by M. Lewis, p108-123 31 00:40:34,000 --> 00:40:44,000 TRUE A friend did send them Lippmann's prospectus, that was how they found out about the housing bubble. The Big Short (2010) by M. Lewis, p108-123 32 00:41:24,000 --> 00:41:34,000 TRUE Mai & Ledley ran the Cornwall Capital Management fund from a garage initially. they ahd $110k, which they turned into $30m by making cheap bets on market changes officially considered improbable. The Big Short (2010) by M. Lewis, p108-135 33 00:42:33,000 --> 00:42:43,000 TRUE Rickert's real-life counterpart was Ben Hockett. He worked for Deutsche Bank & hated it, so he moved to San Francisco Bay area, where he met Mai, his neighbour. Mai & Ledley persuaded him to quit Deutsche & work with them. He helped them out big time. The Big Short (2010) by M. Lewis, p118-119 34 00:45:32,000 --> 00:45:42,000 TRUE-ISH Eisman's team went to Miami to check out the housing market for themselves. They were shocked by the 'calamity' they found. They didn't see a croc in the pool of an abandoned house, though. The Big Short (2010) by M. Lewis, p96 35 00:49:22,000 --> 00:49:32,000 TRUE Many unhappy investors sent Burry nasty emails, but Gotham Capital actually flew out to visit him face-to-face, in an attempt to intimidate him into returning their original investment. The Big Short (2010) by M. Lewis, p190 36 00:50:24,000 --> 00:50:34,000 FALSE-ISH Eisman sent his guys to do this kind of research, rather than go himself, although he did speak to a lot of people trying to work out what was going on. A huge number of properties did go up for sale at this point, though. The Big Short (2010) by M. Lewis 37 00:53:10,000 --> 00:53:20,000 FALSE-ISH Eisman and his guys spoke to as many people as they could to get the scoop on the housing market. It's plausible they spoke to mortgage brokers, although these particular two didn't turn up in the book. The Big Short (2010) by M. Lewis 38 00:54:30,000 --> 00:54:40,000 FALSE Daniel, not Eisman, met a stripper who had 5 separate home equity loans. Eisman was finding out about the state of the housing market from people he knew, including his baby nurse, who had ended up owning 6 properties & couldn't make the payments on any of them. The Big Short (2010) by M. Lewis, p98, 152 39 00:55:02,000 --> 00:55:12,000 TRUE Eisman did buy the swaps from Lippmann eventually. Eisman has said 'we finally just did a trade with Lippmann, then we tried to figure out what we'd done'. The Big Short (2010) by M. Lewis, p90-95 40 00:56:46,000 --> 00:56:56,000 TRUE Daniel arranged the swaps deal with Lippmann. The Big Short (2010) by M. Lewis, p90-95 41 01:00:20,000 --> 01:00:30,000 TRUE Hockett had pull on Wall Street. Somehow he managed to get them set up with an ISDA at Deutsche Bank with their $30m, even though Deutsche required min $2bn to be treated as an institution. The Big Short (2010) by M. Lewis, p122-124 42 01:00:46,000 --> 01:00:56,000 TRUE-ISH Hockett did manage to get Cornwall an ISDA at Deutsche, although it was a bit more drawn out than the movie shows. Still, the process usually takes months - they got it through in 10 days. The Big Short (2010) by M. Lewis, p124-125, 161 43 01:03:36,000 --> 01:03:46,000 TRUE Rather than being determined by the market, the banks were setting the value of the swaps. They were asking for more collateral on them even as the mortgages within the bonds defaulted. The Big Short (2010) by M. Lewis, p184 44 01:03:56,000 --> 01:04:06,000 TRUE Eisman did tell Daniel to tell the risk guys to f*** off. They kept hounding him. They were really nervous. The Big Short (2010) by M. Lewis, p102-103, 168 45 01:06:40,000 --> 01:06:50,000 TRUE Eisman & Daniel went to meet Ernestine Walker of S&P ratings agency to figure out what was going on. They figured out from her that S&P gave the banks what they wanted so they didn't go down the street to Moody's instead. The Big Short (2010) by M. Lewis, p170-171 46 01:07:20,000 --> 01:07:30,000 TRUE Because Burry didn't charge the usual 2% fee to his clients, he had to cover his shortfall by firing his staff while he waited for his bet to come good. Indeed, he did scream f*** at the top of his voice at this point. The Big Short (2010) by M. Lewis, p180, 191 47 01:08:09,000 --> 01:08:19,000 TRUE Mai & Ledley couldn't get their heads around what was happening with CDOs. Hockett had a better understanding, but they all agreed it was fraudulent. The Big Short (2010) by M. Lewis, p128-135 48 01:10:37,000 --> 01:10:47,000 TRUE As everyone involved started to see that CDOs weren't shifting despite historic high default rates, they started to worry. The Big Short (2010) by M. Lewis, p125, 143 49 01:12:52,000 --> 01:13:02,000 TRUE The American Securitization Forum was basically a big conference about subprime mortgages. They all attended, hoping to figure out what was going on with the housing market. American Securitization 50 01:14:27,000 --> 01:14:37,000 TRUE The CEO of Option One gave a speech at the conference, claiming his company was on the up. Eisman raised his hand & challenged him on his assertions, repeatedly. It wasn't a Q&A. The Big Short (2010) by M. Lewis, p153-154 51 01:15:37,000 --> 01:15:47,000 TRUE-ISH A Bear Stearns credit default swap salesman invited them to go shooting at a conference in Vegas. They were idiots, out for a good time. They didn't want to talk about work, so Ledley's questions fell flatc (it was just Ledley, Mai didn't go). The Big Short (2010) by M. Lewis, p144-146 52 01:16:35,000 --> 01:16:45,000 TRUE-ISH There was no brother's ex, but her character represents the people that Eisman & co spoke to. Eisman thought the analysts working for ratings agencies would be content with their position at the top, but found would rather go analyse for Goldman Sachs. The Big Short (2010) by M. Lewis, p156 53 01:16:50,000 --> 01:17:00,000 TRUE Mai, Ledley & Hockett did go round the conference questioning everybody who would give them the time of day, trying to figure out whether what they were doing was a good idea or not. The Big Short (2010) by M. Lewis, p146-150 54 01:19:08,000 --> 01:19:18,000 TRUE-ISH Scion's value dropped before it rose. No mention in the book of an analyst questioning his boss like this, but Burry's investors certainly asked that question. They thought he was just unwilling to accept that had was wrong. The Big Short (2010) by M. Lewis, p190 55 01:20:42,000 --> 01:20:52,000 TRUE After talking to as many people as they could at the conference, they convinced themselves they were right. They decided to buy up AA bonds. The Big Short (2010) by M. Lewis, p161 56 01:21:26,000 --> 01:21:36,000 TRUE They hassled as many people as they could get to talk to them, talking them into buying AA stocks wherever they could. They had the most luck with Wachovia, who continued selling to them after other banks stopped selling swaps full stop. The Big Short (2010) by M. Lewis, p148-150, 162-163 57 01:22:23,000 --> 01:22:33,000 TRUE-ISH Rickert didn't need to remind them, Mai and Ledley were aware of the catastrophe that could hit if they were right. The Big Short (2010) by M. Lewis, p160-167 58 01:24:10,000 --> 01:24:20,000 TRUE Eisman came away from a conversation with Chau with a clear understanding of 'the engine of doom'. Lippmann had seated them together hoping that Eisman would come to see the idiocy of those at the other end of the bet, giving him the confidence to buy more swaps. The Big Short (2010) by M. Lewis, p138-144 59 01:27:41,000 --> 01:27:51,000 TRUE Well, Thaler & Gomez weren't part of the story, but book the movie is based on does explain what synthetic CDOs are. The Big Short (2010) by M. Lewis, p72-77 60 01:28:40,000 --> 01:28:50,000 TRUE After speaking to Chau, Eisman marched directly to Lippmann & told him, 'whatever that guy is buying, I want to short it'. The Big Short (2010) by M. Lewis, p72-77 61 01:29:28,000 --> 01:29:38,000 TRUE They all left the conference feeling like the world as they knew it was about to come to an end. Ledley says they were genuinley scared. The Big Short (2010) by M. Lewis, p164-166 62 01:31:25,000 --> 01:31:35,000 FALSE-ISH Eisman didn't have a brother who committed suicide, but he did lose his infant son died when his nurse smothered him in her sleep. Eisman's family requested that his son's death didn't go into the film, & approved the brother story as an alternative. Bustle 63 01:32:41,000 --> 01:32:51,000 TRUE The process drove Burry nuts. Blasting heavy metal was an outlet for him. The Big Short (2010) by M. Lewis, p187, 193 64 01:33:56,000 --> 01:34:06,000 TRUE As part of the investor agreement, Burry was allowed to side-pocket the investors' funds (stop withdrawals) in case of fraud or disfunction, so he did that. They were mad. Greenblatt threatened to sue, & a bunch of other investors were on board with that. The Big Short (2010) by M. Lewis, p187-192 65 01:34:24,000 --> 01:34:34,000 TRUE Certainly Hockett, Eisman, and Ledley feared the end of the world. Hockett was apocalyptic about it. The Big Short (2010) by M. Lewis 66 01:35:08,000 --> 01:35:18,000 TRUE In 2007 subprime loans were defaulting in record numbers, & the financial giants were weakening daily. The Big Short (2010) by M. Lewis, p180 67 01:35:54,000 --> 01:36:04,000 TRUE It's unclear whether Tao is a fictional character or not, but yeah, the risk people at the bank were insisting Eisman sell his shorts. The Big Short (2010) by M. Lewis, p180 68 01:36:53,000 --> 01:37:03,000 TRUE Burry had been calling & calling various banks to find out what was going on, but all the people he needed were mysteriously on holiday, sick, had systems failures, etc. Goldman Sachs finally called him back, tried to reassure him. Burry wasn't having any of it. The Big Short (2010) by M. Lewis, p195-196 69 01:37:10,000 --> 01:37:20,000 TRUE-ISH After the conference Ledley called his mother, told her it was the end of democratic capitalism. She said 'Oh Charlie', & suggested he try Lithium. The Big Short (2010) by M. Lewis, p160 70 01:37:48,000 --> 01:37:58,000 TRUE Ledley, Mai & Hockett realised the system was corrupt at every level. Banks were claiming the mortgage bond values hadn't moved, despite all the defaults on the stuff they contained. The banks wanted to offload what they had before letting the value drop. The Big Short (2010) by M. Lewis, p160 71 01:39:00,000 --> 01:39:10,000 FALSE Mai & Ledley did try to tell a load of people about the giant fraud they'd uncovered, but nobody was interested. Whether they had a friend over at WSJ isn't on the record, though. The Big Short (2010) by M. Lewis, p198 72 01:40:28,000 --> 01:40:38,000 TRUE Suddenly brokers were scrambling to buy credit default swaps. The Big Short (2010) by M. Lewis, p198 73 01:41:00,000 --> 01:41:10,000 TRUE Burry had been calling & calling various banks to find out what was going on, but all the people he needed were mysteriously on holiday, sick, had systems failures, etc. Goldman Sachs finally called him back, tried to reassure him. Burry wasn't having any of it. The Big Short (2010) by M. Lewis, p198 74 01:43:30,000 --> 01:43:40,000 TRUE Goldman did lose $15bn in the crisis. Financial Times 75 01:45:11,000 --> 01:45:21,000 TRUE Eisman's team were getting panicky, they wanted to sell their swaps before it was too late and they became worthless. For Eisman, it was more about a moral crusade than about the money, he wanted to screw the people at the top, which meant holding out a bit longer. The Big Short (2010) by M. Lewis, p227-228 76 01:45:50,000 --> 01:46:00,000 TRUE Ledley was useless as a trader, the job had to go to Hockett. At the time Hockett was in England, on holiday with his family in Exmouth. The Big Short (2010) by M. Lewis, p220 77 01:47:21,000 --> 01:47:31,000 TRUE Hockett sold their swaps from a pub called 'The Powder Monkey' in Exmouth, using their wifi. The Big Short (2010) by M. Lewis, p220 78 01:47:50,000 --> 01:48:00,000 TRUE-ISH It was actually a little worse - the only thing the email said was 'you're welcome'. The Big Short (2010) by M. Lewis, p223 79 01:48:24,000 --> 01:48:34,000 TRUE Allegedly Lippmann got a bonus check for around $50m, but turned it down as too low. The Observer 80 01:49:18,000 --> 01:49:28,000 TRUE Hockett managed to sell their swaps in Europe, 3/4 of which went to UBS, a Swiss bank. They netted $80m from a $1m bet. The Big Short (2010) by M. Lewis, p222 81 01:50:02,000 --> 01:50:12,000 TRUE Deutsche Bank invited Eisman to speak opposite Miller at their HQ auditorium. The Big Short (2010) by M. Lewis, p229-235 82 01:53:03,000 --> 01:53:13,000 TRUE Bear Stearns was crashing literally as Eisman spoke out against the corruption and idiocy of the housing market - 'you built a castle to rip people off'. His team were getting and texting updates on Bear's falling stock. The Big Short (2010) by M. Lewis, p229-235 83 01:54:00,000 --> 01:54:10,000 TRUE A young banker interrupted Miller's defence of the system to let him know that Bear's stocks had fallen 20 points since Miller started talking. The room emptied as people rushed out to sell their Bear Stocks, all going crazy on their Blackberries. The Big Short (2010) by M. Lewis, p229-235 84 01:55:01,000 --> 01:55:11,000 TRUE-ISH Lehman Bros collapsed Sept 2008, filing for bankruptcy. Mai & Ledley didn't sneak into the building, though. As a 'garage-band fund' they'd always wanted to see inside of Wall Street - this scene probably represented that. Investopedia 85 01:55:39,000 --> 01:55:49,000 TRUE Eisman's team were getting panicky, they wanted to sell their swaps before it was too late and they became worthless. For Eisman though, it was more about a moral crusade than about the money, he wanted to screw the people at the top, which meant holding out a bit longer. The Big Short (2010) by M. Lewis, p227-228 86 01:57:57,000 --> 01:58:07,000 TRUE Burry felt betrayed by his investors, who firstly refused to trust him, & then went silent when his gamble paid off. His investors gained 489.34% after fees, but nobody thanked him. He decided money was an ugly business, & closed the fund. The Big Short (2010) by M. Lewis, p195-196, 246-249 87 01:58:40,000 --> 01:58:50,000 FALSE Mai & Ledley didn't sneak into the building. Their success was ana anticlimax, though. They didn't feel excited by their gains, but weary of the whole system. The Big Short (2010) by M. Lewis, p242 88 01:59:43,000 --> 01:59:53,000 TRUE The afternoon of Lehman Bros collapse, Eisman & Daniel sat outside & watch people passing. They talk of feeling a great sadness that day, but no surprise. The Big Short (2010) by M. Lewis, p250-251 89 02:00:32,000 --> 02:00:42,000 TRUE Kareem Serageldin of Credit Suisse was the only guy that went to jail over the crisis. New York Times 90 02:01:31,000 --> 02:01:41,000 TRUE By the end of 2007, Eisman's hedge fund reached $1.5 billion, doubling in size. Almost $1bn of that was profit gained by betting against the housing market. Market Watch 91 02:01:58,000 --> 02:02:08,000 TRUE Estimates vary widely depending on criteria. PriceWaterHouseCooper estimates 7m lost their jobs in the US. Global losses have been estimated at $15tn. G20 agreed to a $5tn 'global stimulus package'. The Independent Wall St Journal 92 02:02:20,000 --> 02:02:30,000 TRUE Eisman's wife Valerie reports that he turned nice after the collapse. Once he was proved right, he lost a lot of angst & calmed right down. The Big Short (2010) by M. Lewis, p249-250 93 02:02:43,000 --> 02:02:53,000 TRUE All the law firms told them they were nuts. Mai still runs Cornwall Capital Management, with Ledley as an executive. Hockettt lives as a survivalist in a deeply rural part of California. The Big Short (2010) by M. Lewis, p243 Bustle 94 02:03:10,000 --> 02:03:20,000 TRUE Nobody was interested in hearing Burry's story. The FBI raided him and he got audited. The Big Short (2010) by M. Lewis, p246 95 02:03:30,000 --> 02:03:40,000 TRUE Bespoke tranche opportunities' are CDOs with a new name. Goldmann Sachs and others are selling them. The Huffington Post 96 02:09:59,000 --> 02:10:09,000 - 97 02:10:10,000 --> 02:10:14,000 Original Data Provided By: Omid Kashan, DM, David McCandless Karl Webster, Dr Stephanie Starling Subtitles Compiled By: BreadCodes