& ’It ain’t what you don’t know that gets you into trouble. It’s what you know for sure that just ain’t so.’
& Jared Vennett: In the late seventies banking wasn’t a job you went into to make large sums of money. It was a fucking snooze! Filled with losers! Like selling insurance, or accounting and if banking was boring... then the bond department at the bank was straight up comatose. ... That is until Lewis Rainieri came on the scene at Salomon Brothers. You might not know who he is but he changed your life more than Michael Jordan, the I-pod and YouTube put together!
& Jared Vennett: You see, Lewis didn’t know it yet, but he already changed banking forever with one simple idea...
Lewis Rainieri: The mortgage backed security. Or... private label MBS. You got your average persons mortgage fixed rate, thirty years, boring! Same, small payoff. Right? But!.. When you add thousands of them all bundled together suddenly, the yield goes up, but the risk is still small, because... Well, they’re mortgages, and who the hell doesn’t pay their mortgage?
Michigan State Pension Fund: What exactly is the credit-rating on this bond?
Lewis Rainieri: This bond gentlemen... is AAA-rating!
& Jared Vennett: ... The money came raining down! And for the first time, the banker went from the country-club to the strip-club.
& Jared Vennett: Mortgage backed securities, sub-prime loans, tranches... is pretty confusing, right? Doesn’t it make you feel bored... Or stupid... Well... it’s supposed to. Wall-street loves to use confusing terms, to make you think only they can do what they do. Or even better... For you just to leave them the fuck alone. So... here’s Margot Robbie in a bubble-bath to explain.
& Margot Robbie: Basically, Lewis Rainieri’s mortgage bonds were amazingly profitable for the big banks. But then they ran out of mortgages to put in them. After all, there are only so many homes and so many people with good enough jobs to buy them... right? So the banks started filling these bonds with riskier and riskier mortgages ... that way, they can keep that profit machine churning right? By the way, these risky mortgages are called: Sub-prime. So... Whenever you hear sub-prime... think: Shit! Our friend Michael Burry found out, that these mortgages bonds that were supposedly 65 percent AAA, were actually just, basically full of shit. So now he’s going to short the bonds which means... bet against. Got it?... Good! Now fuck off!
& Michael Burry: This is not crazy... It’s all very logical.
Lawrence: So now we pay up premiums on these swaps against housing-market until the mortgages fail? In other words... We lose millions until something that has never happened before... happens?
Michael Burry: That’s correct!
& Danny Moses: No, that can’t be right, there, there, are 500 billion in housing bonds sold last year alone ratings agencies, the banks... The fucking government? You’re saying they’re all asleep at the wheel?
Jared Vennett: Yeah. My whole department is long on this stuff. They call me chicken little. They call me bubble-boy. A’s... zero. B’s... Zero, BB’s... zero. BBB’s... zero. And then... that happens!
Mark Baum: What... is that?
Jared Vennett: That’s America’s housing market.
& Charlie Geller: Our investment-strategy was simple. People hate to think about bad things happening so they always underestimate their likelihood.
Jared Vennett: Their strategy simple and brilliant.
Jamie Shipley: What he said!
Jared Vennett: Jamie and Charlie found: Markets will sell options very cheaply on things they think will never happen. So, when they were wrong, they were wrong small. But when they were right... They were right big! Boooooom! Within a few years they had turned a 110 grand into 30 million then it was time to go to New York City...
& Overheard at a Washington, D.C. bar: «Truth is like poetry. And most people fucking hate poetry.»
& Mark Baum: I don’t get it... Why are they confessing?
Danny Moses: They’re not confessing...
Porter Collins: They’re bragging!
& Jamie Shipley: Ben, why do you do that man? You’re a retired trader, ok? No-one is listening to your calls!
Ben Rickert: The NSA has a 52 billion dollar budget and the ability to tens of millions calls a second, you think they’re not using it?
Jamie Shipley: Ok, I promise I will refrain from saying, Ben Rickert and dirty bomb in the same sentence... Jesus!
& Mark Baum: Just answer the question Georgia, can you name one time in the past year? Where you checked the tape and you didn’t give the banks the AAA-percentage they wanted?
Georgia Hale: If we don’t give them the ratings, they’ll go to Moody’s right down the block. If we don’t work with them they will go to our competitors not our fault, simply the way the world works.
Mark Baum: Holy shit!
Georgia Hale: Ah yes, now you see it! And I never said that!
Vinnie Daniel: You’re selling ratings for fee’s... a ratings shop.
Mark Baum: You could afford to make less, make less.
Georgia Hale: Nobody said that! And it is not my decision, I have a boss.
& Jared Vennett: Tell me the difference between stupid and illegal and I’ll have my wife’s brother arrested.
& Jared Vennett: Yes, there’s some shady shit going down! But trust me, it’s fueled by stupidity!... Look at yourselves! You know you passed yourselves off as cynical people but... You still have some faith in the system don’t you?
& Michael Burry: It’s possible that we are in a completely fraudulent system.
Lewis: Or... you’re, you’re wrong.
Michael Burry: Sure! It’s possible, I just don’t know how!
Lewis: I guess... When... Someone’s wrong, they never... They never... Know how!
Michael Burry: See you in the morning!
& Ben Rickert: Do you have any idea what you just did?
Charlie Geller: Come on, we just made the deal of our lifetime, we should celebrate!
Ben Rickert: You just bet against the American economy!
Charlie Geller: Fuck yeah we did!
Ben Rickert: Which means! Which means... If we’re right... If we’re right, people lose homes! People lose jobs! People lose retirement savings, people lose pensions! You know what I hate about fucking banking! It reduces people to numbers! Here’s a number! Every one percent unemployment goes up, 40 thousand people die! Did you know that?! Did you know that?
Charlie Geller: No, I didn’t know that!
Jamie Shipley: We were just excited!
Ben Rickert: Just don’t fucking dance!
& Mark Baum: So let me get this straight. The bank calls you up. They give you the bonds they wanna sell, they give you clients, they give you money to run your business, give you fat fee’s for doing so, but you represent the investors? Is that right?
Mr. Chau: Yeah! But we’re not in the Merrill-Lynch building!
Mark Baum: Ok, where are you?
Mr. Chau: We’re in New Jersey!
Mark Baum: You’re twenty minutes away!
Mr. Chau: Five, if you use the helicopter!
& Mark Baum: Hold on, say that again! CDO A has parts of CDO B, and CDO B has parts of CDO A, and then they both get put inside CDO C.
Mr. Chau: Yeah, and that one is called CDO square! A CDO of a CDO! Right? And then there’s CDO’s made up of the opposite sides of the bet you made with the swaps. We call them, synthetic CDO’s
Mark Baum: What did you just say? Synthetic CDO’s? That is fucking crazy!
Mr. Chau: It’s not! It’s awesome!
& Jared Vennett: If the mortgage bonds were the match... Then the CDO’s were the kerosene soaked rags. Then the synthetic CDO was the atomic bomb with a drunk president holding his finger over the button. It was at that moment in that dumb restaurant with that stupid look on his face that Mark Baum realized the whole world economy might collapse!
& Jared Vennett: And I know what you’re thinking! What the fuck is a synthetic CDO? Well, here’s Dr. Thaler, father of behavioral economics, and Selena Gomez to explain!
Selena Gomez: Ok, so here’s how a synthetic CDO works! Let’s say I bet ten million on a black Jack hand.
Dr. Thaler: Ten million, because this hand is to represent a single mortgage bond... Okay, Selena has a pretty good hand here! Showing eighteen, dealer showing seven that’s a really good hand for Selena! Good odds, in fact her chances of winning this hand are eighty-seven percent.
Selena Gomez: So, my odds are good. I’m on a winning streak. Everybody in this place wants to get in on the action. How could I lose, right?
Dr. Thaler: Now this is a classic error. In basketball it’s called the hot-hand-fallacy. A player makes a bunch of shots in a row. People are sure they’re gonna make the next one. People think, whatever is happening now is gonna continue to happen into the future! During the real-estate boom markets were going up and up! And people thought they would never go down!
Selena Gomez: So, people who are watching and think that I won’t lose will make a side-bet. Now this is the first synthetic CDO.
Woman in Glasses: I love Selena Gomez! I’ll bet you fifteen million, she wins! And I’ll give you 3-to-1 odds!
Businessman at Casino: 3-to-1 odds? Okay, I’ll take that bet!
Dr. Thaler: Now, somebody else is gonna wanna make a bet on the outcome of their bet! That will lead to synthetic CDO number two!
Guy in Game Jersey: Hey! I bet you 200 million, that lady in the glasses wins that bet!
Woman at Casino: She probably will win! So I want great pay-off!
Guy in Game Jersey: How about 20-to-1?
Woman at Casino: Deal!
Selena Gomez: And this will go on and on, with more and more synthetic CDO’s.
Dr. Thaler: And we can transform an original ten million dollar investment into billions of dollars.
& Mr. Chau: You’re ok?
Mark Baum: No! I actually feel pretty sick!
& Mark Baum: Short everything that man has touched.
& Charlie Geller: Will you listen to me! This is like... the end of capitalism! This is like the dark ages all-over again! ... I don’t want to talk to dad! ... Okay, I love you too, save your money! She says I need to be on Xanax, and double my dose of Zoloft.
& Mark Baum: We live in an era of fraud in America. Not just in banking, but in government, education, religion, food. Even baseball...
& Michael Burry: ’People... want an authority to tell them how to value things, but they chose this authority not based on facts or... results. They chose it because it seems authoritative... Or familiar! And... I’m not, and never have been... familiar. So... So I’ve come to the solemn realization that I must close down the fund. Sincerely, Michael J. Burry MD.’
& Mark Baum: I have a feeling, that in a few years, people are gonna do, what they always do when the economy tanks. They will be blaming immigrants and poor people.
Jared Vennett: But Mark was wrong! In the years that followed, hundreds of bankers and rating-agency’s executives went to jail. The SCC was completely overhauled and Congress had no choice, but to break up the big banks and regulate the mortgage and derivative industries... Just kidding! Banks took the money the American people gave them and used it to pay themselves huge bonuses and lobby the Congress to kill big reform and then they blamed immigrants and poor people and this time even teachers! And when all was said and done, only one single banker went to jail, this poor schmuck! Kareem Serageldin from Credit Suisse. He hit a few billion in mortgage-bond losses, something most of the big banks did on a good day during the crisis.
--
+ quotes on the IMDb
Mark Twain
& Jared Vennett: In the late seventies banking wasn’t a job you went into to make large sums of money. It was a fucking snooze! Filled with losers! Like selling insurance, or accounting and if banking was boring... then the bond department at the bank was straight up comatose. ... That is until Lewis Rainieri came on the scene at Salomon Brothers. You might not know who he is but he changed your life more than Michael Jordan, the I-pod and YouTube put together!
& Jared Vennett: You see, Lewis didn’t know it yet, but he already changed banking forever with one simple idea...
Lewis Rainieri: The mortgage backed security. Or... private label MBS. You got your average persons mortgage fixed rate, thirty years, boring! Same, small payoff. Right? But!.. When you add thousands of them all bundled together suddenly, the yield goes up, but the risk is still small, because... Well, they’re mortgages, and who the hell doesn’t pay their mortgage?
Michigan State Pension Fund: What exactly is the credit-rating on this bond?
Lewis Rainieri: This bond gentlemen... is AAA-rating!
& Jared Vennett: ... The money came raining down! And for the first time, the banker went from the country-club to the strip-club.
& Jared Vennett: Mortgage backed securities, sub-prime loans, tranches... is pretty confusing, right? Doesn’t it make you feel bored... Or stupid... Well... it’s supposed to. Wall-street loves to use confusing terms, to make you think only they can do what they do. Or even better... For you just to leave them the fuck alone. So... here’s Margot Robbie in a bubble-bath to explain.
& Margot Robbie: Basically, Lewis Rainieri’s mortgage bonds were amazingly profitable for the big banks. But then they ran out of mortgages to put in them. After all, there are only so many homes and so many people with good enough jobs to buy them... right? So the banks started filling these bonds with riskier and riskier mortgages ... that way, they can keep that profit machine churning right? By the way, these risky mortgages are called: Sub-prime. So... Whenever you hear sub-prime... think: Shit! Our friend Michael Burry found out, that these mortgages bonds that were supposedly 65 percent AAA, were actually just, basically full of shit. So now he’s going to short the bonds which means... bet against. Got it?... Good! Now fuck off!
& Michael Burry: This is not crazy... It’s all very logical.
Lawrence: So now we pay up premiums on these swaps against housing-market until the mortgages fail? In other words... We lose millions until something that has never happened before... happens?
Michael Burry: That’s correct!
& Danny Moses: No, that can’t be right, there, there, are 500 billion in housing bonds sold last year alone ratings agencies, the banks... The fucking government? You’re saying they’re all asleep at the wheel?
Jared Vennett: Yeah. My whole department is long on this stuff. They call me chicken little. They call me bubble-boy. A’s... zero. B’s... Zero, BB’s... zero. BBB’s... zero. And then... that happens!
Mark Baum: What... is that?
Jared Vennett: That’s America’s housing market.
& Charlie Geller: Our investment-strategy was simple. People hate to think about bad things happening so they always underestimate their likelihood.
Jared Vennett: Their strategy simple and brilliant.
Jamie Shipley: What he said!
Jared Vennett: Jamie and Charlie found: Markets will sell options very cheaply on things they think will never happen. So, when they were wrong, they were wrong small. But when they were right... They were right big! Boooooom! Within a few years they had turned a 110 grand into 30 million then it was time to go to New York City...
& Overheard at a Washington, D.C. bar: «Truth is like poetry. And most people fucking hate poetry.»
& Mark Baum: I don’t get it... Why are they confessing?
Danny Moses: They’re not confessing...
Porter Collins: They’re bragging!
& Jamie Shipley: Ben, why do you do that man? You’re a retired trader, ok? No-one is listening to your calls!
Ben Rickert: The NSA has a 52 billion dollar budget and the ability to tens of millions calls a second, you think they’re not using it?
Jamie Shipley: Ok, I promise I will refrain from saying, Ben Rickert and dirty bomb in the same sentence... Jesus!
& Mark Baum: Just answer the question Georgia, can you name one time in the past year? Where you checked the tape and you didn’t give the banks the AAA-percentage they wanted?
Georgia Hale: If we don’t give them the ratings, they’ll go to Moody’s right down the block. If we don’t work with them they will go to our competitors not our fault, simply the way the world works.
Mark Baum: Holy shit!
Georgia Hale: Ah yes, now you see it! And I never said that!
Vinnie Daniel: You’re selling ratings for fee’s... a ratings shop.
Mark Baum: You could afford to make less, make less.
Georgia Hale: Nobody said that! And it is not my decision, I have a boss.
& Jared Vennett: Tell me the difference between stupid and illegal and I’ll have my wife’s brother arrested.
& Jared Vennett: Yes, there’s some shady shit going down! But trust me, it’s fueled by stupidity!... Look at yourselves! You know you passed yourselves off as cynical people but... You still have some faith in the system don’t you?
& Michael Burry: It’s possible that we are in a completely fraudulent system.
Lewis: Or... you’re, you’re wrong.
Michael Burry: Sure! It’s possible, I just don’t know how!
Lewis: I guess... When... Someone’s wrong, they never... They never... Know how!
Michael Burry: See you in the morning!
& Ben Rickert: Do you have any idea what you just did?
Charlie Geller: Come on, we just made the deal of our lifetime, we should celebrate!
Ben Rickert: You just bet against the American economy!
Charlie Geller: Fuck yeah we did!
Ben Rickert: Which means! Which means... If we’re right... If we’re right, people lose homes! People lose jobs! People lose retirement savings, people lose pensions! You know what I hate about fucking banking! It reduces people to numbers! Here’s a number! Every one percent unemployment goes up, 40 thousand people die! Did you know that?! Did you know that?
Charlie Geller: No, I didn’t know that!
Jamie Shipley: We were just excited!
Ben Rickert: Just don’t fucking dance!
& Mark Baum: So let me get this straight. The bank calls you up. They give you the bonds they wanna sell, they give you clients, they give you money to run your business, give you fat fee’s for doing so, but you represent the investors? Is that right?
Mr. Chau: Yeah! But we’re not in the Merrill-Lynch building!
Mark Baum: Ok, where are you?
Mr. Chau: We’re in New Jersey!
Mark Baum: You’re twenty minutes away!
Mr. Chau: Five, if you use the helicopter!
& Mark Baum: Hold on, say that again! CDO A has parts of CDO B, and CDO B has parts of CDO A, and then they both get put inside CDO C.
Mr. Chau: Yeah, and that one is called CDO square! A CDO of a CDO! Right? And then there’s CDO’s made up of the opposite sides of the bet you made with the swaps. We call them, synthetic CDO’s
Mark Baum: What did you just say? Synthetic CDO’s? That is fucking crazy!
Mr. Chau: It’s not! It’s awesome!
& Jared Vennett: If the mortgage bonds were the match... Then the CDO’s were the kerosene soaked rags. Then the synthetic CDO was the atomic bomb with a drunk president holding his finger over the button. It was at that moment in that dumb restaurant with that stupid look on his face that Mark Baum realized the whole world economy might collapse!
& Jared Vennett: And I know what you’re thinking! What the fuck is a synthetic CDO? Well, here’s Dr. Thaler, father of behavioral economics, and Selena Gomez to explain!
Selena Gomez: Ok, so here’s how a synthetic CDO works! Let’s say I bet ten million on a black Jack hand.
Dr. Thaler: Ten million, because this hand is to represent a single mortgage bond... Okay, Selena has a pretty good hand here! Showing eighteen, dealer showing seven that’s a really good hand for Selena! Good odds, in fact her chances of winning this hand are eighty-seven percent.
Selena Gomez: So, my odds are good. I’m on a winning streak. Everybody in this place wants to get in on the action. How could I lose, right?
Dr. Thaler: Now this is a classic error. In basketball it’s called the hot-hand-fallacy. A player makes a bunch of shots in a row. People are sure they’re gonna make the next one. People think, whatever is happening now is gonna continue to happen into the future! During the real-estate boom markets were going up and up! And people thought they would never go down!
Selena Gomez: So, people who are watching and think that I won’t lose will make a side-bet. Now this is the first synthetic CDO.
Woman in Glasses: I love Selena Gomez! I’ll bet you fifteen million, she wins! And I’ll give you 3-to-1 odds!
Businessman at Casino: 3-to-1 odds? Okay, I’ll take that bet!
Dr. Thaler: Now, somebody else is gonna wanna make a bet on the outcome of their bet! That will lead to synthetic CDO number two!
Guy in Game Jersey: Hey! I bet you 200 million, that lady in the glasses wins that bet!
Woman at Casino: She probably will win! So I want great pay-off!
Guy in Game Jersey: How about 20-to-1?
Woman at Casino: Deal!
Selena Gomez: And this will go on and on, with more and more synthetic CDO’s.
Dr. Thaler: And we can transform an original ten million dollar investment into billions of dollars.
& Mr. Chau: You’re ok?
Mark Baum: No! I actually feel pretty sick!
& Mark Baum: Short everything that man has touched.
& Charlie Geller: Will you listen to me! This is like... the end of capitalism! This is like the dark ages all-over again! ... I don’t want to talk to dad! ... Okay, I love you too, save your money! She says I need to be on Xanax, and double my dose of Zoloft.
& Mark Baum: We live in an era of fraud in America. Not just in banking, but in government, education, religion, food. Even baseball...
& Michael Burry: ’People... want an authority to tell them how to value things, but they chose this authority not based on facts or... results. They chose it because it seems authoritative... Or familiar! And... I’m not, and never have been... familiar. So... So I’ve come to the solemn realization that I must close down the fund. Sincerely, Michael J. Burry MD.’
& Mark Baum: I have a feeling, that in a few years, people are gonna do, what they always do when the economy tanks. They will be blaming immigrants and poor people.
Jared Vennett: But Mark was wrong! In the years that followed, hundreds of bankers and rating-agency’s executives went to jail. The SCC was completely overhauled and Congress had no choice, but to break up the big banks and regulate the mortgage and derivative industries... Just kidding! Banks took the money the American people gave them and used it to pay themselves huge bonuses and lobby the Congress to kill big reform and then they blamed immigrants and poor people and this time even teachers! And when all was said and done, only one single banker went to jail, this poor schmuck! Kareem Serageldin from Credit Suisse. He hit a few billion in mortgage-bond losses, something most of the big banks did on a good day during the crisis.
--
+ quotes on the IMDb
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