Screenwriter Reacts to The Big Short

[@roxanewebster9003]

These loans were fixed for the first few years at low interest rates. these were the teaaer rates. then they started to adjust based off of volatile indexes.The most common one was the overnight lending rate between banks. So when your note adjusted, it would be that overnight rate plus a point or a point and a half. And then they would do it again in six months or a year. I saw people whose payment went from twenty four hundred dollars a month to sixty nine hundred dollars a month in one adjustment.

[@divyashah8657]

Explanation by someone in finance: A riskier mortgage has a higher chance of default usually because the person who's taking the mortgage doesn't really have a good credit profile or stable income or enough of an income to be able to pay it back.

[@ositaiza888]

i took a finance class last semester and we covered a lot of 2008. my understanding based off of what my professor said: a risky mortgage is giving a mortgage to someone who is less likely to pay it off. banks did this bc they were selling them as these packaged securities, they wanted to make more securities so they would hand out mortgages to ppl who maybe didn't have a good credit history or a stable job. in short (ha) they were more likely to end up defaulting im not a finance professional tho

[@vahalasly]

That's pretty much it. Your credit score + income + profession etc. decides how risky you are as a morgage repayer. Because of these factors, you will likely also be given higher interest, which in turn means higher returns for the bank. So a riskier morgage will have higher risk, but also a higher return on the bond.

[@Yesquire0]

Once Wall St. started offering "Mortgage-backed securites" for sale, their ability to sell them (and make a profit from each sale) was limited by the availablity of residential home mortgages to slice into an MBS. Wall St. sold them by noting that in the highly unlikely chance that the homeowners would stop making their mortgage payments and default on their mortgage obligations, the MBS would retain all of its value, because homes had been pledged as collateral to support the value of the secuity and could be foreclosed upon. A lot of credit securities are not backed by any collateral whatsover, so the emergence of this big new class of securities buoyed by real collateral made them an easy sell. If only Wall St. could find more of them. The mortgage lending banks changed their business practices to accomodate Wall St's craving for more mortgages to buy. The mortgage lenders no longer cared if the homebuyers could afford the mortgage loans being offered to them as a way to purchase a home. They no longer cared if the mortgage buyers all defaulted on their payments. Before the ink was dry on a new mortage, the lenders sold the loans to Wall St, and the lenders no longer held the risk inherent in a bad loan. Wall St., as one example of how an MBS was put together, would slice 10,000 mortgages into 10,000 pieces, then mix up all the pieces and use them to build an MBS consisting of slivers cut from 10,000 different mortgages. This was "diversification" which supposedly made the MBS a safer investment for a buyer. But it also made the MBS nearly impossible for a bond rating agency to analyze. The person doing the rating would have to examine the loan origination documents and payment histories on 10,000 mortgages and then figure out a way to bundle those evaluations into one coherent rating as to the amount of risk that particuar MBS carried. I doubt anybody ever did that with any MBS to be rated. I can readily see a phone call that would go like this "What the fuck is this monster you sent over for me to rate? Don't worry about it, its golden, have I ever steered you wrong? Give it an AAA rating and we'll send over a stack of them and you'll be vacationing on Santorini for three weeks next Summer". So, for example, a pension fund in Sweden looking for a safe investment purchased a AAA-rated MBS that, by golly, was even backed by collateral. It was an easy sell, so easy, that on Wall St. the appetite for mortgages became insatiable. But nobody needs a mortgage unless they want to buy a home. Only so many people have the personal wealth and income to afford to buy a home. No problemo!! Just alter bank lending policies and give a massive mortgage to anybody who has every dreamed of owning a home, provided they can fog a mirror placed in front of their mouth and be expected to live until the closing date. Real estate agents and their brokers were complicit in this massive interlocking fraud upon humanity. They knowingly showed and helped close deals for buyers who were so laughbly incapable of actually buying and owning a home that an aardvark could see the truth within about five seconds. In conclusion, real estate agents, real estate brokers, lending banks, Wall St. securities brokers, rating agencies, bond salesmen, and probably lots of other professions were engaged in criminal fraud on a mind-boggling scale. Most of them got obscenely rich doing it. Tens of thousands of "upstanding, good citizens" were enticed by greed to engage in this criminal conspiracy which left a perfect evidentiary paper trail making for easy work for prosecutors. But nobody was prosecuted, and nobody went to jail. The lesson seems to be that if you are a single person, your local prosecutor will own your ass, but if you are part of a conspiracy of 100,000 wealthy people, you own the prosecutors' asses and can sleep very well at night, in a McMansion purchased with stolen money.

[@drdrdrk]

Before the movie came out I powered an all nighter through the book knowing close to nothing about finance and that financial crisis but the book was just so good I couldn’t stop reading.

[@jemimus]

One of the things I love about this director, is that besides the fourth-wall breaking, he edits in slices of mistakes/in-between-takes (like 4:01 of Margo) and he doesn't care about continuity or order very much. He is going for a general vibe, and the disjoined editing actually helps make it feel more chaotic, which was the point. Also... the main reason I wanted to comment.. what accent do you have? I cannot figure it out. I can hear British, Canadian, Jersey, Boston? :D

[@isabel4981]

wtf. i rarely watch movies, and i literally saw this movie last night.

[@goneyon]

7:09 It's way worse than that. He handed them a book of the mortgages and mortgage bonds that THEY, Goldman Sachs, were selling. After laughing at him for betting against the housing market, they shamelessly demonstrate they don't know what's in their own mortgage bonds, let alone the risk. They are selling garbage and have bought into their own stories about housing being invincible. He laughs, then realizes how sad and terrifying this will be for the everyday person, so the laugh fades fast. And the biggest criminals are never actually shown - the people at the top of banks like Goldman, who knew perfectly well what all of this would lead to, and didn't care, because they knew they'd get bailed out. Arguably, they did this on purpose, because a crashed market might mean devastation to most, but to the ultra-rich, it means being able to buy up even more of the world for cheap and repeat the scam. 21:32 That's meant to be the same roof off which his brother committed suicide. Mark Baum is based on Steve Eisman, who did not have such a brother; I'm guessing this whole subplot just exists to give the character a sympathetic reason for being so abrasive to everyone throughout the movie + create a narrative parallel between a personal tragedy and the larger economic tragedy. Worth noting: Eisman closed down his fund in 2014 because "making investment decisions by looking solely at the fundamentals of individual companies is no longer a viable investment philosophy." Which hints at the same issue as 2008: debt, not growth, fueling a bubble. Not just housing: everything.

[@georgesamuels3402]

You shouldve googled that.... hahaha

[@georgesamuels3402]

dudes didnt just google shit back then

[@Nick_CF]

Glad I am not the only one who has seen this movie a thousand times and still can not get past why they are using red dry erase markers for positive gains lol

[@allisonyoung3066]

Not sure I'm smart enough for this commentary without having seen the movie...

[@gyaaniji]

Once people move from toilet paper to bidets...TP stock will fall...😜

[@drdrdrk]

Why did I not get a notification?!