The Big Short....finally saw it....questions...SPOILERS INSIDE (1 Viewer)

[eoMMan]

First off, I agree that it was a good movie. I enjoyed it.  I particularly liked it when one of the actors or a cameo would look directly at the camera and explain things (Margot Roboteteretart in the bathtub, Selena Gomez at the BJ table, etc.).  Some questions/comments though:

1.  Lawrence told Michael Burry (Bale's character) that he wanted his money.  He wanted to pull out.  This was done before Burry sent the e-mail to investors saying that no withdrawals would be granted.  Later on in the movie when we find out how Burry was right, it says that Lawrence made something like $489 million from the trades.  How so?  Are we to believe that Lawrence couldn't get his money out?  Huh?

2. I noticed some of the names of the actual people were changed in the movie.  Do you know if this was at their request or did Mckay just do it?

3.  I'm sure I'll get flack for this next statement but....although I acknowledge that the banks, the rating agencies, the mortgage brokers, etc etc were crooks and really did rip people off at the time, I still feel that no one in this whole crisis wants to take personal responsibility.  You had people with horrible credits buying $400k homes with jobs that pay $30k/year.  Sorry, but whether or not you got swindled by a mortgage broker, I still feel like you should own up and take your lumps.  You should have known you couldn't have afforded that mortgage, even if this was before the rate adjusted. Not to go on a MOP rant, but I feel that's a common problem in America. We'll all looking for someone to blame or who was at fault instead of just saying, "Yeah, I messed up....that's on me."

But I do feel horrible for the responsible people who were affected by all of this and did nothing wrong (retirees, people who lost their jobs or couldn't get jobs, people with retirement plans that plummeted, etc. etc.).

 

[Christo]

Agree with para. 3. But in the grand scheme of things the "smart" people bear more responsibility. The lenders are in the business of lending.If you give money to people you know can't pay it back, #### you. Gonna give me more money I can pay back, great!

 

[RUSF18]

I don't remember the exact details, but funds have redemption periods where the money won't get released before a certain time (usually 90 days). So his request to withdraw could have been made, and then Bale's character changed the terms applicable to the entire fund within that same window, which basically froze everything. 

Been a few months so that's my best shot. 

 

[mr roboto]

Agree with para. 3. But in the grand scheme of things the "smart" people bear more responsibility. The lenders are in the business of lending.If you give money to people you know can't pay it back, #### you. Gonna give me more money I can pay back, great!

To this point, someone making 30k has a banker in a nice suit tell him/her they will give them money to buy their dream home. The borrower thinks that the bank is 'approving' them i.e. saying they are worthy of the loan. 

The banks failed they primary fiduciary responsibility to their shareholders - to balance risk and profit and remain a stable going concern. 

 

[IC FBGCav]

Watch the documentary Inside Job

 

[massraider]

3.  I'm sure I'll get flack for this next statement but....although I acknowledge that the banks, the rating agencies, the mortgage brokers, etc etc were crooks and really did rip people off at the time, I still feel that no one in this whole crisis wants to take personal responsibility.  You had people with horrible credits buying $400k homes with jobs that pay $30k/year.  Sorry, but whether or not you got swindled by a mortgage broker, I still feel like you should own up and take your lumps.  You should have known you couldn't have afforded that mortgage, even if this was before the rate adjusted. Not to go on a MOP rant, but I feel that's a common problem in America. We'll all looking for someone to blame or who was at fault instead of just saying, "Yeah, I messed up....that's on me."

But I do feel horrible for the responsible people who were affected by all of this and did nothing wrong (retirees, people who lost their jobs or couldn't get jobs, people with retirement plans that plummeted, etc. etc.).

Separating the foolish home buyers from the crooks is fair, and I have no problem with that.  There were dumb homeowners, I knew a LOT of them, I knew cocktail waitresses in Vegas that owned three houses.  

But inevitably, some people focus on those dumb homeowners, and the ones that walked away from upside down mortgages, even if they could afford them.  The focus is on these dummies, who took on loans they could not afford, and they were part of the problem.  But they never would have been any kind of problem at all if not for the dishonesty and greed in the mortgage backed securities, and the complete dishonesty in the rating agencies. They never would have gotten loans, and even if they did, they never would have brought the economy to it's knees.   

You think personal responsibility is the problem?  Not me.  I think it's people that 'yeah, yeah, yeah' the true criminals in this case.  I am too offended and angered by the criminals I mentioned to get upset about some dummies that didn't research their home purchase more.  

 

[jamny]

I really liked the movie but didn't care for the celebrity cutaway scenes. I understand the need for a little more of an explanation on things but I found those distracting. It was original so credit them for that.

 

[BigJim®]

Selena Gomez at the BJ table

I might have to put this on my rent list.

 

[Andrew74]

First off, I agree that it was a good movie. I enjoyed it.  I particularly liked it when one of the actors or a cameo would look directly at the camera and explain things (Margot Roboteteretart in the bathtub, Selena Gomez at the BJ table, etc.).  Some questions/comments though:

1.  Lawrence told Michael Burry (Bale's character) that he wanted his money.  He wanted to pull out.  This was done before Burry sent the e-mail to investors saying that no withdrawals would be granted.  Later on in the movie when we find out how Burry was right, it says that Lawrence made something like $489 million from the trades.  How so?  Are we to believe that Lawrence couldn't get his money out?  Huh?

I just watched this last night and at one point Lawrence asked if the investors withdrew the funds they could, how long could Burry pay the premiums before the fund ran out of money.  I took from that the fund had some type of gate that only allowed a certain amount of the fund to be redeemed over a given period of time.  I own a private fund that works that way - redemptions are only allowed once a quarter and only x% of the fund can be redeemed each quarter.

3.  I'm sure I'll get flack for this next statement but....although I acknowledge that the banks, the rating agencies, the mortgage brokers, etc etc were crooks and really did rip people off at the time, I still feel that no one in this whole crisis wants to take personal responsibility.  You had people with horrible credits buying $400k homes with jobs that pay $30k/year.  Sorry, but whether or not you got swindled by a mortgage broker, I still feel like you should own up and take your lumps.  You should have known you couldn't have afforded that mortgage, even if this was before the rate adjusted. Not to go on a MOP rant, but I feel that's a common problem in America. We'll all looking for someone to blame or who was at fault instead of just saying, "Yeah, I messed up....that's on me."

I agree on this to a point.  This movie and most other things about the crisis never talk about the greed and stupidity of the consumer.  But in the end, mortgages wouldn't have taken out the economy like they did if these firms hadn't levered up these MBS derivatives to insane levels.

 

[NutterButter]

Totally agree with you on 3.   

 

[cstu]

You think personal responsibility is the problem?  Not me.  I think it's people that 'yeah, yeah, yeah' the true criminals in this case.  I am too offended and angered by the criminals I mentioned to get upset about some dummies that didn't research their home purchase more.  

 

[Ministry of Pain]

10 years knee deep in it, 7 of them in SoCal...

-I didn't think the movie was all that great. It didn't capture what it was like on the inside and there is still a better movie to be made. This almost felt like a wannabe documentary. 

-I would have liked to see the mounting pressures of the banks and mortgage companies to "hit their number" and the impact it was having on stocks and 401ks loaded with those types of financial instruments during the boom. 

-I agree some with the idea that mom n pop should have known better but many were simply trying to own a home that they were encouraged to buy from the US Gov't. People thought they were helping and prospering from the system. Remember my educated friends, in the real world almost 70% of folks do not hold a college degree. Don't assume they all knew better. Loan officers promised the moon and delivered for a while at the cost of our solar system, Far Out!

 

[Short Corner]

The mortgage broker has a fidicuary responsibilty to his client (in CA anyway) and many of them should have paid the price legally,  During the time I did exactly two mortgages with teaser rates, both were actually for old friends so I knew exactly what their situation was and explained the risk.  One ended up selling his home in a short sale.  A lot of brokers put these people in the loans because they knew they could continually refi when the variables popped.

 

[Short Corner]

First off, I agree that it was a good movie. I enjoyed it.  I particularly liked it when one of the actors or a cameo would look directly at the camera and explain things (Margot Roboteteretart in the bathtub, Selena Gomez at the BJ table, etc.).  Some questions/comments though:

1.  Lawrence told Michael Burry (Bale's character) that he wanted his money.  He wanted to pull out.  This was done before Burry sent the e-mail to investors saying that no withdrawals would be granted.  Later on in the movie when we find out how Burry was right, it says that Lawrence made something like $489 million from the trades.  How so?  Are we to believe that Lawrence couldn't get his money out?  Huh?

I'm going to read the book again, but IIRC, Scion investors had an explicit understanding that this could be the case when they invested with Burry.

 

[The General]

The people lending the money ultimately hold the power and the responsibility. Probably naive but my take has always been they just take your home, the thing worth value, if you don't pay. They never had a problem with doing that.

If they make a bad deal loaning money out then it's on them.

That is of course until their little system gets all f'ed up and threatens to end the world as we know it.

 

[Ministry of Pain]

RE market is red hot in 2016 right now. Sales up almost 15% over a year ago, record low interest rates, get in while you still can or flip that house and get a new one that needs some fixing up and profit by it. 

 

[RUSF18]

I agree on this to a point.  This movie and most other things about the crisis never talk about the greed and stupidity of the consumer.  

How much more did you expect them to beat you over the head with it beyond the "stripper and all her friends own 7 houses each" talk?

 

[Binky The Doormat]

Read the book - great job of explaining a lot of the stuff. Though I can't say I still followed everything.

I haven't seen the movie yet ...really looking forward to it.  

 

[Despyzer]

1.  Lawrence told Michael Burry (Bale's character) that he wanted his money.  He wanted to pull out.  This was done before Burry sent the e-mail to investors saying that no withdrawals would be granted.  Later on in the movie when we find out how Burry was right, it says that Lawrence made something like $489 million from the trades.  How so?  Are we to believe that Lawrence couldn't get his money out?  Huh?

In a previous scene, Burry explained to his boss that he was hired to be given complete control over fiduciary matters. TIn the scene you reference, the boss was speaking rhetorically that he wanted "his" (the investors') money back because he believed Burry had made a terrible move. Lawrence never actually got any money back (until the big pay-off, of course).

 

[ROCKET]

RE market is red hot in 2016 right now. Sales up almost 15% over a year ago, record low interest rates, get in while you still can or flip that house and get a new one that needs some fixing up and profit by it. 

Maybe where you live, certainly not everywhere in the country.

 

[The General]

Maybe where you live, certainly not everywhere in the country.

My county is up 20% from last year, prices over what they were before the crash. Homes going for 10-15% over asking. Getting flyers in the mail asking if we want to sell. 

Definitely seems "bubble-ish".

 

[KCitons]

People still buy things via credit cards, rental centers, etc.  Sheep are still sheeping. 

 

[cstu]

Los Angeles is nearing 2007 levels.

 

[cstu]

Even scarier is that SF has topped the pre-crisis peak.

 

[ROCKET]

My county is up 20% from last year, prices over what they were before the crash. Homes going for 10-15% over asking. Getting flyers in the mail asking if we want to sell. 

Definitely seems "bubble-ish".

I have a niece who lives just outside Seattle who just sold her house for more than 45% of what they bought it for two years ago. I know here in New England the market is somewhat

better than the bottom but isn't remotely close to the bubble numbers. Happy to hear things are better elsewhere but I don't see things getting that way here any time soon.

 

[avoiding injuries]

Saw it Friday and was very disappointed. Perhaps I knew too much about the subject and it bored me. I was really looking forward to it. 

Agree with the personal responsibility issue. I had a loan officer approve me for $300k when I was making $45k a year right out of college. I did SIMPLE math and realized I wouldn't be able to afford it, or at least afford anything else besides it. 

They were lending and people were borrowing based on the assumption of the drastic appreciation continuing. 

 

[The General]

I have a niece who lives just outside Seattle who just sold her house for more than 45% of what they bought it for two years ago. I know here in New England the market is somewhat

better than the bottom but isn't remotely close to the bubble numbers. Happy to hear things are better elsewhere but I don't see things getting that way here any time soon.

They were definitely giving money away in a reckless manner and of course people taking it were dumb, unrealistic, greedy, etc. When I bought a home in 2003 they pretty much asked how much I wanted up to a loan that had a monthly payment that was something like 75% of my take home pay IIRC. At the time I just remember thinking that was weird that that was even on the table.

Ultimately however I feel the bank or lender is supposed to be the adult in this transaction and holds the majority of the responsibility. They have the power to keep this from happening, they create the rules. 

 

[joffer]

Great movie

 

[Short Corner]

Saw it Friday and was very disappointed. Perhaps I knew too much about the subject and it bored me. I was really looking forward to it. 

Agree with the personal responsibility issue. I had a loan officer approve me for $300k when I was making $45k a year right out of college. I did SIMPLE math and realized I wouldn't be able to afford it, or at least afford anything else besides it. 

They were lending and people were borrowing based on the assumption of the drastic appreciation continuing. 

I think creating instruments for private contractor types (ie interest onlys, neg-ams) were being sold to people with basically fixed incomes.  Sure you can figure it out with simple math, but a lot of people get intimidated in what is an unfamiliar environment and think the expert loan officer knows what he is doing, when in fact he has a fiduciary responsibilty to the borrower to explain the pros and cons of the loan.

 

[avoiding injuries]

I think creating instruments for private contractor types (ie interest onlys, neg-ams) were being sold to people with basically fixed incomes.  Sure you can figure it out with simple math, but a lot of people get intimidated in what is an unfamiliar environment and think the expert loan officer knows what he is doing, when in fact he has a fiduciary responsibilty to the borrower to explain the pros and cons of the loan.

I'm not saying there aren't any expert loan officers, but I've met and dealt with my fair share that were very underwhelming. I hope this doesn't come off as smug, but I feel bad for the average consumer who has to rely on these people for likely their most important financial decision. 

 

[flranger]

The banks never cared if the loan defaulted as PMI will pay it to 80% and with home values increasing, they stood to make money whether you paid or defaulted in the resale.

Until of course prices quit going up...

 

[dhockster]

I loved this movie because the indian guy was really funny. Oh wait.....this is about the Big Short not the Big Sick.