The Big Short is a fictionalized account of the run-up to the financial meltdown of 2008. Some of the names have been changed to protect those who played the short game, but the details of how this horror unfolded are accurate.
It should come as no surprise that there was massive fraud in the lead up to the final crash and burn of the global economy.
When lending institutions changed their view on mortgages from lending instruments to investment opportunities, the flood gates of hell were opened. Once that point of view became widely established, lending institutions would give anybody who asked a mortgage. They did not concern themselves with the obvious question: “Can the lendee, pay this thing back?”. That was not a concern since mortgages became an investment that they could sell!! Payback was not a concern.
What made this whole thing worse, is that “side bets” where taken out on the bundles of mortgage investments. The total bets were as much as 20 times bigger than the value of the underlying mortgages. This was high stakes gambling and it was unregulated gambling since their was no oversight by agencies that normally would review gambling activities.
One of the more damning aspects of this meltdown, was the complicity of the investment rating agencies. They are the ones who put the “lipstick on the pig” by rating these toxic investments as good opportunities. They are all still in business and still offering their “ratings”.
Most of us would assume that those in the banking industry are not gamblers. We would be wrong, they were gambling with other peoples money and worse still put the entire global economy at risk through their reckless behavior.
The only winners in this mess, were those who bet against the bundles of mortgage investments that were being cranked out by this fraudulent mortgage mill.
Watch this film and learn.