The Big Short

I cannot think of any other movie I have ever seen where I laughed a lot while simultaneously being pissed off at what I was seeing and hearing. The Big Short is one of those movies that presents a very true story that happened recently, does it in a bit of a madcap way, but doesn’t pull punches about just how despicable some of the key players are. Yet they are likable, too, thanks to some truly cleaver casting choices. So much of this movie would be unpalatable, especially if you were amongst the people affected by the events depicted, were it not for the likes of Ryan Gosling, Christian Bale and Steve Carrell selling the hell out of profiting off of the misery of others.

The film follows three groups of people, all of whom saw a global crisis coming and took advantage of it. That crisis was the 2007 housing market crash. Predatory lending in the form of subprime mortgages targeting immigrants and low-income buyers, excessive risk taking by the global financial institutions, a non-stop buildup of toxic assets within the banks and the bursting of the US housing bubble created a perfect storm and ushered in the Great Recession that plagued the end of the George W. Bush era and much of the Obama presidency. 

The first of these groups, Scion Capital, is represented by eccentric hedge fund manager Michael Burry (Christian Bale), a man who seems to spend his days walking around his office in his bare feet and studying the numbers. Burry discovers that the housing market is unstable and will collapse early into 2007 when interest rates will rise from adjustable-rate mortgages. He creates a credit default swap agreement allowing him to bet against, or short, market-based mortgage-backed securities, for profit. This requires him to pay large sums of money as monthly premiums which puts him at odds with his main client, Lawrence Fields who accuses him of wasting money, demanding he reverse and sell.

Jared Vennett (Ryan Gosling) is one of the first bankers to understand Burry’s analysis, learning from one of the bankers who sold Burry an early credit default swap. He decides to get in on the market and purchases his own credit default swaps, however the large premiums convinces him to reduce the number of swaps he has. A misplaced call alerts hedgefund manager Mark Baum (Steve Carrell) who is motivated to buy swaps from Vennett due to his negative opinion of banking ethics. A meeting between Vennett and Baum’s people further convinces him of a guarantee of the home mortgage collapse and an opportunity to turn this collapse into a large return on investment.

Young investors Charlie Geller (John Magaro) and Jamie Shipley (Finn Wittrock) accidentally discover a marketing presentation by Vennett that convinces them to invest in swaps as it fits their strategy to buy cheap insurance with potentially big payouts. To get around the financial restrictions keeping them from entering trades like Burry’s and Baum’s, they enlist the assistance of retired securities trader Ben Rickert (Brad Pitt). When the bond values and Collateral Debt Obligations (CDO’s) rise despite defaults they suspect the banks are committing fraud. They target the higher-rated AA mortgage securities, which are considered highly stable, and carry a much higher payout than what Baum and Burry are targeting. The banks and the ratings agencies freeze the price of their CDO’s in order to sell and short them before the inevitable crash which Charlie and Jamie believe to be fraud. The press refuses to publish these accusations in fear of alienating their relationships with the investment banks. As the market begins to collapse Charlie and Jamie make a tidy profit but have lost their faith in the system as the consequences to the general public become severe. Only one man is ever held responsible for the fraud and the rest of the personnel and the banks escape any consequences for their actions that led to this collapse. As of 2015 the banks are back to business as usual, selling CDO’s under a new name, same scheme. 

There are a lot of concepts bandied about during the course of this film, so much so that it is easy to get bogged down in all the jargon. The film attempts to hold your hand through the worst of the concepts by bringing in celebrity guest spots to break these things down to simple terms. While this does succeed in making complex concepts a little easier to understand it also pulled me out of the movie every single time like Margot Robbie in a bubble bath explaining how the banks were running out of people who could afford mortgages and started targeting riskier and riskier loans. The imagery is wryly humorous but distracting. Anthony Bourdain, Richard Thaler and Selena Gomez get similar moments with the same results. 

As someone that lived through the Great Recession it was harrowing seeing just why it all happened and that nothing was really done to prevent it from happening again. All three focus groups profited from betting against the economy which in and of itself should make me dislike them. Fortunately they are not portrayed as heartless individuals who delighted in the sorrow of others for their own profits. Burry sees the inevitable and, after the dust settles, has to deal with the public backlash and a multitude of IRS audits. He closes his fund and settles with only investing in water securities going forward. Baum is emotionally a wreck over what the collapse has done to people’s lives, seeking comfort from his wife. He initially refuses to sell his swaps and take the billion dollars in profit but is pushed to finally do so by his partners. Vennett makes $47 million for his role in the whole affair and in unrepentant for his actions. Charlie and Jamie go their separate ways, splitting up their investments. Ben Rickert reminds them of just how much misery their windfall comes from.

This is a cautionary tale of fraud and greed that many of us lived through less than twenty years ago. The housing market was a disaster and hadn’t recovered fully by the time the film was released. While I’ll confess to not fully understanding all the jargon spouted here, even after all that hand-holding, I understood the gist of it all and was rightfully upset with the whole banking industry and how next to no one was held accountable for it. A brief scene where Baum and his team are shown how much housing has increased in price reminded me of how in 2014 I couldn’t get anyone to buy my house, even for a loss. Eight years later I sold that same house for double what I still owed on it. The housing market is a scary place right now and it doesn’t look like things are going to get better anytime soon.

Academy Award Nominations:

Best Picture: Dede Gardner, Jeremy Kleiner and Brad Pitt

Best Director: Adam McKay

Best Supporting Actor: Christian Bale

Best Adapted Screenplay: Adam McKay and Charles Randolph (won)

Best Film Editing: Hank Corwin

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Release Date: December 11, 2015

Running Time: 130 Minutes

Rated R

Starring: Christian Bale, Steve Carrell, Ryan Gosling, and Brad Pitt

Directed By: Adam McKay