Excellent acting by the ensemble cast The Big Short takes you into the world of creative finance and how millions of people lost their homes while a select few made billions. Unfortunately it’s a true story with a ‘”little” Hollywood embellishment, but still a must see. Get ready for the down and dirty business of Wall Street where the rich get richer and the middle class bails them out.
Based on a true story The Big Short involves a financial advisor Lewis Ranieri (Rudy Eisenzopf) who in 1978 recognizes a growing trend in the housing market and formulates a way to make big money. The average rate mortgage is 30 year fixed and it has a small payoff to banks. But, if you bundle thousands of the mortgages all together, the bank makes a lot of money on the same risk. After all everyone pays their mortgage or losses their home. It’s called a Mortgage Backed Security (MBS) a creative term used to sell mortgages.
Then there’s the credit rating on the bond that includes the large number of mortgages. In this case stated above its AAA rated. Fund holders are buying up millions of dollars’ worth of the MBS’s. Stocks and savings became insignificant as the best investment becomes the MBS’s. The big money people were doing billions of dollars a year dealing mortgage bonds and the number one industry became banking in America. Flash forward to 2008 however, some thirty years later it all came crashing down with millions of homes going into foreclosure.
Now that you understand what happened and probably lived through it, the movie is really about how one man Michael Burry (Christian Bale) foresaw the collapse. You see most of those mortgages carried an adjustable rate of interest and in 2007 they were about to kick in. Burry saw this happening along with a high percentage of C and D rated mortgages in the MBS bundles. He then set out to short the housing market in an attempt to make billions of dollars for himself. Then there’s Jared Vennett (Ryan Gosling) and Mark Baum (Steve Carell) who found themselves in the middle of the game. All vying for a lion’s share of the mortgage market’s default.
The acting here is exceptional and the story should bring a lot of tears to the eyes of the homeowners who lost their property back to the banks. In addition there’s the bank bailouts and a lot of red faces on Wall Street.
I recommend the film highly and hopefully I explained how the film works so you can enjoy it better. In addition the film includes a short clip of actress Margot Robbie explaining what the transaction is all about while sitting in a bubble bath.
And if you were affected by the housing mortgage debacle and really want to cry your eyes out, rent the film 99 Homes and relive the story of your eviction. For those of you who escaped unscathed by the mini depression both films are a warning to all.
FINAL ANALYSIS: A very good film that will probably get nominated for several Oscars. (A)
Additional Film Information:
Cast: Christian Bale, Steve Carell, Ryan Gosling
Directed and Written by: Adam McKay
MPAA Rating: R
Running Time: 2 hrs. 10 min.
Release Date: December 25, 2015