The Big Short is one big pile of
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NOT ONE WORD MENTIONED of Fannie or Freddie, the two GOVERNMENT institutions primarily behind the subprime mortgage meltdown.
NOT ONE WORD of the Community Reinvestment Act, the law signed by Jimmy Carter, and vigorously implemented during the Clinton Administration.
IT WAS FEDERAL GOVERNMENT policy that mortgages should be made available to EVERYONE regardless of whether or not they could afford them. Traditional lending standards of requiring a significant down payment, credit background checks, and verifiable steady employment went out the window.
I’m not saying Wall Street didn’t play a role in the mortgage meltdown crisis. It did. But the whole thing was created by misguided government policy meddling in the private sector and mortgage markets.
The Big Short makes NO MENTION OF FEDERAL RESPONSIBILITY WHATSOEVER. Typically Hollyweird BS blaming everything on the private sector.
I seem to recall a brief reference to Fannie, but not big enough to be noticed by most people. I also don’t remember if AIG was mentioned. I think this was meant as a personal story, not a complete documentary, and thus touched on the types of people and the specific shorted securities that they were betting on. Thus in addition to detailed analysis of the holdings backing the securities, and then going around and talking to the guys doing the lending and housing wheeling and dealing it was mostly about their fear they had made the wrong bet, and their shock and amazement at how many people made this happen to us.
I do wish someone would make a reasonably dramatic true story about the other issues you have raised. A big part of the problem was the banks bundling a lot of worthless paper and then selling it, preferably offshore to people who didn’t know how or care to check on it. Was that particular part (the bundling and sales) related to something specific the federal government did?
I can remember driving down to see my son in Miami almost yearly from the late 90s to 2006. We came in the back way via Lake Okachobee, and each year I was astonished at how many more big houses had been built and were almost deserted. I kept asking myself, “Where are they going to find all the people to buy these homes?” I thought maybe it was laundering drug money. This looked like the same area where the alligator was in the swimming pool, and the poor shlub found out he was paying his rent, but his landlord wasn’t paying the bank. So many people hurt, sickening!!!
Personally I benefited because as a self employed person I was having trouble refinancing my 8.75% second property mortgage. However, I had been with the same bank for twenty years and the rental more than covered the mortgage. However, they were not concerned that I was two years behind on filing my tax returns although I had sent Automatic Extension of Time to File Forms along with adequate money to cover annual earnings. I could see the requirements were looser, but I still had adequate credibility.
The ex-wife of a friend had received a $30,000 divorce settlement which she used for a down payment on a house. Then she couldn’t pay the balloon and was foreclosed. My friend showed me the papers too late to reverse the foreclosure. I examined them. They were from Deutsch Bank (mentioned in the movie), and between the initial estimate of costs and the end (signing/closing), the balloon figure had jumped from 10% to 12.5%, which the Spanish speaking woman apparently completely did NOT understand. When the balloon hit (as was mentioned in the movie) she was toast and sought help too late.