‘The Big Short’: Expert Opinion On The Realities Of The Film

The Big Short is on the list of Oscar nominees for this year’s coveted Best Motion Picture award, and it definitely deserves the nomination. It is a movie that is based on a book of the same name, written by Michael Lewis, and it covers the financial crisis of 2007-2008. The movie reveals that the financial crisis was caused by the real estate market and a handful of people on Wall Street who made money betting on the state of that market.

Here are some facts about the movie that are fascinating and good to know prior to seeing it.

1. Nautilus reports that Wall Street Trader Bob Henderson spoke about The Big Short. He was particularly surprised that the characters played by Christian Bale (Michael Burry) and Ryan Gosling (Jared Vennett) were able to figure out that there were mortgage products that were being mispriced when so many other people missed it.

“We had lots of ‘quants’ — quantitative experts — and very smart people at the banks who presumably didn’t see it, or somehow it didn’t reach the right people.”

2. The Big Short revealed that there was a feedback loop in which mortgage products inflated the bubble and then the bubble infected the products and then more products had sold and onward. Bob Henderson explained.

“And not only did the bubble infect these products and make them bad, there was also a feedback loop so that the more these products had sold, the more demand there was for loans, which then drove banks to be more willing to buy these crappy loans, which then meant the mortgage brokers made more crappy loans, which meant more people could buy houses, which pushed the market up more. That whole feedback loop is really systematic and it’s interesting, and I don’t know that anybody at the time could’ve really seen that.”

3. Henderson admits that he would not have been as confident as Christian Bale’s character in The Big Short.

“I would not have been confident. This is a beautiful part of the story. As one character says to Burry, being early in a bet on the market is the same as being wrong. So it’s not enough to be right. You have to be right at the right time.”

4. Henderson also revealed that Wall Street was so surprised by what was portrayed in The Big Short because no one had the incentive to really look for it and find out what was causing it.

5. Henderson said the collapse could have been avoided if one or two of any of the factors had been altered.

“A bunch of a different things happened that all came together to create this crash. I could list eight or ten different contributors. Some of it is the incentives of all the major actors: the mortgage brokers, the banks, the rating agencies, the regulators, the investors. If you altered any one or two of them, then you could see how the whole thing could’ve been avoided.”

6. Time Money reports that The Big Short was not just about risky bets, bad policies, and over-extended borrowers; it was also about fraud and deception.

7. In reality, the protagonists portrayed in The Big Short, those played by Christian Bale, Steve Carell, Brad Pitt, and Ryan Gosling, weren’t really the underdogs because it wasn’t that simple. These people became wealthy while working people suffered. Brad Pitt’s character, Ben Rickert, said it best in the movie.

“You just bet against the American economy. And if you win, hardworking people will suffer, so try not to celebrate.”

[Photo by Kevin Winter/Getty Images]