Bankers, bond traders, stockbrokers, hedge-fund managers either didn’t know what they were doing, or knew but didn’t care. In creating, selling, and buying credit default swaps, collateralized debt obligations, and other increasingly baroque financial instruments built on a foundation of shoddy subprime mortgages, Lewis writes, they were “either crooks or morons.” They made billions before losing trillions of dollars of other people’s money, and it would be nothing more than depressing and enraging if Lewis weren’t such a great reporter and storyteller, going behind the scenes of the financial crisis from the point of view of a handful of people who bet against this insane bubble.
Best of all, the highlight of The Big Short is a long set piece from the 2007 American Securitization Forum (ASF), which was held at the Venetian in Las Vegas in January 2007, and which was where Lewis’ protagonists realized just how systemic the madness was. As did one of ASF 2007’s sponsors, United Capital Markets CEO John Devaney, who during a panel discussion he moderated went off on “an extemporaneous rant about the state of the subprime market”:
“It was incredible,” said Charlie [Ledley, a principal with Cornwall Capital, and one of Lewis’ protagonists]. “Stream of consciousness. He went on about how the ratings agencies were whores. How the securities were worthless. How they all knew it. He gave words to stuff we were just suspecting. It was like he was talking out of school. When he was finished there was complete silence. No one specifically attempted a defense. They just talked around him. It was like everyone pretended he hadn’t said it.” On the one hand, it was exhilarating to hear a market insider say what he thought to be true; on the other, if the market became self-aware, its madness couldn’t last long.
So, meetings were a part of the madness — but they also helped bring it to an end.