I resaw "The Big Short," a funny, horrifying — funnifying? — movie that's up for an Academy Award for its portrayal of Wall Street shenanigans that helped spark the Great Recession and the shredding of Americans' financial lives.
It’s fun when a director whose movie credits include “Anchorman” and “Talladega Nights: The Ballad of Ricky Bobby” tackles issues like cdo’s … “collateralized-debt obligations.”
Riffing off a book by Michael Lewis (The Blind Side, Moneyball, Liar's Poker), director Adam McKay makes it mostly understandable. An actress in a bubble bath defines subprime mortgages. Chef Anthony Bourdain compares some bundling of mortgages to making a stew from leftover seafood ("It's not old fish; it's a whole new thing"). And economics professor Richard Thaler and singer Selena Gomez equate a "synthetic cdo" to side-bets at a Vegas blackjack table.
I wondered how people closer to home — real estate agents, mortgage brokers, Georgia’s banking commissioner — might view the movie.
After all, they were all part of the chain.
Heck, virtually all of us were.
Metro Atlanta didn’t see home prices balloon during the boom as much as places like Las Vegas or stretches of Florida. But with population and home construction skyrocketing, Georgia was one of the nation’s biggest mortgage factories, churning out raw material for the Wall Street mortgage circus.
Quickie movie synopsis: Quirky, renegade investors short the housing market, which means they were betting it would decline, which was pretty much heresy. The renegades realized that the Big Banks’ bundled mortgages (yours and mine) included home loans that were crud, given to people who couldn’t afford them, shepherded by lenders and mortgage brokers who would get a loan for almost anyone.
Steve Beecham and his wife brought their three young-adult children to watch “The Big Short” in hopes they would see how the economic calamity they suffered had sucked in lots of other people.
They thought the sleaziest people portrayed in the movie were two braggadocios mortgage brokers — people who line up third-party home loans for prospective borrowers — who targeted immigrants and cash-rich strippers for mortgages.
Which is interesting, because Beecham is an Alpharetta mortgage broker.
Beecham told me that before the housing bust, he saw how it was getting easier for people to get home loans. But he said he never felt he was getting someone into a mortgage that wouldn’t work.
He told me he didn’t realize how Wall Street banks were packaging junk mortgages in bundles that were rated as solid, top investments.
At one time Beecham had a 37-person business and raked in enough in commissions to have a $1 million-plus dream home. Then the market collapsed. So did his income. He sold his dream home. His beach investment properties in Destin are gone.
Now, the business is just him and his wife.
“I don’t put the blame on anybody. Nobody was out to try to hurt anybody,” Beecham told me after watching the movie. “It basically was a bubble burst.”
(By the way, Georgia has nearly 90 percent fewer licensed mortgage brokers than it did before the recession began, according to the Georgia Department of Banking and Finance.)
The movie suggests that people on Wall Street were often smug, unquestioning and stupid. That some, from ratings agencies to big banks, purposely avoided looking too closely when there was money to be made. The movie didn’t slam home buyers, except, perhaps, for being naïve.
One scene shows a peppy real estate agent downplaying worrying signs, suggesting the market is just in an itty-bitty “gully.”
Bill Golden, a real estate agent with Re/Max Metro Atlanta Cityside, watched “The Big Short” with a couple dozen people from his office. They groaned over a scene with uncaring mortgage brokers.
Golden said most real estate agents weren’t like that.
“Like the general public, we didn’t know the world was falling apart until it fell apart,” he said.
And the Wall Street stuff?
“Most of that was stuff way beyond what I knew about. Way, way, way beyond,” he said.
Seeing it described in the movie shook him, he told me. “How comfortable am I telling people: ‘I think your property value is going to go up and the market is good’? Because it can change on a dime.”
Kevin Hagler, Georgia’s banking commissioner, hadn’t yet seen “The Big Short” when I called him.
Roughly 90 banks in the state – most of them small operations — went down during the Great Recession and its aftermath. Many had gone gaga over borrowers who had the hot hands: developers and builders. They let lending standards get mushy.
“We hate that we missed it,” Hagler told me.
“Things happened so gradually that you get into this new norm,” he said. “You think you will always have this many people moving in or prices will keep going up.”
I think it is in human nature for most of us to be short-sighted. It is easy to think what’s happening now will keep happening. To trust too much that someone is watching our collective backs and that institutions know what they are doing. We discount how money makes it easier to avoid questions.
Maybe we don’t short enough.
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