By Donna Westfall – March 20, 2016 – It’s not often that you can watch a movie like The Big Short and not continue to think about it, discuss it, and research it on the internet for days. No wonder it was nominated for an Oscar for Best Picture in 2016.
To simplify; no one thought the housing market would burst like a bubble in 2008 or did they? In reality, there were several men that tried to bring the impending doom to light only to be laughed at and ridiculed.
In this film, Dr. Michael Burry, played by Christian Bale, founder of the Scion Capital LLC and hedge fund manager, analyzes the mortgages that are being bundled and sold off for huge profits. He was one of the first investors in the world to recognize and invest in the impending subprime mortgage crisis.
The character, Mark Baun, played by Steve Carrell in an uncharacteristic dramatic role fueled by anger, plays real life hedge fund manager, Steve Eisman who also saw the housing market collapse before it happened and made a bundle off of it.
The character of Jared Vinnett is based on real life Greg Lippmann, a former trader for Deutsche Bank who bet against subprime-mortgages before the market collapse, subsequently raking in billions. He’s played by Ryan Gosling in a wig.
Then there were characters, Charlie Geller and Jamie Shipley that in real life, are Charles Ledley and Jamie Mai who started Cornwall Capital in a shed in Berkeley, California, and went on to make millions by making small bets against the housing market. They were able to transform a $15 million investment into $120 million by counting on the failure of subprime mortgages.
Most disappointing to this day is that no one was held accountable although rules and regulations were tightened up and changed afterwards. Sure, many of the investment bankers and lenders went out of business. But who went to jail while 8 million people were out of jobs and 6 million lost their homes. Even Alan Greenspan, former head of the Federal Reserve has never said, “I’m sorry.” It was his job to regulate and know about all the fraud, illegality and stupidity. Instead, he took his huge salary, wrote a book and retired.
It reminds me of the suspected fraud going on between municipalities and the Water Quality Control Districts. How can an unelected board make decisions like granting a $43.8 million loan to a town the size of Crescent City to expand and upgrade their wastewater treatment plant (WWTP) and not know how the loan would be repaid. Huge red flag!
How can Grand Jury after Grand Jury not investigate thoroughly into the allegations of graft, fraud and corruption on the WWTP? Another huge red flag?
How can the City of Crescent City get away with destroying records, documents and video’s of meetings regarding the WWTP and not be held accountable? Another huge red flag!
Is Crescent City the only municipality suffering under the burden of this huge debt, or is this scenario being repeated in other cities?
Certainly not the world wide magnitude of the ’08 real estate crisis. But a crisis nevertheless.
So far, no one in this town will do anything about it.
When will the authorities outside our area pay attention? When the City declares bankruptcy?