The US government interviewed the heroes of 'The Big Short' -- here's what they had to say

The Big ShortGetty Images/ Dimitrios Kambouris(L-R) Actor Finn Wittrock, Author Michael Lewis, Actor Jeremy Strong, Actor Steve Carrell, director Adam McKay, actor Ryan Gosling, Chairman and CEO of Paramount Pictures Brad Grey, and actor Brad Pitt, and Actor John Magaro

The National Archives did a document dump on Friday, releasing transcripts, meeting agendas, and confidentiality agreements from the Financial Crisis Inquiry Commission.

The group was set up in the aftermath of the crisis by Congress to look into the causes of the event, and the documents are a gold mine of information.

There are interviews with Warren Buffett, Goldman Sachs chief executive Lloyd Blankfein and AIG Financial Products chief Joe Cassano.

Included among them are interviews with some of the real-life Wall Streeters from Michael Lewis book “The Big Short.”

We’ve taken some of the highlights from their interviews below, so you can see what the likes of Gregg Lippman, Steve Eisman and Ben Hockett.

Greg Lippmann at Deutsche Bank

Dimitrios Kambouris/Getty Images for Turner

Ryan Gosling played Deutsche Bank trader Jared Vennett, based on the real-life Greg Lippmann, a mortgage trader. He now runs his own hedge fund.

In his interview with the FCIC, from May 2010, he set outs how he came to recognise the weakness in the US housing market.

When I looked at the home prices to defaults across America, I was struck by two things; one, the big difference between the default rate in the parts of the United States where home prices were going up three or four per cent per annum, and the much, much lower default rate in places where home prices were going up more like 12 or 13 per cent per annum. I was also surprised at how many people were defaulting even in those areas where home prices were going up so much, which made me question the viability of these loans in a more modest home price environment.

He did the maths, and figured out that while going long a collateralized debt obligation might pay four to eight points in a best case scenario, it could fall 50 to 90 points in a worst case scenario. The inverse was also the case, making the short bet extremely profitable if the market went that way.

And so I went to the management of Deutsche Bank, and I gave them a synopsis similar to what we just discussed. And I said that I think that this makes sense because the payout far exceeds the loss when adjusted for the probabilities. I represented that I thought there was less than a 50 per cent chance that this trade would actually work. But I felt that even if it's less than a 50 per cent chance of working, if you're getting paid five or ten or even more than ten-to-one, you don't t need to actually think it will work for it to be sensible, particularly when the institution, as a whole, specifically in these products, and then more broadly, was an institution like most Wall Street firms that is biased towards investments doing well.

And here is what he had to say about the book:

The book is, first and foremost, meant to entertain. So I think there are a lot of things that are exaggerated. So where do you draw the line between inaccurate and exaggerated is -- any individual draws that line on their own ... So I think that that comment where it's attributed to me that I said, 'Idiots in Germany buy this,' I think it's taken way out of context. It's certainly not something that I led with. I didn't go into people and say, 'Well you should buy protection because idiots in Germany are selling protection.' That's not how it came about ... So what I can remember from the book, that's the thing I have the most problem with.

Steve Eisman at FrontPoint

Steve Carell played FrontPoint Partners hedge fund manager Mark Baum, a character based on the real-life Steve Eisman. Eisman left FrontPoint in 2011.

His interview with the FCIC was especially entertaining. He said:

  1. No one the FCIC had spoken to 'has a clue.'
  2. 'All of CEOs are clueless' with the possible exception of Lloyd Blankfein.
  3. The financial system's methods for measuring leverage amount to 'some kind of gobbledygook.'
  4. 'Alan Greenspan is the worst Chairman of the Fed in history.'
  5. Ratings agencies were told in 2003 or 2004 that their models were wrong, or 'probably both years.'
  6. 'Nothing here is criminal, it's just stupid. I think they're generally just stupid.'
  7. He did a CDS trade with Goldman Sachs in 2007, and was in contact with Greg Lippman.
  8. He also met with Citigroup and Bank of America, 'but they were pretty incompetent.'
  9. He was asked if he had documentation of his interactions with a Goldman Sachs exec, and responded 'I don't do documentation, my friend.'

Ben Hockett and Jamie Mai at Cornwall Capital

Brad Pitt plays Ben Rickert in the movie, who is based on Ben Hockett, while Finn Wittrock plays Jamie Shipley, based on real-life Jamie Mai.

Here are the highlights from the memo summarizing the interview with Hockett and Mai:

The October 6, 2006 Grant's Interest Rate Observer was what gave Cornwall the idea for their trades shorting subprime MBS through credit default swaps. The article includes a chart from Paul Singer, general partner of Elliott Associates, showing that if home prices stay flat to appreciating by 4%, the entire double-A tranche of a subprime CDO would fail.


Cornwall participated at the CDO level, and wasn't able to be too choosy. Cornwall knew from reading research that they wanted to buy CDS on double-A tranches of CDOs. They went to banks and said they wanted to buy CDS on double-A tranches. Banks would come back with a list of 1-10 tranches on which Cornwall could buy CDS protection. Cornwall used Lehman Live to get information on the tranches on the list. Intex, a more robust data source on underlying loan pools, would not even return Cornwall's phone calls.


Cornwall didn't know how to distinguish between cash and synthetic CDOs. They didn't know if the underlying collateral was synthetic. Jamie said this may not have mattered, though.

NOTE: Jamie Mai recommended the book 'How I Caused the Credit Crisis' while talking to FCIC, if you want to go check that out.

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