This index is distributed free of charge with the permission,
not necessarily the recommendation, of the publisher of the book.
The Big Short
by Michael Lewis (hardcover 2010)
ISBN-13: 978-0393072235
INDEX
©2010 by Nancy C. Gerth
www.nancygerth.com
Note: An "n" following a page number indicates a footnote.
A
Aaa (AAA) (triple-A) rating, 50n
Aames Financial, 2–3, 9
ABS East, 102
ABSs (asset-backed securities), 99n, 127
ABX index, 126, 161, 164, 189
accounting, 14, 15, 23–24, 77n, 173, 174, 234
ACORN (Association of Community Organizations
for Reform Now), 18
adjustable rate mortgages (ARMs), 97, 98
AIG (American International Group, Inc.). see also
Cassano, Joe; Park, Gene
background, 68–74, 77n, 233
CDOs and, 79, 80
Federal Reserve and, 237, 259–260
Lippmann and, 83–84, 90–91
Aldinger, Bill, 16
Alt-A (Alternative A-paper), 127, 194
Amaranth, 193
Ambac Financial Group, 234
American International Group, Inc. see AIG
American Securitization Forum (ASF), 148
ARMs (adjustable rate mortgages), 97, 98
ASF (American Securitization Forum), 148
Asperger's syndrome, 181–183, 224
asset-backed securities (ABSs), 99n, 127
Association of Community Organizations for Reform
Now (ACORN), 18
Attwood, Tony, 181
Avant! Corporation, 45–46
B
balance sheets. see accounting
Bank of America, 52, 59, 174, 184, 196, 237, 239
basis points, 51
Bass, Kyle, 105
Baupost Group, 105
B&C mortgage, 24
Bear Stearns. see also Cioffi, Ralph
background, 24, 25, 254
CDOs and, 165
Cornwall Capital and, 117, 132, 146, 163, 219,
221
credit default swaps pricing, 164
Eisman and, 229–230, 231, 232
failure of, 166–167, 176, 222, 228, 232–233, 234,
235
government guarantees and, 259
2007 bond prices, 195, 210
Bellingham, Washington, 17
Bernanke, Ben, 168, 175, 197–198, 260
bespoke credit default swaps, 201, 202, 205
Black-Sholes option pricing model, 113–114, 122
Blankfein, Lloyd, 260
BNP (Banque Nationale de Paris - Paribas), 221–222
bonds. see also specific types of bonds
Britain, 18
Buffett, Warren, 35, 42, 172
Burry, Michael. see also Scion Capital
Asperger's syndrome and, 181–183, 224
background & character, 31–38, 107
credit default swaps and, 26–30, 47–59
crisis and, 245–248
financial system, on, 194
Goldman Sachs and, 78
investors and, 187–194, 199, 223–225, 245–246,
247
predictions, 179–180
strategy of, 95–96
Burry, Nicholas, 180–181
Burt, David, 132–134, 149
Byrne, Jack, 41
C
Capital One Financial, 110–112
capital reserves , 78
Cassano, Joe, 71, 83, 86–89
Cayne, Jimmy, 25
CDOs (collateralized debt obligations). see also
mortgage bonds; synthetic CDOs; tranches
analysis of, 138–144
background, 72–78, 234, 254
Cornwall Capital and, 126, 129, 146–148
correlated prices and, 207–208, 213, 214
Deutsche Bank and, 79
diversification and, 129, 208
Hubler and, 204–209
mezzanine, 140, 161n, 175, 254
opacity of, 73, 126, 130, 140, 141, 142–143,
176–177
ratings and, 73, 76, 140, 144, 207–208
risks and, 77–78
2007, 161–166
Cedar Hill Capital Partners, 105
CEOs, 25, 255–256, 256–257, 260. see also
individual CEOs
Chau, Wing, 138, 139–141, 142–144, 159, 234, 256
Chilton Investment, 16
Chinese walls, 205n
Cioffi, Ralph, 210, 245
Citigroup
AIG and, 86
CDOs and, 165, 215
Cornwall Capital Management and, 221
crisis and, 228, 244
FrontPoint Partners and, 174
government and, 260, 261
clothes, 236
code of Wall Street , 63
Cohn, Gary, 262
collateral, 75–76, 165, 195, 213. see also leverage
collateralized debt obligations. see CDOs
Collins, Porter, 22, 230, 241–242, 250–251
comic books, 19
conflicts of interest, 205
confusion. see opacity (confusion)
consumer loans, 208. see also credit card debt
Cornwall Capital Management. see also Hockett,
Ben; Ledley, Charles; Mai, Jamie
background, 108, 110–117, 121–127
Bear Stearns and, 117–118, 219, 233
CDOs and, 129–135, 219–220
credit default swaps and, 221–222
crisis and, 242–243
Las Vegas conference and, 144–150
subprime market and, 127–135
correlated prices, 207–208, 213, 214
credit card debt, 9, 54, 71
credit default swaps. see also bespoke credit default
swaps; synthetic CDOs
AIG and, 70–71
basics, 29–31, 30, 75, 78, 206n
Burry and, 26–30, 31, 47–59, 68
Cornwall Capital Management and, 221–222
Hubler and, 201–204
Lippmann and, 65, 79, 81–83
Morgan Stanley and, 201–202
pricing, 164
Credit Suisse, 62, 70, 254
crisis, financial. see also 2007
basics, 140, 161, 228, 237–239, 244
Burry and, 245–248
Cornwall Capital Management and, 242–243
Daniel and, 251
effects of, 251–252
Eisman and, 249–252
FrontPoint Partners and, 167–168, 227–228, 238–
239, 251
regulation and, 166
speculation and, 240
Cruz, Zoe, 210
D
Daniel, Vincent (Vinny). see also FrontPoint Partners
background, 10–12, 235, 237
Chinese walls, on, 205n
crisis and, 251
Eisman, on, 230, 231, 235
Lippmann and, 92–94
Moody's and, 172
subprime mortgage research, 12–15, 15–16, 24–
25
wariness of, 61, 92–93
data, 13, 15, 27, 44, 170, 171n, 194
Daula, Tom, 211
Davilman, Andrew, 72
deception, 24, 60. see also fraud
defaults
Daniel on, 14–15
FICO scores and, 100, 194n
housing prices and, 55, 65, 80
interest rates and, 30
Morgan Stanley and, 217–218
Option One and, 153
rates, 96–97, 152n
ratings and, 67n, 157, 169
2000-2006, 64–65, 126
2007, 180, 184, 192, 197, 210
2008, 198
derivatives, 62, 116, 254, 254, 255. see also credit
default swaps; synthetic CDOs
Deutsche Bank. see also Lippmann, Gregg
Burry and, 50, 58–59
CDOs and, 234
Cornwall Capital and, 124–125, 132
credit default swaps and, 31
crisis and, 162
derivatives and, 78–79
Eisman and, 229
FrontPoint Partners and, 151, 152
housing prices and, 89
Hubler/Morgan Stanley and, 206, 208, 212–214
incremental defaults and, 49
2007, 209
Devaney, John, 148–149
Dimon, Jamie, 209
discontinuities , 116
diversification , 129, 130–131, 208
dot-com bubble, 38
Dow Jones Industrial Average, 238
Drexel Burnham, 69, 254
Druskin, Steve, 49, 185, 186, 191, 248
E
Edman, Mike, 201, 203
Edwards, Jeff, 173, 249
efficiency of markets, 74
Eisman, Elliot and Lillian, 1–2, 6
Eisman, Steve. see also Feigen, Valerie; FrontPoint
Partners
background & character, 1–6, 12, 16, 20–23, 107,
136–137, 237
Bear Stearns and, 229–230, 231, 232
crisis and, 249–252
Daniel, on, 230, 231, 235
epiphany of, 25
financial system, on, 194, 230–231, 263
FrontPoint Partners and, 20–23, 168
Goldman Sachs, on, 24
Grant and, 178
Household Finance and, 17–18
HSBC Group, on, 229
insults by, 229–231
Las Vegas convention and, 150–159
Merrill Lynch and, 174
Morgan Stanley and, 20
Moses on, 230, 235
ratings agencies, on, 171, 176
regulation, on, 18–20
subprime mortgage loans, on, 9–10, 13, 15
Elliott Associates, 105
Elm Ridge, 105
equity analysis, 2
equity tranche, 161n
F
Fairbank, Richard, 112
Falcone, Philip, 94, 105
Fannie Mae, 7, 259
FDIC (Federal Deposit Insurance Corporation), 260
Federal Reserve , 243–244, 259–260, 261, 262
Feigen, Valerie, 5, 21–22, 231–232, 249, 250
Fewings, Tom, 83
FICO scores, 27, 99–101, 194n
Fitch Ratings, 158–159
floating-rate mortgages (adjustable rate mortgages)
(ARMs), 97, 98
Fool's Gold (Tett), 70n
foreign banks. see specific banks
Fournier, Alan, 105
fraud, 17–18, 55, 111, 129, 186. see also lies
Freddie Mac, 7, 259
Fremont Investment & Loan, 158n
FrontPoint Partners. see also Eisman, Steve
background, 22–25
crisis and, 167–168, 227–228, 238–239, 251
Eisman and, 20–23, 168
Lippmann and, 61–68, 91–94, 95, 137–139
ratings and, 101–103
strategy of, 96–97
Frost, Al, 71, 85–86, 88
Fuld, Dick, 25
G
gambling, 256
Geithner, Timothy, 260, 261
Gen Re FP, 70
Gertner, Dan, 177
Ginnie Mae, 7
Global Alpha fund, 196
Global Proprietary Credit Group (GPCG), 204, 211.
see also Hubler, Howie
Golden West Financial Corporation, 19–20
Goldman Sachs. see also Cohn, Gary
AIG and, 71, 72, 237–238
bond performance of, 105
Burry and, 51, 52, 58, 59, 184–187, 195, 196
CDOs and, 72–78
credit default swaps and, 31, 68
crisis and, 228, 239
Eisman on, 24
employees, former, 204n
FrontPoint Partners and, 169–170
housing prices and, 89
Hubler and, 206
incremental defaults and, 49
interest only mortgages and, 28
Lippmann and, 105–106
Paulson and, 260
subprime mortgage loans and, 24
2007, 209
Gorton, Gary, 88
Gotham Capital, 39–40, 190, 223
government, 18, 260–261, 263–264. see also Federal
Reserve; individuals in government;
Treasury, U.S.
government guarantees, 8, 259, 260, 261
GPCG (Global Proprietary Credit Group), 204, 211.
see also Hubler, Howie
Graham, Benjamin, 35
Grant, Jim, 177
Grant's Interest Rate Observer, 177
Great Depression, 55
greed, 256
Greenberg, Ace, 117–118, 132
Greenblatt, Joel, 39, 40, 113, 190–191
Greene, Jeff, 105
Greenspan, Alan, 229
Greentree, 9
Grinstein, Veronica, 59, 195, 196
Gugliada, Richard, 171n
Gutfreund, John, 253, 254, 255, 257–258, 263–264
H
Harbinger Capital Partners, 94, 105
Harding Advisory, 138, 142
Hayman Capital, 105
hedge funds, 44, 104, 105, 238. see also specific
hedge funds
hedges , 30, 91, 106–107
HELOCs (home equity lines of credit), 127
HELs (home equity loans), 127
Hintz, Brad, 175
Hockett, Ben, 108, 118–122, 124, 220–221, 222–223.
see also Cornwall Capital Management
home equity lines of credit (HELOCs), 127
home equity loans (HELs), 127
home mortgage bonds. see mortgage bonds
Household Finance Corporation, 16–18, 167. see also
HSBC Group
housing bubble. see housing prices
housing prices
Cassano on, 89
defaults and, 55, 65, 80
historical, 55, 94–95
lenders and, 47
ratings agencies and, 157, 170
sand states and, 97
subprime bonds and, 80
2005, 54
2006, 107, 126, 189
2007, 194
H&R Block, 153
HSBC Group, 18, 167, 173, 229. see also Household
Finance Corporation
Hubler, Howie
background, 200
Bear Stearns and, 210
CDOs and, 204–209
credit default swaps and, 201–204
knowledge of risks, 218n
Morgan Stanley and, 210–212
resignation of, 215
winnings, 256
I
"ick "investments, 45–46
incentives, 43–44, 256, 257
IndyMac Bank, 91
Institutional Investor, 133
interest-only mortgages, 27–28, 51
interest rates, 30, 54, 75n, 169
interest rate swaps, 48n, 69
International Swaps and Derivatives Association
(ISDA), 122, 124, 130, 161, 221. see also
credit default swaps
Internet, 42, 172
investing, overviews of, 35–36, 46, 256
investors, Burry's, 55–56
involuntary prepayments, 14
ISDA (International Swaps and Derivatives
Association), 122, 124, 130, 161, 221. see
also credit default swaps
J
Jacobs, Sy, 8–9
J.P. Morgan, 30, 105, 209, 235, 259
L
Las Vegas conference
background, 161
Cornwall Capital and, 144–150
Eismann and, 150–159
FrontPoint Partners and, 134–144
laundering, 73–74
lawyers, 248
LEAPs (Long-term Equity AnticiPation Securities),
113, 114, 122
Ledley, Charles. see also Cornwall Capital
Management
background & character, 108–110, 119–121, 244
crisis, on, 160–161
financial system, on, 194
Las Vegas conference and, 144–145
strategy of, 107–110
Lehman Brothers
background, 25, 254
bonds and, 31, 105, 165
Cornwall Capital Management and, 221
failure of, 237, 259, 261
FrontPoint Partners and, 174
subprime mortgage loans and, 24
LehmanLive (website), 131
leverage, 228, 233, 258. see also collateral
Lewis, Ken, 174
Lewis, Michael, 254, 255
"Liar" (no-doc loan to value measures), 27
LIBOR (London Interbank Offered Rate), 75n
lies, 24, 60. see also fraud
Lippmann, Gregg
AIG and, 72, 83–84, 90–91
background & character, 62–64, 254
Burry and, 58–59, 60
CDOs, on, 79–83, 209
FrontPoint and, 61–68, 95, 137–139, 168
Hubler and, 212, 213–215
influence of, 104–106, 108, 125
salary of, 256
Lomas Financial Corporation, 3
Long Beach Savings, 24, 97
Long-Term Capital Management, 15
Long-term Equity AnticiPation Securities (LEAPs),
113, 114, 122
lower-middle class, 9, 14, 28, 66, 110–111, 211
McDaniel, Ray, 171
media, 168, 198, 246
Merrill Lynch
background, 175
CDOs and, 142, 165, 215
Cornwall Capital Management and, 221
crisis and, 228, 237, 244, 249
Hubler and, 208
models of, 174
subprime mortgage loans and, 24, 173
mezzanine CDOs , 140, 161n, 175, 254
midprime markets, 127–128
Milken, Michael, 254
Miller, Bill, 229, 230, 234–235
Milton's Opus, 53–54, 58
Mizuho Financial Group, 215
mobile homes, 14
models , 69, 98, 100, 165, 174, 175–176
The Money Store, 3, 9
Moody's, 13, 50, 76, 165, 171. see also ratings
agencies
Morgan Stanley. see also Mack, John; individual
traders
background, 25
Burry and, 59, 184–186, 196
CDOs and, 234
Cornwall Capital and, 149–150, 161–163
credit default swaps and, 201
crisis and, 228, 239, 244
Deutsche Bank and, 212–214
Eisman and, 20
employees, former, 204n
FrontPoint Partners and, 169–170, 174, 240
Hubler and, 204
interest only mortgages and, 28
Paulson and, 260
subprime mortgage loans and, 24
2007, 195–196, 219
mortgage bonds, 6–8, 54, 73–74. see also CDOs
(collateralized debt obligations)
Moses, Danny. see also FrontPoint Partners
background, 22, 235, 237
Eisman and, 230, 235
Lippman and, 92–94, 95
stress and, 240–242
Munger, Charlie, 43
M
Mack, John, 25, 210, 216–219, 260
Mai, Jamie, 108–110, 115, 119–121. see also
Cornwall Capital Management
manufactured housing, 14
market errors, 54
Mayo, Mike, 229
MBIA Inc., 234
N
New Century, 85, 91–92, 169, 210
1980s, 69
1990s, 3, 23, 30, 70
no-doc ("Liar") loan to value measures, 27
no-doc mortgages, 96, 97
O
Oberting, Kip, 41, 191
O'Neal, Stan, 249
OOMLT 2005-3, 197
opacity (confusion)
background, 61–62, 69–70, 77n, 79
CDOs and, 73, 126, 130, 140, 141, 142–143,
176–177
Goldman Sachs and, 72–73
Morgan Stanley and, 201
ratings and, 155
terminology, of, 24, 29, 99n, 126–127, 131
Wall Street CEOs and, 174
Oppenheimer securities, 1, 9
Option One, 153, 169, 197
options, stock, 113–114, 116, 121–122. see also
LEAPs (Long-term Equity AnticiPation
Securities)
"originate and sell" industry, 24, 27
P
Pandit, Vikram, 260
Park, Gene, 85–86, 88, 89
parochialism, 110
Passport Capital, 105
Paulson, Henry, 197–198, 260, 261
Paulson, John, 105, 106, 198
Pennant Capital, 105
Petry, John, 190
Phanos, Theo, 106
Ponzi schemes , 185, 232
poor people, 97–98, 100
prospecti, 27
public corporations, 258–259, 263
Q
QVT Financial, 105
R
Raiter, Frank, 171n
Ranieri, Lewie, 8
ratings. see also ratings agencies
background, 26, 50n, 98–103
CDOs and, 73, 76, 140, 144, 207–208
change in, 94–95
default rates and, 66, 67
FICO scores and, 99–101
German investors and, 203
Ledley on, 128
opacity and, 155
ratings agencies. see also ratings; specific agencies
basics, 98–99
Eisman on, 176
employee calibre, 156–159
FrontPoint Partners and, 101–103, 169
Grant on, 177
models, 98, 100, 165
Morgan Stanley and, 201
real estate bubbles. see housing prices
regulation
Capital One and, 111
CDO crisis and, 166
credit default swaps and, 78
Eisman on, 18–20
interest rate swaps and, 69–70
lack of, 62, 244
Wall Street view of, 210n
Republicans, 20
Reserve Primary Fund, 238
risks
AIG and, 71–72
basics, 258
Burry on, 41–42
CDOs and, 77–78
credit default swaps and, 81–83
hiding, 74
Hubler and, 211–212
interest rate swaps and, 69
measurements of, 50n, 207, 217–218
Rizzo, Rich, 130
RMBSs (residential mortgage-backed securities), 127
Russia, 15
S
Salomon, William, 257
Salomon Brothers, 7, 8, 25, 254, 257–258
Sandler, Herb, 19–20
Savage, Tom, 87
Schnall, Peter, 112
Schorr, Glenn, 173
Schroeder, Alice, 2
Schwartz, Alan, 230, 231
Scion Capital, 39–47, 179, 185. see also Burry,
Michael
SEC, 166
second mortgages, 17, 100
securitization, 172
senior tranche, 161n
September 11, 2001, 240–241
shorting, overviews of, 24–25, 28–29, 46, 171, 256
side-pocketing, 189–190
silent seconds, 100, 195
Sinha, Gyan, 164, 229
skepticism, 56–57
socialism, 20
Sosin, Howard, 69
S&P. see Standard and Poors
specialty finance, 3
speculation
basics, 75, 233, 256
credit default swaps as, 30
crisis and, 240
discontinuities and, 116
housing prices and, 94–95
public corporations and, 263
Spider-Man, 152–153
spread, 160n
Standard and Poors (S&P). see also ratings agencies
2001-2004, 42
CDOs and, 76
data and, 169–170
Grant and, 177
price of swaps and, 50
rating models, 94, 165
standardization of swaps, 203
standards, 27, 28
Stark, John, 17
stock market, 37, 237, 238, 247
stock options, 113–114, 116, 121–122. see also
LEAPs (Long-term Equity AnticiPation
Securities)
stocks, 25, 29, 61
Stone, Andy, 254
Strauss, Stacey, 149
structured finance , 172
subprime lenders , 24, 27, 28
subprime mortgage loans
background, 8, 9–10
Capital One and, 111, 112
credit default swaps and, 29–30
Daniel's research, 12–16, 24–25
Eisman on, 9–10, 13, 15
risk and, 13–14
terms of, 23
1990s, 3, 23
2000-2006, 16, 23, 27, 30, 68, 71
Wall Street banks and, 24, 173
subway travelers, 236–237
Sullivan, Martin, 71
Swiss Re FP, 70
synthetic CDOs (credit default swap funds), 75–77,
134, 140, 143, 239. see also credit default
swaps
T
TABX, 161n, 162
Tannin, Matthew, 245
Tanona, William, 217
TARP (Troubled Asset Relief Program), 260, 261
tax payers, 238, 261
tax refunds, 168
terminology, opacity of , 24, 29, 99n, 126–127, 131
Tett, Gillian, 70n
therapy, 21
Toll Brothers, 91
trailers, 14
tranches. see also CDOs (collateralized debt
obligations); mezzanine CDOs
basics, 7–8, 26, 73, 161n
ratings of, 101
shorting and, 28
terminology and, 127
transparency. see opacity
Treasury, U.S., 259, 260, 262
Treasury bonds, 62
Troubled Asset Relief Program (TARP), 260, 261
Tufariello, Tony, 205
20 Rising Stars of Fixed Income (Institutional
Investor), 133
1980s, 69
1990s, 3, 23, 30, 70
2000-2004
defaults, 65
lending standards, 27
subprime mortgage loans, 16, 23, 71
2005
credit default swaps, 58
delinquencies, 25, 54
Lippmann's epiphany, 80, 83
subprime bond market, 24, 164
subprime mortgage loans, 23, 30
2006
credit default swaps, 89–90
defaults, 64–65, 126
housing prices, 107, 126, 189
rating agencies and, 94, 101
subprime bond market, 164
subprime mortgage loans, 68
2007
CDOs, 161–166, 169
defaults, 169, 180, 184, 192, 197, 210
housing prices, 194
HSBC dump, 173
subprime bond prices, 161–166, 168, 172, 194–
196, 210
subprime mortgage market, 175, 209, 219
2008, 198
U
UBS (Union Bank of Switzerland), 62, 174, 216, 222
United Capital Markets, 148
United Pan-European Cable, 115
V
value investing, 35, 46, 56, 79, 113
Vanguard funds, 37–38
VaR (value at risk), 207, 218
W
Wachovia Bank, 150, 163, 260
Warner, Ernestine, 170–171
Washington (state), 17–18
Washington Mutual, 97, 260
Wells, David, 158n
Wells Fargo, 28, 105
Whitebox, 105
White Mountains, 41, 56, 191
Whitney, Meredith, 4
X
Xu, Eugene, 66, 80
Y
You Can Be a Stock Market Genius (Greenblatt), 39,
113
Z
Zelman, Ivy, 94–95
Zurich Re FP, 70