The financial institutions and banks were providing mortgage facilities to anyone who came in, without proper credit checks on affordability or the ability to pay back the loans. The mortgages were based on the assumption of receiving regular payments from borrowers. The mortgage IOU’s were then converted to various bonds and other securities. The borrowers were not informed about the risks involved when they bought stocks and funds on Wall Street. Even pensions and hedge funds were converted into bonds. These investments were portrayed as being safe. Later, it was found out many of the IOU’s were of no value. This led to foreclosure on houses, as many people could not afford to even pay the monthly rent. Someone earning $40,000 a year could not keep up with mortgage payments and would default. (Wolff-Mann). Similar practices continued due to loopholes in the mortgage sector that led to the creation of Collateralized Debt Obligation – CDOs, which were later sold and resold. This way a bad debt could be covered up as another product. CDOs are assets, such as mortgages, bonds and …show more content…
The main theme of the movie was “short”. Ratings placed by Standard and Poor (S&P 500 is an American stock market index based on 500 large companies with stocks listed on the NYSE or NASDAQ) were over exaggerated. Burry was not straightforward in his dealings. He concealed facts from the fund investors that he was going to short the housing market. On the other hand, S&P should have been transparent and kept investors informed about risks involved in bonds, stocks and securities. When the financial market crash hit the economy, people lost their jobs, homes and belonging; Michael Burry, along with his associates, banks and S&P executives profited from