Big Deal

Rating: 9/10 (12 November 2016)

Film Review: "The Big Short" could cause you to take the Big Sleep, but you should still see this film because it is about a Big Deal. Based on the non-fiction book of the same name, written by Michael Lewis (author of "Moneyball"), Paramount Pictures and Brad Pitt's Plan B Entertainment create a film explaining the origins of the Great Recession.
This is not easy material to understand, so the producing team smartly hires Saturday Night Live writer/director Adam McKay ("Anchorman", "Talladega Nights", "Ant-man") to write the screenplay. In addition to getting the right writer, they also cast Christian Bale, Ryan Gosling, and Steve Carrell to join Mr. Pitt to create the smartest and most charismatic cast imaginable to present the material. This is how to make a film of substance in Hollywood.
Now for the film, Mr. McKay uses almost every trick in the book to keep the audience interested. They break the fourth wall (have characters talk directly to the audience), use celebrities as cameos, like Selena Gomez, and he asks characters to play over-the-top eccentric financial players. Slowly, but surely, the fraud unfurls on screen.
Since the fraud is so complicated, I'm going to take a shot at explaining the meltdown, so you have a better chance of enjoying the film as opposed to hearing the financial mess for the first time. In the early 2000s, financial institutions and markets created special securities (CDOs) made up of mortgages from people's homes between approximately 2002 and 2008. A large part of these securities were made up of subprime mortgages (mortgages issued to borrowers with poor credit ratings or were unlikely to pay the mortgages off) and then were allegedly pooled with mortgages that were not as risky. Except, they didn't diversify the CDOs very well (i.e. they paired risky mortgages with other risky mortgage based securities). These risky CDOs were then given AAA ratings by Standard & Poor's and Moody's, because the large banks/financial institutions where creating the CDOs and paying the ratings agencies to give AAA status to these risky securities (many people think this was bribery). Then, the banks pushed these risky securities to be purchased by millions of investors, who did not know they were risky because they were well rated. When, everyday people couldn't pay their mortgages, these mortgage based securities became almost worthless.
"The Big Short" is a film about three groups of fund managers and investors that discovered that the CDOs were fraudulent, and took advantage of a credit default swap market (a non-publicly traded, unregulated market) that allowed investors to bet that the housing based securities would fail. Michael Burry, played by Christian Bale, was one of the first people to understand the problem and create a way to short (bet against the risky mortgage based securities). Investors Jared Vennett (Ryan Gosling), and Mark Baum (Steve Carrell) are investors also unraveling the truth behind the CDOs, and Ben Rickert (Brad Pitt) is a retired banker who helps two young investors who also discover the fraud. There's much more to the film, and more financial terms and concepts to learn from the film. (This film pretty much leaves out AIG's negligent role insuring the risky securities in the credit default swap market, but is included in Mr. Lewis' book.)
This is a good film. It tries to explain complicated securities that many professional investors did not understand during the housing boom, and for the most part succeeds. The best part of the film is the performances. Mr. Bale, Mr. Gosling, Mr. Carrell and Mr. Pitt are intense and excellent. There is not a chance to get to know the characters, since this is a film about characters investigating and reacting to knowledge that the U.S. and world financial markets will collapse. This film is not about the characters, but about the world they inhabit. I recommend this film to anyone who wants to know more about what happened to the financial markets, and want it to be explained by Christian Bale, Ryan Gosling, Steve Carrell and Brad Pitt. Personally, I don't mind going to class with these instructors.