The Big Short - "Jenga" Clip (2015) - Paramount Pictures

(door opens)

(phones ring)

(whispers)

- Hi, how are you?

Hey, Mr. Vennett.

Who do we have?

(prospectus thuds)

- Let's see what you got.

- You smell that, what is that?

- [Mark] What?

- What's that smell?

- A cologne?

- [Jared] No.

- Opportunity.

- No, money.

- Oh, okay.

- I smell money.
- Okay.

- Chris.

Goddammit.

- [Chris] I'm sorry.

- This is your basic mortgage bond.

All right, the originals were simple.

They were just thousands of
AAA-mortgages bundled together,

guaranteed by the U.S. government.

The modern ones are different.

They're private.

And they're made up of layers of tranches.

(slinky jazz music)

Highest level AAAs getting paid first.

The lowest rated Bs getting paid last,

taking on defaults first.

Now obviously, if you're buying Bs

you could make more money.

But, they're a little
risky, sometimes they fail.

Chris.

Somewhere along the line,

these B and BBs went from
a little risky to dog shit.

Where's the trash?

- [Man] THere's one behind you.

- I'm talking rock-bottom FICO scores.

(Jenga block thuds)

No income-verification.

(Jenga block thuds)

Adjustable rates, dog shit.

(Jenga block thuds)

The default rates are already
up from one to 4%, fellas.

And if they rise to 8%, and they will,

a lot of these BBBs are going to zero too.

And that, you're too close,

is an opportunity.

(exhales)

- Okay, you're saying
that at 8% the bonds fail,

and we're already at 4%?

- That's right.

- If they go to eight, it's Armageddon.

- Yeah, that's right.

- [Mark] How come nobody's
talking about this?

- You're completely sure of the math?

- Look at him.

That's my quant.

- [Mark] Your what?

- My quantitative, my math specialist.

Look at him.

You notice anything different about him?

Look at his face.

- [Mark] That's pretty racist.

- Look at his eyes.

I'll give you a hint.

His name's Yang.

He won a national math
competition in China.

He doesn't even speak English.

Yeah, I'm sure of the math.

- Actually, my name is Jeong,
and I do speak English.

Jared likes to say it though,

because he thinks it makes
me seem more authentic.

And I got second in that
national math competition.

- So you're offering us a chance

to short this pile of blocks?

How?

- With something called
a credit default swap.

(claps)

It's like insurance on the bond,

and if it goes bust, you can make 10-to-1.

Even 20-to-1 return, and it's
already slowly going bust.

- 10-to-1, 20-to-1, no way.

- And no one's paying attention.

No one is paying attention.

Because the banks are too
busy getting paid obscene fees

to sell these bonds.

- But wait, you are the bank,
or you work for the bank.

I bet your margins are
pretty nice and fat.

- Let's not talk about
my margins by the way.

Being nice and fat.

That's a nice shirt, do
they make it for men?

- [Man] Aren't you the bank?

- I work for the bank.

I don't think like a bank.

Big banks, small bank,
I like to make money.

All right, let me put it this way.

I'm standing in front of a burning house,

and I'm offering you fire insurance on it.

As, zero.
(Jenga block clatters)

Bs, zero,

BBs, zero.
(Jenga block clatters)

BBBs, zero.
(Jenga block clatters)

(blocks clatter)

And then that happens.

- What is that?

- That's America's housing market.