Note: An "n" following a page number indicates a footnote.
Association of Community Organizations for Reform
Now (ACORN), 18
Attwood, Tony, 181
Avant! Corporation, 45–46
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
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
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
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
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
1980s, 69
Investor), 133
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