The Big Short is a 2015 American drama film directed and co-written by Adam McKay. It is based on the non-fiction 2010 book The Big Short: Inside the Doomsday Machine by Michael Lewis about the financial crisis of 2007–2008, which was triggered by the United States housing bubble. The film stars Christian Bale, Steve Carell, Ryan Gosling, and Brad Pitt.
Distributed by Paramount Pictures, the film began a limited release in the U.S. on December 11, 2015, followed by a wide release on December 23, 2015. The film was nominated for five Academy Awards, including Best Picture, Best Director, Best Supporting Actor for Bale, and won in the category of Best Adapted Screenplay.
The film is noted for the unconventional techniques it employs to explain complex financial instruments: among others, cameo appearances by Margot Robbie, Anthony Bourdain, Selena Gomez, and Richard Thaler, who explain concepts such as subprime mortgages and collateralized debt obligations directly to the audience. Several other actors also break the fourth wall, most frequently Gosling, who serves as the narrator.
In 2005, eccentric hedge fund manager Michael Burry discovers that the U.S. housing market is extremely unstable, being based on high-risk subprime loans. Anticipating that the market will collapse during the second quarter of 2007, as interest rates would rise on many adjustable-rate mortgages, he envisions an opportunity to profit. His plan is to create a credit-default swap market, allowing him to bet against the mortgage-backed securities that are based on the housing market. He proposes his idea to several major investment and commercial banks. These firms, believing that the housing market is secure, readily accept his proposal. Burry’s huge long-term bet, in excess of $1 billion, entails paying substantial „premiums“ to the banks. This proviso incurs his clients‘ ire because they believe that he was wasting their capital. Many demand that he reverse course and sell his swaps, but Burry, confident in his analysis, refuses. When the rate-hike arrives and begins triggering heavy mortgage failures, however, the freefall he anticipates did not occur. As he later discovers, the banks collude with a major bond-rating company to maintain high ratings on bonds that were essentially worthless. This ploy allows the banks to sell off their losing positions before the true value of the bonds became known. Pressed by his investors, Burry restricts withdrawals from his fund, again angering his investors. Eventually, as the housing market collapsed as he predicted, the value of his fund increases by a net of 489% with an overall profit of over $2.5 billon, but the backlash he received from his investors, coupled with his own sense of disgust for the industry, convinces him to close down his fund.
Salesperson Jared Vennett is one of the first to understand Burry’s analysis, learning about Burry’s actions from one of the bankers that sold Burry an early credit default swap. Vennett uses his quant to verify that Burry’s predictions are likely true and decides to put his own stake in the credit default swap market, earning a fee on selling the swaps to firms who understand that they will be profitable when the underlying mortgage bonds fail. A misplaced phone call alerts hedge fund manager Mark Baum to his plans, and Baum is convinced to buy credit default swaps from Vennett due to his own personal distaste with the big banks. Vennett explains that the impending market collapse is being further perpetuated by the packaging of poor, unsellable loans into CDOs large enough to be considered diversified and thus given AAA ratings. Baum sends some of his staff to investigate the housing market in Miami, and they discover that mortgage brokers make more money if they only sell risky mortgages to the Wall Street banks – and these mortgages are so easy to acquire that a speculative housing bubble has been created. In early 2007, the mortgages loans begin to default, but the prices of the corresponding bonds increase and their ratings remain the same. When Baum questions an acquaintance at Standard & Poor’s, he discovers there is conflict of interest and dishonesty amongst the credit rating agencies. When Baum’s employees question Vennett’s motives, Vennett maintains his position and invites Baum and his team to the American Securitization Forum in Las Vegas, where Baum interviews CDO manager Wing Chau, who creates CDOs on behalf of an investment bank while claiming to represent the interests of investors. Chau describes how synthetic CDOs make a chain of increasingly large bets on the faulty loans, involving twenty times as much money as the loans themselves. Baum realizes, much to his horror, that the scale of the fraud will cause a complete collapse of the global economy. Baum convinces his business partners to go through with more credit default swaps, profiting from the situation at the banks‘ expense. Baum laments that the banks will not accept any of the blame for the crisis.
Eager young investors Charlie Geller and Jamie Shipley accidentally discover a prospectus by Vennett, which convinces them to become involved in the credit default swaps, as it fits their strategy of buying cheap insurance with big potential payouts. Since they are below the capital threshold for an ISDA Master Agreement needed to pull off the trades necessary to profit from the situation, they enlist the aid of retired securities trader Ben Rickert. When the value of mortgage bonds and CDOs rise despite the rise in defaults, Geller suspects the banks of committing fraud and thinks they should buy more swaps. The three visit the Mortgage Securities Forum in Las Vegas, where they learn that the Securities Exchange Commission has no regulations to monitor the activity of mortgage-backed securities. They manage to successfully make an even higher-payout deal than the other hedge funds by shorting the higher rated mortgage securities, as they will become worthless if defaults rise above 8% and their real value is likely less than stated. Shipley and Geller are initially ecstatic, but Rickert is disgusted, since they’re essentially celebrating an impending economic collapse and soon-to-be-lost lives (40,000 for each 1% rise in the unemployment rate). The two are horrified, and take a much more emotional stake in the collapse by trying to tip off the press and their families about the upcoming disaster and the rampant fraud amongst the big banks. Ultimately, they profit immensely, but are left with their faith in the system broken.
A note is given that CDOs have come back into the current market, under a different name: „bespoke tranche opportunity“.
In 2013, Paramount acquired the rights to the 2010 non-fiction book The Big Short: Inside the Doomsday Machine by Michael Lewis, to develop it into a film, which Brad Pitt’s Plan B Entertainment would produce. On March 24, 2014, Adam McKay was hired to write and direct a film about the housing and economic bubble. Screenwriter Charles Randolph, who co-wrote the film with McKay, said one of the first challenges was finding the right tone for the film. He told Creative Screenwriting, „In general it was trying to find the right tone that was slightly funnier than your average Miloš Forman comedy, which is all grounded character-based but not so satirical where you got Wag the Dog. Somewhere between there was what I was shooting for. Once I got the tone down, then I went through the plot. The market’s movements provided you with an underlying plot. You make your short deal, then the bank is trying to squeeze you out, and then it all breaks loose. So that was pretty easy, and it provided character arcs against that.“ Two years after Randolph wrote his draft, McKay, as director, rewrote Randolph’s screenplay. It was McKay’s idea to include the celebrity cameos in the film to explain the financial concepts.
On January 13, 2015, Variety reported that Brad Pitt, Christian Bale, and Ryan Gosling were set to star in the film, with Pitt producing the film along with Dede Gardner and Jeremy Kleiner. Plan B Entertainment would finance, with Paramount handling the distribution rights. Before this, Pitt had already starred in the adaptation of the author’s Moneyball, for which he was nominated for an Oscar. On January 14, it was announced that Steve Carell would also star. On April 21, 2015, more cast was revealed by Deadline, including Melissa Leo, Marisa Tomei, Tracy Letts, Hamish Linklater, John Magaro, Byron Mann, Rafe Spall, Jeremy Strong, and Finn Wittrock. Charles Randolph wrote the initial draft. Max Greenfield joined the ensemble cast of the film on April 23, 2015. Karen Gillan tweeted about her involvement in the film on May 8, 2015.
Principal photography on the film began on March 18, 2015 in New Orleans, Louisiana. On March 25, filming was taking place on General De Gaulle Boulevard in the Algiers section of New Orleans. On May 8, Gillan confirmed she was shooting her scenes. On May 20, 2015, filming took place on Mercer, between Prince Street and Spring Street in Manhattan, New York City. On May 22, the production crew recreated the offices of failed investment firm Lehman Brothers in the lobby of the New York State Department of Financial Services in Manhattan. An assistant counsel for the Department of Financial Services played one of the extras in the scene.
On September 22, 2015, Paramount set the film for a limited release on December 11, 2015 and a wide release on December 23, 2015.
The film was released on DVD and Blu-ray on March 15, 2016.
The Big Short grossed $70.3 million in North America and $63.1 million in other territories for a worldwide total of $133.3 million, against a budget of $28 million.
The film was released in eight theaters in Los Angeles, New York, San Francisco and Chicago on December 11, 2015 and earned $705,527 (an average of $88,191 per theater). It set the record for the best ever per-screen gross for a film opening in eight locations, breaking the previous record held by Memoirs of a Geisha ($85,313 per theater), and was the third biggest theater average of 2015 behind the four screen debuts of Steve Jobs ($130,000) and The Revenant ($118,640).
The film had its wide release on Wednesday December 23, 2015 and grossed $2.3 million on its first day. In its opening weekend it grossed $10.5 million, finishing 6th at the box office.
The Big Short has received positive reviews from critics, with Bale’s performance receiving strong praise. On Rotten Tomatoes, the film has a rating of 88%, based on 266 reviews, with an average rating of 7.8/10. The website’s consensus reads, „The Big Short approaches a serious, complicated subject with an impressive attention to detail – and manages to deliver a well-acted, scathingly funny indictment of its real-life villains in the bargain.“ On Metacritic, the film has a score of 81 out of 100, based on 45 critics, indicating „universal acclaim.“ Audiences polled by CinemaScore gave the film an average grade of „A–“ on an A+ to F scale.
IGN gave the film a score of 8.6/10, praising its „energetic direction“ and making „a complicated tale palpable for the layperson even as it triggers outrage at the fatcats who helped cause it.“ The New York Times‘s „UpShot“ series stated The Big Short offered the „strongest film explanation of the global financial crisis“. Vermont senator and 2016 presidential candidate Bernie Sanders endorsed The Big Short as an „excellent film“. Hamish Popplestone, from Salient, remarked in his review: ‚Go in craving Wolf of Wall Street; come out sticking Bernie’s bumper stickers on your car.‘