Steve Eisman
Eisman is one of the central characters in The Big Short. He originally worked as a corporate lawyer, until quitting to join his parents at Oppenheimer securities in 1991. There, he rose quickly through the ranks thanks to his bold demeanor and talent for predicting when a company would fail. He established himself as one of few analysts whose opinions could change the markets, and found genuine joy in learning about the industry. He is described as an eccentric character: he dresses half-fastidiously, with a haircut he seems to have done himself, and has “the opposite of a poker face.” Those who work for him tend to love him because he stands up for the underdog and has a strong sense of justice, but many people are off put by his lack of manners. He enters the industry believing that he is blessed by good luck. In his youth, he also identifies as a Republican and believes that finance benefits everyone through its trickle-down effects. After the accidental death of his infant son, however, he develops a more pessimistic outlook and comes to believe that nothing and no one is too good to fail. He also decides that the consumer finance industry exists to “rip people off,” and becomes determined to stand up for the rights of lower and middle class Americans whom this industry takes advantage of.
Vincent Daniel
Vincent Daniel is introduced as the opposite of Steve Eisman in many ways: he grew up in Queens, in a lower class family, and went on to dress and behave very seriously and carefully in his professional life. However, he and Eisman both share an intense suspicion of other people. Daniel is hired at Eisman’s firm, Oppenheimer, thanks to a personal connection when he is only 26. But Eisman chooses him to investigate the subprime mortgage market as his personal assistant. While looking into the market data, Daniel discovers that no one is disclosing the delinquency rate of home loans, as they are supposed to. This raises his suspicion that there is something terribly wrong with the subprime lending industry.
Michael Burry
Michael Burry is the owner of Scion Capital, and one of the first people to recognize the profits that could be made from betting against the mortgage bond market. He is characterized primarily by his fake eye, which was the result of a rare cancer in his childhood. He blames much of his eccentricity on this fake eye. For example, he has trouble with face to face interactions because he finds it awkward to look people in the eye. As a result, Burry prefers to work alone, and communicate remotely with investors and clients. He also has an unusually high drive when it comes to things he is interested in. He is able to attend a top medical school while also running a successful financial blog on the side, and eventually quits the medical profession to more fully pursue his deep interest in finance. He is known for being incredibly good at predicting which companies might make a comeback or fail soon, which allows him to run a very successful hedge fund that raises a huge amount for his investors. He initially engages in “value investing,” meaning he searches for companies that are little known or misunderstood so they can be bought for less than their liquidation value. He also refuses to take two percent of assets off the top from his fund in order to make sure he has pure incentives: in order to make money for himself, he has to make money for those who invest in his fund, first.
When Blurry gets involved in shorting the housing market, however, he initially is met with skepticism by his investors, who fear that this unusual new plan is doomed. He must contend with investors doubting him and wanting to leave the fund, even as he pulls off this plan. Burry’s investors come to mistrust him, and he, in turn, feels betrayed by them. He is going through a rough patch in relation to the hedge fund when he has to face the fact that his toddler son might be dealing with issues of his own, as well. Teachers begin to note that Burry’s son is different from other kids, and tends to be disliked, and they bring this up with Burry and his wife. At first, Burry dismisses this, knowing that he had been similar as a kid and believing that he had turned out fine. But after his son is diagnosed with Aspergers, which Burry previously knew little about, he realizes that he himself might also have this condition. For the first time, his oddities are packaged into a diagnosis, and a recognizable medical condition; this changes Burry’s entire perspective on his unique personality, and is difficult to come to terms with.
Greg Lippmann
A bond trader from Deutsche Bank who recognizes the potential gains to be made from shorting the housing market. He meets with initial skepticism from Eisman and Daniel when he tells them his plan, which is partly because he came from the bond market, and partly because he seemed like an untrustworthy person. He is thin and tightly wound, speaks too quickly, wears his hair slicked back and sideburns long “in the fashion of an 1820s Romantic composer or a 1970s porn star,” and is known for saying outrageous things with little self awareness. For example, he tends to make oblique references to how much he gets paid, and is vocally critical of his employers. Lippmann is “incapable of disguising himself or his motives,” which makes him unlikeable for many people. His controversial personality is due to the fact that he is transparently self-interested and self-promotional, and that he is particularly alert to other people’s self-interest and self-promotion. He convinces Eisman to bet against the subprime mortgage bond market by showing him a chart explaining that millions of Americans could not repay their mortgages unless their houses rose dramatically in value—which was almost impossible. Eisman is immediately taken with the idea, since he hates the subprime mortgage bond market, and likes Lippmann’s brash personality.
Eugene Xu
An analyst employed by Deutsche Bank who works most closely with Lippmann. He is often referred to as “Lippmann’s Chinese quant,” in reference to the fact that he supports Lippmann’s arguments with quantitative data. He supposedly speaks no English and, according to Lippmann, this means he can’t possibly lie. His hard data helps to convince Eisman that he should bet against the subprime mortgage bond market.
Gene Park
An AIG FP employee in the Connecticut office who works close to the credit default swap traders, and recognizes the risk in the industry. He noticed a front page story in the Wall Street Journal about the mortgage lender New Century in mid-2005, and took note of how high the company’s dividend was. When he did more research into the company, he realized that it owned a large amount of subprime mortgages of frighteningly poor quality. Soon after, an old college friend told him he had been offered several loans for a house he couldn’t afford. Park put two and two together, and realized that this was a widespread problem with mortgage lenders. He also extended this epiphany to the realization that AIG FP must contain a lot more subprime mortgages now than ever before, and that, if US homeowners began to default in greater numbers, it would not have enough capital to cover the losses that would result. He advises his boss Joe Cassano not to insure any more deals in mortgage bonds, which is initially met with anger but eventually helps AIG FP to see reason.
Joe Cassano
The head of AIG FP and the son of a police officer, he is mainly characterized by his demand for obedience and total control within the company. He bullies his employees and cannot tolerate anything he views as insubordination. Worst of all, he has an imperfect understanding of his own business, and his judgment is clouded by insecurity. His leadership creates a culture of fear and compliance within the company, which contributes to AIG FP’s overall inability to recognize and call out the bad risks it was taking by buying so many piles of consumer loans with subprime mortgages. He gets very upset with Gene Park when Park tells him that he wants no part in subprime mortgage bonds anymore because of their risk, because he sees this as insubordination. After meeting with other traders, however, Cassano recognizes that AIG FP shouldn’t insure any more of these deals, and passes off the realization as his own.
John Paulson
An investor who became involved in credit default swaps on subprime mortgage bonds after being persuaded by Lippmann’s arguments. He is notable for having had the most money available to him, and for being particularly obsessed with these trades. Nine months after Burry failed to raise a fund for buying credit default swaps, he succeeded in doing so by presenting it to investors not as a catastrophe almost certain to happen, but as a cheap hedge against the remote possibility of catastrophe. He was better known on Wall Street than Burry, but was still somewhat of a Wall Street outsider. But he had had a career of searching for overvalued bonds to bet against, which helped him to spot the crisis and the great potential of credit default swaps.
Charlie Ledley and Jamie Mai
In early 2003, these two thirty-year-old friends started a money management firm called Cornwall Capital from a shed behind a friend’s Berkeley house, with only $110,000 in savings to begin with. They had worked briefly for Golub Associates, a private equity firm, but had little other experience with finance. Both of them were also very hesitant and clearly indecisive and uncertain whenever they spoke. And yet they became very good at betting on things that Wall Street believed was least likely to happen, and winning. Their guiding principles were that thinking globally was important—but neglected by Wall Street, which paid a lot of people well for their narrow expertise and few people badly for seeing the big picture—and that people tended to be too certain about inherently uncertain things, and thus had difficulty attaching appropriate probabilities to improbable events. These principles led them to look for long-term options that they could buy cheaply, when they had a good sense that they would become more valuable in the future. They coined the term “event-driven investing” for this strategy, which led them to make bets based on world events that they believed would influence a market.
Ben Hockett
At the beginning of his career, Hockett spent nine years selling and trading derivatives for Deutsche Bank. But Hockett quit Deutsche Bank to join Ledley and Mai after getting sick of the company, and his role of working alone from home. He shares their view that people tended to underestimate the probability of extreme change, but takes this even further than they do: he is very alarmist, and believes that disasters can strike in real life at any time. His response to this fear of disaster is to be constantly prepared to fight back against whatever may happen. For example, he owns a small farm in the country, in a remote place without road access and with enough fruits and vegetables to feed his family, just in case the world ends. Though his worldview is extreme, it is helpful when it comes to dealing with Wall Street. Like Ledley and Mai, Hockett knows that the market underestimates disaster, and thus works with them to take advantage of this gap in Wall Street’s knowledge.
Wing Chau
A CDO manager who also ran an investment firm called Harding Advisory. He was seated next to Eisman at a financial conference in Las Vegas, in order to convince Eisman of how incompetent the people on the other side of credit default swaps really were. Chau has a superior attitude but actually is remarkably ignorant of the details of CDOs, and his work in general. Eisman was fascinated by his conversation with Chau, who revealed just how sloppy and irresponsible he and his coworkers really were. For example, Chau readily admitted that he had sold everything from his portfolio, which, as Eisman knew, was about to be wiped out by the very high default rates on the loans it insured. He is a representative of how CDO managers were like double agents: they seemed to represent the interests of investors but actually better represented the interests of Wall Street bond trading desks.
John Devaney
The manager of a hedge fund that invested in subprime mortgage bonds, United Capital Markets. He lavishly displayed his wealth, owning a Renoir, a helicopter, a yacht, etc. He was the moderator for a conference in Las Vegas attended by Ledley shortly before the market crash. To Ledley, he appeared to be drunk, unhinged, or terribly hungover as he delivered a speech at the conference. In the speech, he ranted about the state of the subprime market and went on about how the rating agencies were whores, securities were worthless, etc. After he finished, everyone else pretended to ignore what he had just said and move on with the conference as though there were no issues in the industry. For Ledley and Hockett, however, this speech was evidence of just how close to a crash the market really was.
Howie Hubler
The head of subprime mortgages at Morgan Stanley. He was a football player in college, and remained known for his large and tough physique, his stubornness and loudness, and his aggression even at work. He largely refused help from others and tried to set out on his own. His job was relatively easy until the subprime mortgage bond market changed; he was playing a low-stakes poker game rigged in his favor, since nothing had gone wrong with the market in the past. But when the subprime mortgage market changed, he chose to bet for it, instead of against it. This eventually cost Morgan Stanley a huge amount of money. But Hubler left the company, with his large bonus, before the losses struck. He was never punished for his mistake.
