«Summary of The Big Short» by Instaread Summaries

Inside this Instaread Summary:


Overview of the entrie book


Introduction to the important people in the book


Summary and analysis of all the chapters in the book


Key Takeaways of the book


A Reader's Perspective


Preview of the earlier chapters:


 Chapter 1


In December of 1991, Steve Eisman was working for Oppenheimer and Co. as an analyst and became


known for his knack for ignoring consensus, an analysis of a stock’s future sales and earnings.


In the early 1990s, the Salomon Brothers trading floor began a whole new bond market by packaging


mortgages into bonds. In this way, they began to tap the unused equity many people had in their


homes, driving the interest rates of mortgages so low that even those with less than perfect credit could


get low rates. This led to a surge in subprime mortgages, mortgages offered to those with poor credit


ratings. Subprime mortgages were then packaged into bonds and sold to investors.


Eisman hired accountant Vincent Daniel to help him decipher the suspicious accounting used by


subprime mortgage originators. Daniel discovered companies were booking profits for expected future


values of loans, and prematurely displaying themselves as profitable. However, they were failing to


reveal the delinquency rate of the home loans they were making, claiming that they were selling these


loans to be packaged as bonds, so their risk was limited. An example of this was Long Beach Savings,


one of the first banks to implement what was called the originate and sell method, a method of


originating a loan that was likely to be defaulted on and sell it to another lender, but leave it


on the books to appear as profit…


 About the Author


With Instaread Summaries, you can get the summary of a book in 30 minutes or less. We read every


chapter, summarize and analyze it for your convenience.