The Goldman Sachs Group, Inc. is an American multinational investment bank and financial services company. Founded in 1869, Goldman Sachs is headquartered in Lower Manhattan in New York City, with regional headquarters in many international financial centers. Goldman Sachs is the second largest investment bank in the world by revenue and is ranked 55th on the Fortune 500 list of the largest United States corporations by total revenue. In Forbes Global 2000 2023, Goldman Sachs ranked 34th. It is considered a systemically important financial institution by the Financial Stability Board.
Adam McKay is an American screenwriter, producer, and director. McKay began his career as a head writer for the NBC sketch comedy show Saturday Night Live (SNL) from 1995 to 2001. Following his departure from SNL, he rose to fame in the 2000s for his collaborations with comedian Will Ferrell and co-wrote his comedy films Anchorman (2004), Talladega Nights (2006), Step Brothers (2008), and The Other Guys (2010). Ferrell and McKay later co-wrote and co-produced many television series and films, with McKay himself co-producing their website Funny or Die through their company, Gary Sanchez Productions.
A collateralized debt obligation (CDO) is a type of structured asset-backed security (ABS). Originally developed as instruments for the corporate debt markets, after 2002 CDOs became vehicles for refinancing mortgage-backed securities (MBS). Like other private label securities backed by assets, a CDO can be thought of as a promise to pay investors in a prescribed sequence, based on the cash flow the CDO collects from the pool of bonds or other assets it owns. Distinctively, CDO credit risk is typically assessed based on a probability of default (PD) derived from ratings on those bonds or assets.
Steven John Carell is an American actor and comedian. He played Michael Scott in the sitcom The Office, in which he also worked at several points as a producer, executive producer, writer, and director. Carell has received numerous accolades, including a Golden Globe Award for The Office. He was recognized as "America's Funniest Man" by Life.
The American subprime mortgage crisis was a multinational financial crisis that occurred between 2007 and 2010 that contributed to the 2007–2008 global financial crisis. The crisis led to a severe economic recession, with millions of people losing their jobs and many businesses going bankrupt. The U.S. government intervened with a series of measures to stabilize the financial system, including the Troubled Asset Relief Program (TARP) and the American Recovery and Reinvestment Act (ARRA).
The subprime mortgage crisis impact timeline lists dates relevant to the creation of a United States housing bubble and the 2005 housing bubble burst and the subprime mortgage crisis which developed during 2007 and 2008. It includes United States enactment of government laws and regulations, as well as public and private actions which affected the housing industry and related banking and investment activity. It also notes details of important incidents in the United States, such as bankruptcies and takeovers, and information and statistics about relevant trends. For more information on reverberations of this crisis throughout the global financial system see 2007–2008 financial crisis.
A synthetic CDO is a variation of a CDO that generally uses credit default swaps and other derivatives to obtain its investment goals. As such, it is a complex derivative financial security sometimes described as a bet on the performance of other mortgage products, rather than a real mortgage security. The value and payment stream of a synthetic CDO is derived not from cash assets, like mortgages or credit card payments – as in the case of a regular or "cash" CDO—but from premiums paying for credit default swap "insurance" on the possibility of default of some defined set of "reference" securities—based on cash assets. The insurance-buying "counterparties" may own the "reference" securities and be managing the risk of their default, or may be speculators who've calculated that the securities will default.
Credit rating agencies (CRAs)—firms which rate debt instruments/securities according to the debtor's ability to pay lenders back—played a significant role at various stages in the American subprime mortgage crisis of 2007–2008 that led to the great recession of 2008–2009. The new, complex securities of "structured finance" used to finance subprime mortgages could not have been sold without ratings by the "Big Three" rating agencies—Moody's Investors Service, Standard & Poor's, and Fitch Ratings. A large section of the debt securities market—many money markets and pension funds—were restricted in their bylaws to holding only the safest securities—i.e. securities the rating agencies designated "triple-A". The pools of debt the agencies gave their highest ratings to included over three trillion dollars of loans to homebuyers with bad credit and undocumented incomes through 2007. Hundreds of billions of dollars' worth of these triple-A securities were downgraded to "junk" status by 2010, and the writedowns and losses came to over half a trillion dollars. This led "to the collapse or disappearance" in 2008–09 of three major investment banks, and the federal government's buying of $700 billion of bad debt from distressed financial institutions.
AIG Financial Products Corporation (AIGFP) is a subsidiary of the American International Group, headquartered in New York, New York, with major operations in London. The collapse of AIG Financial Products, headquartered in Wilton, Connecticut, is considered to have played a pivotal role in the global financial crisis of 2008–2009.
Magnetar Capital is a hedge fund based in Evanston, Illinois. The firm was founded in 2005 and invests in fixed-income, energy, quantitative, and event-driven strategies. The firm was actively involved in the collateralized debt obligation (CDO) market during the 2006–2007 period. In some articles critical of Magnetar Capital, the firm's arbitrage strategy for CDOs is described as the "Magnetar trade".
Inside Job is a 2010 American documentary film, directed by Charles Ferguson, about the late-2000s financial crisis. Ferguson, who began researching in 2008, said the film is about "the systemic corruption of the United States by the financial services industry and the consequences of that systemic corruption", amongst them conflicts of interest of academic research, which led to improved disclosure standards by the American Economic Association. In five parts, the film explores how changes in the policy environment and banking practices helped create the financial crisis.
Many factors directly and indirectly serve as the causes of the Great Recession that started in 2008 with the US subprime mortgage crisis. The major causes of the initial subprime mortgage crisis and the following recession include lax lending standards contributing to the real-estate bubbles that have since burst; U.S. government housing policies; and limited regulation of non-depository financial institutions. Once the recession began, various responses were attempted with different degrees of success. These included fiscal policies of governments; monetary policies of central banks; measures designed to help indebted consumers refinance their mortgage debt; and inconsistent approaches used by nations to bail out troubled banking industries and private bondholders, assuming private debt burdens or socializing losses.
Steven Eisman is an American businessman and investor known for having shorted collateralized debt obligations (CDOs), thereby profiting from the collapse of the US housing bubble in 2007–2008.
Brad Pitt is an American actor and producer. His acting career began at age 23 in 1987 with roles in the hit Fox television series 21 Jump Street. He subsequently appeared in episodes for television shows during the late 1980s and played his first major role in the slasher film Cutting Class (1989). He gained recognition in Thelma & Louise (1991) and A River Runs Through It (1992). He later took on the role of vampire Louis de Pointe du Lac in the horror drama Interview with the Vampire (1994) and for his performance in the epic drama Legends of the Fall (1994), he earned his first Golden Globe Award for Best Actor nomination.
The Big Short is a 2015 American biographical crime comedy-drama film directed and co-written by Adam McKay. Co-written by Charles Randolph, it is based on the 2010 book The Big Short: Inside the Doomsday Machine by Michael Lewis showing how the 2007–2008 financial crisis was triggered by the United States housing bubble. The film stars Christian Bale, Steve Carell, Ryan Gosling and Brad Pitt, with John Magaro, Finn Wittrock, Hamish Linklater, Rafe Spall, Jeremy Strong, and Marisa Tomei in supporting roles.
Army of One is a 2016 American comedy film directed by Larry Charles and written by Rajiv Joseph and Scott Rothman. The film stars Nicolas Cage, Wendi McLendon-Covey, Rainn Wilson, Russell Brand, Denis O'Hare, Paul Scheer, and Will Sasso.
Howard Hubler III, known as Howie Hubler, is an American former Morgan Stanley bond trader who is best known for his role in the fifth largest trading loss in history. He made a successful short trade in risky subprime mortgages in the U.S., but to fund his trade he sold insurance on AAA-rated mortgage-backed collateralized debt obligations that market analysts considered less risky, but also turned out to be worthless, resulting in a massive net loss on his trades. His actions while handling credit default swaps (CDS) directly resulted in the loss of roughly US$9 billion during the 2007–08 financial crisis—the largest single trading loss in Wall Street history when adjusted for inflation, and the largest at the time. The only bigger single losses in nominal terms came in in 2012 with Bruno Iksil and in 2021 when Bill Hwang lost around $10 billion on total return swaps.
The Greatest Trade Ever: The Behind-the-Scenes Story of How John Paulson Defied Wall Street and Made Financial History is a debut non-fiction book by American journalist Gregory Zuckerman. The book was released on November 3, 2009, by Crown Business. The book investigates the reasons and consequences of the subprime mortgage crisis and the role that hedge fund manager John Paulson played in those events.
Goldman Sachs, an investment bank, has been the subject of controversies. The company has been criticized for lack of ethical standards, working with dictatorial regimes, close relationships with the U.S. federal government via a "revolving door" of former employees, and driving up prices of commodities through futures speculation. It has also been criticized by its employees for 100-hour work weeks, high levels of employee dissatisfaction among first-year analysts, abusive treatment by superiors, a lack of mental health resources, and extremely high levels of stress in the workplace leading to physical discomfort.
