The Big Short: Inside the Doomsday Machine

the cash-strapped American masses had a virtually unlimited demand for loans but an uncertain ability to repay them.

Writing a check separates a commitment from a conversation. —Warren Buffett

The market might have learned a simple lesson: Don’t make loans to people who can’t repay them. Instead it learned a complicated one: You can keep on making these loans, just don’t keep them on your books. Make the loans, then sell them off to the fixed income departments of big Wall Street investment banks, which will in turn package them into bon

“Steve’s fun to take to any Wall Street meeting,” said Vinny. “Because he’ll say ‘explain that to me’ thirty different times. Or ‘could you explain that more, in English?’ Because once you do that, there’s a few things you learn. For a start, you figure out if they even know what they’re talking about. And a lot of times they don’t!”

“When you’re a conservative Republican, you never think people are making money by ripping other people off,” he said. His mind was now fully open to the possibility. “I now realized there was an entire industry, called consumer finance, that basically existed to rip people off.”

How do you make poor people feel wealthy when wages are stagnant? You give them cheap loans.

The accounting rules allowed them to assume the loans would be repaid, and not prematurely. This assumption became the engine of their doom.

“Any business where you can sell a product and make money without having to worry how the product performs is going to attract sleazy people.

big fear of the 1980s mortgage bond investor was that he would be repaid too quickly, not that he would fail to be repaid at all.