The Real History Behind The Big Short

In 2008, Joshua Brown, a retail stock broker, “needed a place to vent” about what was going on around him on Wall Street. Early that year, the market had hit what many—incorrectly—saw as its bottom, with the forced sale of Bear Stearns. Brown sensed that the worse was still to come, a hunch that inspired his first blog post as “The Reformed Broker,” which celebrated people who had made prescient bearish calls. The list included Meredith Whitney, who is featured in the book version of The Big Short.

With the film version of The Big Short among the candidates for Best Picture at the upcoming Oscars, Brown reflects on what it was like to have a front-row seat on Wall Street during the crisis depicted on screen.

“Before the crisis, it was a very anything-goes kind of world, because anything that you wanted to do there was financing for it. And there was enormous investment demand for almost every kind of product that you were going to sell,” he recalls. “If you were at an investment bank producing product, it was really easy to find a buyer. The hard part would be to be creative enough to come up with something that someone else wasn’t doing. And creative is not a good word on Wall Street when all is said and done.”

The change came suddenly. “You would hear about people losing their jobs second- and third-hand, and these were people that a month before were making hundreds of thousands of dollars per month,” he says. “And then I think the other aspect that was startling was that you couldn’t trust anyone. You had executives from every major bank coming out on TV to keep their workforce calm globally. And it became apparent that they were all either lying or didn’t themselves understand what was happening, or some combination of the two.”

It was a time of rumor-mongering, when the Financial District bars popular with brokers buzzed with “outrageous” talk—or didn’t, as people disappeared from view in the wake of shame or scandal, or out of fear. And that so-called bottoming out that had occurred early in 2008? It turned out not to be the end of the downturn, a fact that Brown says surprised even those who were paying attention—and those who might hope to capitalize on “buying the crisis.”

“[Bear Stearns] was like, O.K., this is one of those moments in time when we never forget it: the fall of Bear marked the end of the crisis,” Brown says. “It didn’t work out that way. But it was a nice feeling a lot of people had.”

Nearly a decade later, Brown says that the popularity of The Big Short can play an important role in helping people process what happened. “It’s probably healthy for the markets long-term because it’ll serve as this very big pop culture reminder, ‘Oh, we’ve been through things like this before, it didn’t go well last time,” he says. “Maybe let’s take less risk.'”