The film consists of three separate but concurrent stories, loosely connected by their actions in the years leading up to the 2007 housing market crash.

Michael Burry

In 2005, eccentric hedge fund manager Michael Burry (Christian Bale) discovers that the United States housing market, based on high-risk subprime loans, is extremely unstable. Anticipating the market's collapse in the second quarter of 2007, as interest rates would rise from adjustable-rate mortgages, he proposes to create a credit default swap market, allowing him to bet against market-based mortgage-backed securities, for profit.

His long-term bet, exceeding $1 billion, is accepted by major investment and commercial banks, but as it requires paying substantial monthly premiums, it sparks his clients' vocal unhappiness, believing he is "wasting" capital. Many demand that he reverse and sell, but Burry refuses. Under pressure, he eventually restricts withdrawals, angering investors. Eventually, the market collapses and his fund's value increases by 489% with an overall profit of over $2.69 billion. He (the fund) deposits profits of $489 million into Lawrence's account.

FrontPoint Partners and Jared Vennett

Deutsche Bank salesman Jared Vennett (based on Greg Lippmann, played by Ryan Gosling), the executive in charge of global asset-backed securities trading at Deutsche Bank, is one of the first to understand Burry's analysis, learning from one of the bankers who sold Burry an early credit default swap. Using his quant to verify that Burry is likely correct, he decides to enter the market, earning a fee on selling the swaps to firms who will profit when the underlying bonds fail. A misplaced phone call alerts FrontPoint Partners hedge fund manager Mark Baum (based on Steve Eisman, played by Steve Carell), who is motivated to buy swaps from Vennett due to his low regard for banks' ethics and business models. Vennett explains that the packaging of subprime loans into collateralized debt obligations (CDOs) rated at AAA ratings will guarantee their eventual collapse.

Conducting a field investigation in South Florida, the FrontPoint team discovers that mortgage brokers are profiting by selling their mortgage deals to Wall Street banks, who pay higher margins for the riskier mortgages, creating the bubble, prompting them to buy swaps from Vennett. In early 2007, as these loans begin to default, CDO prices somehow rise and ratings agencies refuse to downgrade the bond ratings. Baum discovers conflicts of interest and dishonesty amongst the credit rating agencies from an acquaintance at Standard & Poor's. Baum's employees question Vennett's motives, yet he maintains his position and invites Baum and company to the American Securitization Forum in Las Vegas.

Interviewed by Baum, CDO manager Wing Chau, on behalf of an investment bank, describes how synthetic CDOs create chains of increasingly large bets on faulty loans – up to 20 times as much money as the loans themselves. A horrified Baum realizes that the fraud will completely collapse the global economy. He purchases as much as possible, profiting at the banks' expense and waits until the last minute to sell. Baum's fund makes a profit of $1 billion, and he laments that the banks won't accept blame for the crisis and that people will scapegoat immigrants, teachers and the poor.

Brownfield Capital

To find out what happens next watch the full movie

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