Mel Fordham reviews blockbuster “The Big Short”

Having just seen the film “The Big Short” it’s made me think of many aspects of the times I had during the era the film depicts.

A name that came up several times was a large US based mortgage bank that through a subsidiary was offering non-conforming residential mortgages in the UK. The account manager that introduced the lender advised that they had a product which, is completely un-imaginable today, called the “85% any, any” effectively they would lend 85% of the property value irrespective of income, affordability or current payment history provided the borrower was not an un-discharged bankrupt and at rates commensurate with UK High Street lenders too!

At the time this product was launched; as intermediaries we seriously thought the product had been designed by people taking hallucinatory substances, it was just an invite for serious collection & recovery problems, and undoubtedly going to cause a great deal of misery. The Big Short, highlights the rationale behind these products and looking back you seriously have to ask if this product was launched by someone who had a bigger interest in market collapse in the UK than its success?


Whilst many involved in the regulated market in the UK today complain about how rigid the current regulatory regime is and how sometimes the regulator seems overzealous, the Big Short depicts in the most graphic terms how the threads of corruption get sown into commerce in the most bizarre and enigmatic manner. One such specific instance (be it fact or fictitious) identifies how the rating agencies who were responsible for qualifying the quality of “mortgage portfolios” was held to ransom by the institutions selling the portfolios and economically forcing them to give artificially high ratings, resulting in higher sales on mortgage books which were literally defaulting.

The result was thousands and thousands of people losing their homes through un-controlled and poorly regulated lending and investors being sold securities from organisations that had ulterior motives which were not a true reflection of their real value or likely performance.

Mel Fordham (Centrado Ltd Director)