Pipeline

A 'Short' Film

The story of investors who prospered by betting against subprime mortgages is making its way to the big screen — and we at American Banker have casting suggestions.

Michael Lewis' best-seller "The Big Short" has piqued the interest of Brad Pitt, whose production company, Plan B Entertainment Inc., has bought the rights to the book, Starling Lawrence, editor in chief of the publishing house W.W. Norton & Co., told Investment Dealers' Digest last week. Paramount Pictures Corp. is slated to release the film, Lawrence said.

He said he was not surprised by Hollywood's interest in the book, given the success of movies like Oliver Stone's "Wall Street" (whose sequel will be released this fall).

"There are characters in here," Lawrence told IDD (a sister publication to American Banker). "If it was just numbers, it would be crazy, but they made a movie of Wall Street, Gordon Gekko and company. … The theme of greed and untold illicit or ill-gained wealth is a time-tested formula."

Lewis' book chronicles the financial meltdown through profiles of a handful of hedge fund managers who made millions by buying credit-default swaps — essentially insurance against defaults — on collateralized debt obligations and other securities tied to shaky home loans.

There's no word on who will play any of the real-life characters. But we recommend the filmmakers try to land Larry David for the role of Steve Eisman, the curmudgeonly hedge fund manager. Just imagine David (the star of television's "Curb Your Enthusiasm") delivering lines like this one spoken by Eisman after he meets a buffoonish CDO manager: "Whatever that guy is buying, I want to short it … sight unseen."

Jeremy Piven ("Ari Gold" from "Entourage") might be good as Greg Lippmann, the bond trader who, when his Deutsche Bank colleagues mocked him for taking a pessimistic view of the housing market, shot back: "F--- you. I'm shorting your house."

On the Skids

Home loan application volume dropped 5.9% last week from a week earlier, despite a dip in interest rates, the Mortgage Bankers Association said Wednesday.

The trade group's component index of refinancing requests fell 7.3%, while the purchase loan application index slipped 1.2% from the previous week on a seasonally adjusted basis. The decline in total purchase applications was due to a 4.4% drop in government purchase applications. Conventional purchase applications inched up 1%.

The average contract 30-year fixed rate fell 7 basis points, to 4.75% — the lowest rate since the week that ended May 15, 2009.

Economists say the decline in mortgage activity is to be expected given the end of a tax credit for first-time homebuyers. To receive the benefit, buyers had to sign contracts by the end of April and close by the end of this month.

"What we're clearly witnessing is the payback to the end of the homebuyers' credit," said Dana Johnson, chief economist at Comerica Inc. "And I don't think we're going to be able to tell for a couple of months what the underlying trend is in the demand for mortgages."