Michael Lewis has been sued by Wing Chau for his depiction of Chau in "The Big Short" as a buffoon who championed extremely risky investments in overrated bunches of subprime mortgages, and who was ultimately taken advantage of by savvier investors. Of course, Michael Lewis's black and white world of evil ne'er do-wells aggressively marketing financial products filled with default-prone mortgages and white knights shorting those same products on behalf of the common man is pretty silly.
Everybody involved got rich from this scheme, both the winners and losers on Wall Street. Everyone else, ie most people, got totally screwed. However, Wing Chau is hardly a good guy. But, he didn't act alone. As Warren Buffett points out in the previously linked that entering into a transaction where one side is just really stupid doesn't make a fraud. The real problem here is not any of the individuals who got filthy rich in these trades.
The problem is the total lack of government oversight, either before or after the fact. After slapping a couple banks who were hiding extremely risky transactions on the wrist, the SEC still does not have the power to regulate the ratings agencies, who are ultimately responsible for letting the banks hid this risk. So, the more things change, the more they stay the same, and we are only left to speculate what the next bubble will be. Commercial Real Estate, anyone? How about gold? Maybe commodities in general. Or social media (liveblogging the next economic crises here, everybody). The one thing we can be sure of is that guys like Wing Chau will get rich off of it, regardless of which side they bet on, and the SEC is going to be looking the other way when it happens.
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