“There’s no fucking way that the big banks are that stupid”

2008 Housing Crisis Questions/Discussion Seriously, does anyone else find it hard to believe that the big banks who facilitated selling Burry Credit Default Swaps allowed for such a massive position to be held against them. Was the effect of greed/the thought that “the housing market cannot crash” that strong to blind them from doing DD? To anyone knowledgeable on the Burry CDS play situation, could you please answer the following questions. Did the banks check to see why Burry wanted a massive position in Credit Default Swaps and if his theory had any legitimacy before selling Burry his massive positions in CDSs that would result in the banks having massive losses when they paid off? Did the banks hedge their risk against their exposure to Burry’s (and other) CDS positions and if so, why didn’t their hedge position(s) work? Surely if Burry, who to my knowledge, found out about the state of the housing market by himself, then the big banks, with their large workforce, could have found out also, especially since they, to my knowledge played a large part in making the housing crisis? It just doesn’t make since how the banks would see an investor like Michael Burry, who, to my knowledge was, even before the CDS play, a respected investor/trader, essentially full porting into a position, and then react by seemingly just agreeing to taking the opposite side of the play with no second thoughts. MULTIPLE banks to my knowledge btw, not just one. Obviously speaking in hindsight, but still, even back then Burry’s CDS order request had its red flags to the banks right? Why did the banks take the risk of facilitating these massive CDS orders? Credit for the in the title: The Big Short (Movie)