Michael Burry deliberately avoided Lehman Brothers and Bear Stearns as swap counterparties.

Judged as of 2010-04-06, about Scion Capital's mortgage credit default swap trades in 2005–2007. True: the record (Scion investor letters or trade records, FCIC materials, or reliable accounts) shows that Scion did not take on Lehman Brothers or Bear Stearns as a CDS counterparty, and that Burry avoided them on purpose because he saw them as exposed to the crisis. Mostly true: neither firm was a counterparty and avoiding them was deliberate, but a minor detail of the stated reasoning differs. Mixed: one of the two firms was avoided but the other was a counterparty, or neither was a counterparty but there is evidence that this was not a deliberate choice. Mostly false: Scion did trade with one or both firms, but only in a minor or brief way (for example one small trade that was quickly closed or novated). False: records show that Lehman Brothers or Bear Stearns was a significant CDS counterparty to Scion.

Set before the research began.

1. E1 Transcript of Michael Burry’s talk, “Missteps to Mayhem: Inside the Doomsday Machine with the Outsider who Predicted and Profited from America’s Financial Armageddon” Vanderbilt University News · 13 April 2011 Own record

   “We would ultimately use nine different dealer counterparties, though I avoided Lehman and Bear. Goldman Sachs would feature prominently.”

2. E2 The 2008 Crash Made Certain People Obscenely Rich Exnihilo Magazine · 28 August 2026

   “He went to the major banks and asked them to create credit default swaps on mortgage securities for him to buy.”

3. E3 Transcript of Michael Burry’s talk, “Missteps to Mayhem: Inside the Doomsday Machine with the Outsider who Predicted and Profited from America’s Financial Armageddon” Vanderbilt University News · 13 April 2011 Own record

   “though I avoided Lehman and Bear. Goldman Sachs would feature prominently.”

4. E4 Transcript of Michael Burry’s talk, “Missteps to Mayhem: Inside the Doomsday Machine with the Outsider who Predicted and Profited from America’s Financial Armageddon” Vanderbilt University News · 13 April 2011 Own record

   “We would ultimately use nine different dealer counterparties,”

5. E5 Michael Burry's "Big Short" of the Housing Market Shortform · 16 December 2021

   “He ruled out Bear Stearns and Lehman Brothers as potential credit default swap sellers, reasoning that they were too deep in the subprime game to be able to pay him when the bonds failed.”

6. E6 Betting on the Blind Side Vanity Fair · 1 March 2010

   “He didn’t even bother calling Bear Stearns and Lehman Brothers, as they were more exposed to the mortgage-bond market than the other firms.”

7. E7 Scion Capital Subprime Mortgage Short Primer studylib.net (reposting Scion Capital letter by Michael J. Burry) · 5 March 2024 Own record

   “The Funds have six counterparties from which credit protection on subordinated tranches of mortgage-backed securities has been purchased.”

8. E8 Michael Burry's Testimony Before The Financial Crisis Inquiry Commission ValueWalk · 29 March 2011

   “For example on the one that we’re talking about in row five? With Barclays five Morgan Stanley’s five Goldman Sachs 15”

A Vanity Fair excerpt published before the claim date says Burry did not even call Bear Stearns or Lehman Brothers because they were more exposed to the mortgage-bond market than other firms (E6). A Shortform article likewise says he ruled them out as CDS sellers because they were too deep in subprime to pay out (E5). The FCIC testimony excerpt names Barclays, Morgan Stanley and Goldman Sachs for one position row, with no mention of Lehman or Bear (E8), and Burry's own 2011 talk says he avoided Lehman and Bear (E1). The evidence includes no trade records, but the independent accounts (E5, E6) support both the avoidance and the stated reason.