Michael Burry demanded daily collateral settlement on his swaps, with cash posted to Scion's account the next day if positions moved in its favor.

Judged as of 2010-04-06. The test is whether Burry/Scion required daily collateral posting on its credit default swaps, so that cash was posted to Scion's account the next day when positions moved in its favour. TRUE: Scion's contemporaneous investor letters, its ISDA/CSA documentation, or independent accounts based on documents or counterparties (for example the FCIC record or reporting with counterparty sources) show daily collateral settlement terms that Scion demanded. MOSTLY TRUE: collateral posting in Scion's favour was required and was frequent, but a minor detail differs, such as settlement within a few days rather than next day, or the terms applying to most but not all counterparties. MIXED: some counterparties agreed to daily collateral and others clearly did not, or Scion sought these terms but obtained them only partly. MOSTLY FALSE: collateral terms existed but were periodic (for example weekly or monthly) or were only one-way against Scion, so the claim overstates them. FALSE: documents or counterparty accounts show Scion did not demand or obtain collateral posting in its favour. Burry's own later statements alone do not suffice.

Set before the research began.

1. E1 Michael Burry's Testimony Before The Financial Crisis Inquiry Commission ValueWalk · 29 March 2011 Own record

   “We were interested in getting those valuation confirmations every single day even if we were only transferring collateral every week.”

2. E2 Michael Burry's Testimony Before The Financial Crisis Inquiry Commission ValueWalk · 29 March 2011 Own record

   “The reason that I demanded daily collaterals is because I thought to these could disappear very quickly overnight and it was protection against”

3. E3 Michael Burry's Testimony Before The Financial Crisis Inquiry Commission ValueWalk · 29 March 2011 Own record

   “On the back office side (which I didn't get involved in) there was a daily computation of collateral and I don't know all of the different paperwork”

4. E4 Betting on the Blind Side Vanity Fair · 1 March 2010

   “Goldman was newly unable, or unwilling, to determine the value of those positions, and so could not say how much collateral should be shifted back and forth.”

5. E5 Betting on the Blind Side Vanity Fair · 1 March 2010

   “His biggest positions were with Goldman, and Goldman was newly unable, or unwilling, to determine the value of those positions, and so could not say how much collateral should be shifted back and forth.”

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

   “As it happened, Deutsche Bank had broken off relations with Mike Burry back in June, after Burry had been, in Deutsche Bank’s view, overly aggressive in his demands for collateral.”

7. E7 Michael Burry's Testimony Before The Financial Crisis Inquiry Commission ValueWalk · 29 March 2011 Own record

   “The reason that I demanded daily collaterals is because I thought to these could disappear very quickly overnight”

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

   “Was there pushback on daily posting collateral requirements and if so by which counterparties?”

9. E9 burry_scion-2006-4q-rmbs-cds-primer-and-faq.pdf Scion Capital (Michael J. Burry), investor letter reproduced on Scribd · 7 November 2006 Own record

   “Importantly, we negotiated ISDA contracts that give us the right to collateral should our swap positions move in our favor.”

10. E10 burry_scion-2006-4q-rmbs-cds-primer-and-faq.pdf Scion Capital (Michael J. Burry), investor letter reproduced on Scribd · 7 November 2006 Own record

    “The dealer counterparties are the marking agents for the Funds’ positions, and therefore the values set by these dealer counterparties determines how the collateral flows on a daily basis.”

11. E11 Betting on the Blind Side Vanity Fair (excerpt from Michael Lewis, The Big Short, W. W. Norton) · 1 April 2010

    “His biggest positions were with Goldman, and Goldman was newly unable, or unwilling, to determine the value of those positions, and so could not say how much collateral should be shifted back and forth.”

Scion's November 2006 investor letter, written at the time, says Scion negotiated ISDA contracts giving it the right to collateral when its swap positions moved in its favour (E9). The same letter says dealer marks decided how collateral moved each day (E10). Independent reporting says Deutsche Bank thought Burry was overly aggressive in his collateral demands (E6), and that collateral was meant to move back and forth with Goldman (E5). However, none of the evidence confirms next-day cash settlement, and Burry's later FCIC testimony mentions wanting daily valuation confirmations "even if we were only transferring collateral every week" (E1). So daily collateral in Scion's favour is broadly supported, but some details differ from the claim.