# AI financing echoes the warehouse lines behind subprime

Markdown copy of https://realalpha.app/s/ai-financing-echoes-the-warehouse-lines-behind-subprime/ on Real Alpha, the best minutes from long interviews with the people building AI. Cite and link the page, not this copy.

- Speaker: [Danny Moses](https://realalpha.app/people/danny-moses/) · Danny Moses is a former Big Short partner and host of On The Tape. · Spotted the housing bubble before the crisis and helped execute the trade chronicled in The Big Short.
- Host: [Steve Eisman](https://realalpha.app/people/steve-eisman/)
- Show: The Real Eisman Playbook
- Episode: [Big Short Reunion w/ Danny Moses: Rising Rates, AI & Private Equity | The Real Eisman Playbook Ep 80](https://realalpha.app/v/bjikXzIJqSM/), Oct 19, 2026
- Moment: 16:50 to 20:24 of the episode (4 min), playing on https://realalpha.app/s/ai-financing-echoes-the-warehouse-lines-behind-subprime/; the episode from there: https://realalpha.app/v/bjikXzIJqSM/?t=1010

## Quote

> “The minute the thing started to drift lower, you and I both know what happened, Wall Street started to **pull the warehouse lines**.”
> — [Danny Moses](https://realalpha.app/people/danny-moses/) at [18:10](https://realalpha.app/v/bjikXzIJqSM/?t=1090) · The Real Eisman Playbook

## Takeaways

1. Warehouse lines financed loans that lenders planned to package and resell.
2. When loan prices fell, lenders pulled funding and originators were stuck.
3. AI and private-credit lending outside banks is harder to track.

## About this segment

Danny Moses compares AI financing with the warehouse lines that funded mortgage originators before the crisis. The parallel matters because lenders can pull funding when loan economics deteriorate.

From “Big Short Reunion w/ Danny Moses: Rising Rates, AI & Private Equity | The Real Eisman Playbook Ep 80”, Oct 19, 2026. [Watch the full episode](https://realalpha.app/v/bjikXzIJqSM/)

## Transcript

Transcribed by machine (Whisper) from the episode’s audio, so a word may be off here and there.

[16:53](https://realalpha.app/v/bjikXzIJqSM/?t=1013) So, where are the similarities to 2006 and 2007? I'll tell you where it is, especially with the news a few months ago about this securitization partnership between NVIDIA and all the banks on Wall Street. Yes. Okay. Which I don't know what's happened since then. They're starting new deals right now. It's starting. It's starting to do now. Okay. And so, remember, I'm telling you as if ... I'll explain it to the world, which you already know because you taught me everything to deal with this, was the mortgage trade went on because of one reason and one reason only.

[17:22](https://realalpha.app/v/bjikXzIJqSM/?t=1042) Wall Street's willingness to lend to the mortgage originators to provide lines of credit so the mortgage companies could produce these mortgages and they could package them, Wall Street, and buy them and sell them to the world. Same thing. Let's actually just repeat that. So Wall Street, just so everybody understands, Wall Street would basically lend money to a mortgage lender so that the mortgage lender could lend money to a consumer.

[17:47](https://realalpha.app/v/bjikXzIJqSM/?t=1067) And they would take that loan and they would sell it to Wall Street, who would then package it and sell it to investors. So, they would use a warehouse line. They would provide a warehouse line. They would provide a warehouse line. And as long as the economics kept working, Wall Street was more than willing to provide them the warehouse line. Correct. So, if a loan's at par, which is 100, and accredited home lenders cost them 2.5% to originate a loan, their cost is 102.5%.

[18:09](https://realalpha.app/v/bjikXzIJqSM/?t=1089) As long as you can sell loans for more than 102.5%, it works. We're all in business. The minute the thing started to drift lower, you and I both know what happened, Wall Street started to pull the warehouse lines. And then what happened? Those mortgages were then stuck on the balance sheets at New Century, Countrywide, or Cardinal Menders, and the rest is history. Right. There is a similarity here within kind of the lending and when we got into the securitization space.

[18:31](https://realalpha.app/v/bjikXzIJqSM/?t=1111) And the craziest quote was Larry Fink on CNBC, which was a great interview. They had everyone around. When was this? This was a couple months ago when they announced this deal. Okay. Jensen was on there. This was the deal that Jensen created with Wall Street. Yeah, it was created. They were all sitting around. Right, right, right. And I think Fink was the only one that was remote. Everyone else was actually in the CNBC studio.

[18:48](https://realalpha.app/v/bjikXzIJqSM/?t=1128) Right. And Fink goes, you know, this is amazing. This reminds me so much of what we did with mortgage-backed securities back in the 70s. This is incredible. I'm like, what did you just say? What did you just say? So anyway, so there are some, you know, and the other thing. The other thing, Steve, is, just to take this full circle here, is that, and you know this better than anyone, we were so shocked in 2008 that the government had no idea.

[19:11](https://realalpha.app/v/bjikXzIJqSM/?t=1151) The reason we got so scared at the end, we're like, whoa, we thought you knew. You thought we knew. Me, the government. Yeah, the government. We thought the government knew what we knew. They weren't tracking anything. They didn't know the leverage anywhere. Well, what's happened since then is the perfect storm, which is that a lot of the lending has gone outside of the banking system. Correct. Yes, it's at Blackstone.

[19:27](https://realalpha.app/v/bjikXzIJqSM/?t=1167) It's at Apollo. And I know you've had guests on and Glenn Short. You've had people that have talked about this. But I don't know what's, you know, we don't know what's the type of, you know, the amount of lending that's actually out there. A couple trillion dollars, what are they doing? Private credit. And a lot of the private credit trade has lent itself into the AI growth sector and the technology sector.

[19:46](https://realalpha.app/v/bjikXzIJqSM/?t=1186) So, there's nothing systemic. I'm not saying that, but this has to be accounted for somewhere. And it just seems like, yeah, one-off bad credit here in the private equity world and private credit, a one-off thing here. things don't feel, things feel fragile to me overall because the fragility that, you know, we're at five point, as we sit here today, we could be very different when this airs, but 5.27, 5.3% 10 year yields. We can live with that. It's not an issue, right? If you have the growth to support it, but you're reaching levels now where companies that aren't growing, their ability to grow in a higher rate environment is just different. This episode is brought to you by