Michael Burry built his legend by betting on the collapse of subprime credit.
This crazy bet, as it was described at the time on Wall Street, paid off when in 2008 Lehman Brothers collapsed, sending a shockwave through the global financial system.
That's because most financial and real estate firms worldwide were exposed to U.S. subprime mortgages.
The bet made him an icon of finance.
If some Wall Street barons smile at his predictions, millions of retail investors and portfolio managers take them seriously and analyze them. Indeed, since the financial crisis of 2008, Burry has transformed into a kind of Mister Doom.
He is a regular bearer of bad news, which often positions him as one against all. Recently, for example, Burry, who founded hedge fund Scion Asset Management, was one of the few financiers to believe that the January market rally was a mirage.
As a result, he predicted a crash on Jan. 31 using a single word: "sell".
Burry Sees Bailout as Fueling More 'Bad Choices'
Since then, uncertainty has returned to the markets and the stock market has declined.
The legendary investor, whose character was captured in the 2015 movie "The Big Short," doesn't dwell on his wins.
He has now turned to another fight. In a series of now-deleted tweets, he warned against President Joe Biden's student-loan-forgiveness program, which currently is being reviewed by the Supreme Court.
For Burry, if this plan were put in place, there would be "terrible consequences" for America.
"Let's not forget that the student debt problem is built on a foundation of terrible major choices," the financial guru wrote on Feb. 28. "Bailing generations out of those bad choices will mean more bad choices, tuition hikes, and terrible consequences for America."
Canceling the debt of millions of students would aggravate the problem rather than solve it, the investor says.
Burry then shares his own experience as a student who went into debt. He seems to suggest how the system should work and that the debt motivated him.
"When I left residency at Stanford to gamble my future on what was to become, I had well into six figures of educational debt. I was damned sure I was going to pay it off," Burry tweeted the following day.
In the US, student loans are often taken out for expensive higher education, both private and public. The price for a year often soars to tens of thousands of dollars and many Americans struggle to repay their loans once the enter the workforce.
What Is at Stake?
President Biden hoped to be a game-changer for many households, announcing last August the partial cancellation of student debt for people earning less than $125,000 a year. But many conservative states have opposed it, judging that the White House is committing taxpayer money without more clearly asking taxpayers -- via Congress -- for permission.
The Supreme Court is reviewing this flagship measure of the Biden presidency, whose economic stakes are staggering: between $300 billion and $400 billion.
If America's highest court agrees with the Democratic president, nearly 44 million Americans could see $10,000 to $20,000 cut from their student loan debt.
The verdict, which is expected by June 30, will have a direct impact on the finances of former students but not only on them. The high court, firmly anchored in conservatism, could take advantage of this case to limit the president's room for political maneuver.
At the start of the pandemic, as the economy went into hibernation, the administration of Republican President Donald Trump suspended the repayment of these loans under a 2003 law allowing "relief" for student loan borrowers in the event of a "national emergency."
The measure had been renewed without interruption until the end of 2022.
In view of the resumption of monthly payments, Biden wanted to go further and said he would erase $10,000 from the slate for borrowers earning less than $125,000 per year, and $20,000 for former scholarship holders. Eligible candidates rushed to take advantage. A total of 26 million applications have been filed, according to the White House.
But the courts have blocked implementation of the plan after being petitioned by a coalition of Republican states and by two students ineligible for the $20,000 discount.
They accuse the administration of abusing its powers under the pretext of the pandemic. For them, the 2003 law covering the issue, the Higher Education Relief Opportunities for Students, or Heroes, Act, enables freezing the debt, not canceling it.
