Cornwall Capital was founded in 2003 by two young people who were not in the mainstream - Charlie Ledley, and Gammy Mak. I say they were out of the mainstream because they were not financial professionals from a scientific background, but they were full of imagination, and a keen insight into the market. Their insight is evident in the transactions of First Capital Financial. Case Background Before betting that the subprime mortgage market would collapse, Cornwall Capital first noticed a credit card business company, First Capital Financial. Throughout the 1990s and early 2000s, First Capital Financial claimed that it had better tools than other firms for analyzing the creditworthiness of subprime credit card users and pricing the risk of lending to them, and the market bought that claim. But in July 2002, First Capital Financial's stock fell 60% in two days after the company voluntarily disclosed a disagreement between them and two government regulators: How much capital did they