‘Big Short’ investor Steve Eisman says the financial system is ‘safe’ but he’s worried about Europe’s banks

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Actor Steve Carrell played Eisman in the film adaptation of Michael Lewis’s ‘The Big Short.’ YouTube/Paramount Pictures

LONDON — Steve Eisman, who made a fortune by successfully predicting the 2007-2008 crash, said the global financial system is “safe.”

Speaking in an interview with the Financial Times, Eisman said that he had concerns about the continent, and said that increased stability in the system, not every bank in the world is safe.

“European authorities did not follow the lead of the US and allow the banks to take the pain early. This was a mistake. The other hindrance has been the austerity policies of governments, which has prolonged the pain for the continent,” Eisman said.

These issues, Eisman told the FT, mean that parts of Europe’s financial system remain undercapitalised.

Regardless of the issues in Europe, Eisman said he now regards the global financial system as “safe,” saying: “The world is a very different place to what it was pre-crisis. For the first time in my working life, which is more than 30 years, I would regard the financial system as safe.

Eisman was featured in Michael Lewis’ award-winning book, “The Big Short,” as one of the few people to correctly predict that the financial crisis of 2007 was coming. He made a fortune when his firm FrontPoint Partners bet against subprime mortgages — as much as $US1 billion, The Guardian reported.

He was subsequently played in the film adaptation of the book by Steve Carell — albeit with his name changed to Mark Baum.

His tone with regards to Europe has moderated somewhat since his last prominent interview with a British publication, in which he said the continent was “screwed.” Speaking to The Guardian in November, Eisman cited the surfeit of non-performing loans in the Italian financial system as a cause for concern, saying “Europe is screwed. You guys are still screwed.”

Read Eisman’s full interview with the FT here.