Steven Eisman Recounts First-Hand Experience of The Big Short


In the blockbuster movie The Big Short, Steve Carell plays the role of Mark Baum, a senior portfolio manager who earns millions betting against subprime mortgages. Carell’s character in the movie, which is modeled on a 2010 book of the same name, is based on real-life Steven Eisman and the investment decisions he made during the financial crisis of the late-2000's. On Thursday afternoon, Mr. Eisman visited Regis and recounted for Regians in detail the investment strategies and decisions that led to the greatest financial crisis in modern history.

Eisman_02Eisman was a partner and the senior portfolio manager of the FrontPoint Financial Services Fund, which began operations in March 2004. He rose to fame by betting against subprime mortgages and, by 2010, he was managing more than $1 billion for FrontPoint.

"Credit standards were lowered to the point where anyone who could breathe could get a loan," quipped Eisman, while describing the climate of mortgage lending in the mid-2000's.

(Pictured: Steve Carell as Mark Baum, a character based on Steve Eisman for the blockbuster hit The Big Short)

The lecture hall was packed with students eager to hear Eisman's first-hand account of the financial collapse that dominated headlines in 2008, when current Regis freshmen were still in Kindergarten.

"His base of knowledge was clearly enormous. Just listening to him made understanding the Great Recession easier," said Charles Barton '16, a senior in attendance. "CDOs and credit-default swaps have never seemed so straightforward."

Peter Vanderslice '16 was particularly intrigued by Eisman's take on the government's decision to rescue some of the banks responsible for the crisis that were on the  verge of collapse. "He explained that while this move was politically distasteful, it was necessary to prevent the Great Recession from becoming another Great Depression, in which unemployment would have risen many times higher than what is was at the height of the financial meltdown," remarked Vanderslice.

When asked by a student how he dealt with his conscience knowing that his financial success was coming at the expense of the national economy, Eisman described his change in emotions as the economy worsened.

"Early on, I woke up dancing," reflected Eisman, adding that he was glad to see irresponsible financial institutions squirm. But as things continued to worsen, his mood shifted, a feeling he likened to that of Noah on the Ark. "Believe me, Noah wasn't happy that everyone around him was suffering."

Students remained engaged throughout the entire lecture, and left with a better understanding of some of the financial challenges that remain for our country.

"I think its crucial that today's new generation acquire a solid understanding of what happened," added Barton. "The country isn't impervious to the arrogance and folly that nearly led to its collapse, and understanding the root causes of such a calamity is a necessity."

Posted: 2/25/16