"European authorities did not follow the lead of the US and allow the banks to take the pain early. This was a mistake," Eisman told the Financial Times.
LONDON — Steve Eisman, who made a fortune by successfully predicting the 2007-2008 financial crash, says the global financial system is "safe."
Speaking in an interview with the Financial Times, however, Eisman said that he had concerns about the continent and that despite increased stability in the system, not every bank was safe.
"European authorities did not follow the lead of the US and allow the banks to take the pain early," Eisman said. "This was a mistake. The other hindrance has been the austerity policies of governments, which has prolonged the pain for the continent."
These issues, Eisman told the FT, mean parts of Europe's financial system remain undercapitalised.
Regardless of the issues in Europe, Eisman said, he regards the global financial system as "safe," saying: "The world is a very different place to what it was precrisis. 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 $1 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 regard to Europe has moderated somewhat since his most recent prominent interview with a British publication, in which he said the continent was "screwed." Speaking with The Guardian in November, Eisman cited the surfeit of nonperforming loans in the Italian financial system as a cause for concern, saying: "Europe is screwed. You guys are still screwed."