Steve Eisman Quotes

A financial institution has the task of taking risks, and if it's a well run institution - say, Goldman Sachs - it tries to cover the potential losses to itself, but only to itself.

The fundamental problem with banks is what it's always been: they're in the business of banking, and banking, whether plain vanilla or incredibly sophisticated, is inherently risky.

Investment banks manage to go bankrupt through their investment-banking activities, commercial banks manage to go bankrupt through their commercial-banking activities.

Banks are employing risky derivatives strategies to goose up returns….the interbank market could freeze up, and one could well have a full blown financial crisis.

We don't understand the equity market well, and so we deploy funds in fixed-income securities, and like any other securities, investment in those securities also need to follow the mark-to-market accounting principle.

The efficiency, credibility, and liquidity of the financial markets have been foundational to the largest economy in the world.

History has not dealt kindly with the aftermath of protracted periods of low risk premiums.

The very nature of finance is that it cannot be profitable unless it is significantly leveraged... and as long as there is debt, there can be failure and contagion.

The S.B.A. does not lend directly to businesses, but instead backs loans to encourage banks to invest in small businesses as part of a nearly $90 billion portfolio.

The big question is: When will the term structure of interest rates change? That's the question to be worried about.

With interest rates rising, gold doesn't pay an interest rate, but every other currency - it becomes not only less important to hold gold as an alternative, but more expensive to hold it as an insurance policy and so that will be a burden on the price of gold.

We concluded that you cannot rely on delta hedging alone. It sounds simplistic to say that now, but back then, this was the sort of thing people were only just beginning to realize.

Most of the time, your risk management works. With a systemic event such as the recent shocks following the collapse of Lehman Brothers, obviously the risk-management system of any one bank appears, after the fact, to be incomplete. We ended up where banks couldn't liquidate their risk, and the system tended to freeze up.

Everyone is exposed to economic risks of some kind.

I loved working on Wall Street. I loved the meritocracy of it and the camaraderie of the trading floor.

Oil futures were originally created to give heating oil dealers, gas retailers, aviation companies and other businesses a method of hedging against adverse price changes. Instead, they've become just another Wall Street plaything.

Other People’s Money and How the Bankers Use It

Ours is an economy that depends on the availability of credit at affordable interest rates.

One of the most important causes of economic crises is “running liabilities”, or short term debt that the government does not insure. The U. S. financial sector holds trillions of dollars of such debt, including uninsured bank deposits and the short-term liabilities of other financial institutions, such as overnight loans…. Amongst the potential causes of the next crisis, the massive amount of short-term debt ranks as the most probable.

When you read that UBS did not even view parts of its mortgage portfolio as having market risk, it becomes very obvious that a number of firms were not dotting the i's and crossing the t's when it comes to risk management.

I went to work on Wall Street for about three or four years with an investment bank, got certified: series 3, series 7, and all this stuff.

I think that it would be a mistake for any institution to think that their stake in a default or in a voluntary accord is determined by the amount of their exposure, hedged or unhedged.

The financial crisis revealed important weaknesses in many areas of our financial system.

People far too often associate derivatives markets with mere speculation, but there are very legitimate businesses that need derivatives to protect themselves against risk.

Credit default swap gives you something to do. You can buy some credit default swaps from them to protect yourself against the bankruptcy of people who owe you money.