Steve Eisman of the “The Big Short” fame said on Monday that the recent problems at New York Community Bancorp are not systemic, so they won’t have a negative effect on the wider economy. “It’s confined to office real estate,” Eisman said on CNBC’s ” Squawk Box .” “Office real estate is confined to certain community banks and regional banks. It’s not a big bank problem … I just don’t see a systemic or big problem at this point that’s going to hurt the economy.” Shares of NYCB plunged more than 40% last week to suffer its worst week since it went public in 1993. The brutal sell-off came after the bank reported that it swung to a fourth-quarter loss , took a $552 million provision for credit losses and cut its dividend to shore up capital. NYCB took over the failed Signature Bank during the regional bank crisis in 2023. Eisman, who profited from the subprime mortgage crisis that spurred the Global Financial Crisis in 2008, believes the troubles at NYCB, which has $116 billion in assets, could affect investors in its commercial mortgage-backed securities, but there shouldn’t be any big collateral damage. The investor, now a senior portfolio manager at Neuberger Berman, also noted that NYCB recently reached more than $100 billion in assets, which requires a higher reserve level. “They passed the $100 billion threshold, and the regulators were all over them and forced them to increase their liquidity and increase their reserves,” he said. Eisman said he’s not worried about the broader economy as long as consumer credit stays strong. “Office real estate is not big enough to have a real big negative effect on the economy,” he said. “If consumer credit quality would just start to really deteriorate, like it started in late 2006, OK, but you know, until then, as long as the consumer is healthy, I don’t think there’s much to scare.”
This story originally appeared on CNBC
