The Dodd-Frank Wall Street Reform Act — designed to help prevent another financial crisis, has not discouraged banks from lending — as many critics of the regulations contend, said Steven Eisman, the strategist portrayed by Steve Carell in "The Big Short."
Eisman, a senior portfolio manager at Neuberger Berman, said the argument that Dodd-Frank has slowed loan activity "certainly sounds great," but "there's only one problem with the thesis, it's not true."
The only lending area that's really been negatively impacted since the 2008 crisis has been mortgages, he said. "That's not a Dodd-Frank issue. That's a post-crisis, banks-have-been-fined issue."
Eisman, whose bet against the subprime lending market prior to the housing collapse was depicted in the 2015 movie, said the slowdown in lending to small businesses also is not related to Dodd-Frank.
"Here's a dirty little secret about small-business lending: Banks are not venture capitalists," he said.
Banks want collateral, Eisman continued. Pre-crisis prospective borrowers would use their homes, but post-crisis home-equity lending has gone away, he added. "That's why small-business lending is lower."
In what he expects to be the era of financial deregulation under the Trump administration, Eisman said he's been loading up on financial stocks, and "very long" on the stock market overall.
