Eisman to ABS East attendees on burdensome regulations: “get over it”
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Eisman to ABS East attendees on burdensome regulations: “get over it”

Steven Eisman 230 x 150

Steve Eisman, portrayed as the crusading hedge fund portfolio manager in Michael Lewis’s financial crisis saga The Big Short, had some choice words for ABS East attendees upset about tight financial regulation in the wake of the 2008 crisis on Sunday. His advice to those who think coming regulation unfairly lumps all ABS together as the culprit for the crash? “Get over it”.

“You lived in a bad neighborhood and didn’t police yourselves. You blew up planet Earth. Get over it and move on,” Eisman told a standing room only crowd at the end of day one of ABS East.

Eisman, now a portfolio manager with Neuberger Berman, said during his keynote address that there likely are not any assets out there that could claim the title of the “next big short”, but rather the issues facing financial markets today are more widely systemic. Low domestic growth, stagnant median incomes and lingering problems in Europe are all making for a US and global economy that will continue to just “muddle along”.

“Why has this been the slowest recovery from a recession post-war? Because 70% of the US economy is consumer driven and incomes haven’t grown in 30 years... 2% growth is as good as it is going to get.”

Patrick Foulis, US business editor for The Economist in New York, will give the keynote address on day two.

Investors hit the beaches

Deal makers flocked to Miami Beach for this year’s conference in droves, with the number of pre-registered attendees surging past last year’s headcount ahead of the event and even more expected to register at the door.

According to IMN there are just over 4,000 registered delegates this year. CLOs are drawing a particularly large crowd, with participants in that market coming in such numbers that IMN has given the sector its own dedicated venue, just next door at the Eden Roc. Around 1,800 delegates are issuers or investors, and the event has drawn 120 sponsors.

“This year we have had to annex the Eden Roc as official co-host property to be able to accommodate the CLO sector, which is coming en masse,” said Jade Friedensohn, senior vice president and conference producer at conference organizer IMN.

Over 1,000 CLO delegates are expected, with registrants likely to represent around 25% of the total headcount. The Eden Roc will serve as the CLO hub of ABS East, with dedicated meeting rooms and panel sessions catering to that market. CLO players have said that networking and deal making opportunities will be front and centre, even more so than in previous years given the heightened attendance.

ABS market participants say they are headed to the event to get a read on what the market will look like going into the fourth quarter, following a busier than usual month of issuance in August and a wave of new deals pricing going into Labor Day. Nearly $10bn in new deals were priced in the week leading up to the conference, with investors saying that another wave will wash over the market following ABS East.

Apart from market chatter, November’s presidential election will undoubtedly be on the minds of all delegates.

A banker attending the conference said that a Donald Trump victory in November could be the US version of Brexit, but added that he did not expect it to be a long-term dampener on the ABS market. The fear among some attendees is that looming political concerns will distract from the discussion of market issues, similar to the UK vote on EU membership, which took place just one week after Global ABS in Barcelona this year and figured heavily into discussions at that event.

Like a bad penny, regulation will turn up again this year as a major theme of the event. With risk retention for securitization arriving on Christmas Eve, it will be among the biggest discussions at the conference.

RMBS investors will get the chance to hear about the future of Fannie Mae and Freddie Mac's credit risk transfer programs and a panel on the outlook for non-QM mortgage securitization. The non-QM panel on Tuesday will feature the US Department of the Treasury’s Monique Rollins, alongside market players including Steven Schwalb of Angel Oak Capital, an active issuer of non-QM RMBS.

Another prevalent theme this year will be the comeback of marketplace lending securitization following a difficult period this summer in the wake of headlines surrounding the drama at Lending Club in May.

“I think many people are going to be talking about risk retention,” said an ABS lawyer attending the conference. “I noticed there’s a lot more marketplace lenders attending than before, which I think is interesting because it shows that their businesses are maturing and they need to do securitization. It’s the most natural way for them to raise money. People got a handle on what happened in May, and adapted to it. Now I think people are more interested in talking about deals.

Outside of panels and deal making, parties will be a highlight of the event. CoreLogic, which last year hosted a gathering on the 111 foot luxury vessel Biscayne Lady, will be hosting an event at the Fontainebleau on Monday. Morgan Stanley will be hosting its ABS East bash at Soho Beach House, and DLA piper will fete attendees at Hakkasan in the conference venue.

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