Bob Pozen » Written By

How to keep politics out of rating agency reform [FT]

Bob Pozen — Thu, 13 May 2010 17:13:21 +0000

By requiring a neutral third party to select the rating agency, Congress would significantly improve the quality of bond ratings relied on by small institutions and individual investors. Yet this approach avoids excessive political influence on the ratings process by limiting the government’s role to the minimum necessary to avoid ratings shopping.

A better fail-safe than CoCo bonds [FT]

Bob Pozen — Wed, 21 Apr 2010 16:00:18 +0000

CoCo with its mandatory conversion presents the unappetising combination of bond returns with equity-type risk. Sub-debt with an option to convert offers bond risks with the potential for equity-type returns. Which one would you choose?

How to design a fair bank tax [Financial Times]

Bob Pozen — Wed, 24 Mar 2010 23:09:20 +0000

It is unfair to impose a bank tax on all financial institutions with over $50bn in assets regardless of whether they received any direct federal assistance during the financial crisis. Congress should raise roughly the same amount by imposing the tax only on the very large financial institutions that received direct federal assistance and it should base the size of the tax on the amount of that assistance.

America’s budget deficit needs bipartisan action [FT]

Bob Pozen — Tue, 02 Mar 2010 18:32:51 +0000

Although a bipartisan agreement will be hard to achieve in the current Washington environment, both parties should recognise that a package of entitlement reforms is less dangerous than an explosion of US interest rates in the coming years.

The US public debt hits its tipping point [Boston Globe]

Bob Pozen — Tue, 23 Feb 2010 20:28:49 +0000

CONGRESS RAISED the federal debt limit this month by $1.9 trillion to a record level of $14.3 trillion. Given the projected budget deficit for the next year, the gross public debt of the US government will probably hit that $14.3 trillion limit by the end of 2010. This huge expansion of public debt is not just an abstract concern of economists; it is likely to hurt the practical situation of most American families and firms.

Lessons for the American housing market [Financial Times]

Bob Pozen — Wed, 27 Jan 2010 03:10:25 +0000

American subsidies are justified as necessary to promote home ownership in the US. Indeed, the rate of home ownership in the US rose to 68 per cent by 2006. Yet, without these governmental subsidies, the rate of home ownership in Canada also rose to 68 per cent in 2006. This comparison suggests that the large American subsidies for home purchases have led to higher home prices in the US rather than significant increases in the rate of US home ownership.

Stop the Federal Guarantees [Huffington Post]

Bob Pozen — Wed, 13 Jan 2010 23:19:35 +0000

The administration could give the big banks a choice — replace your guaranteed debt with newly issued non-guaranteed bonds, or pay the US Treasury $6 billion representing the remaining value of this federal guarantee over the next two years. This would not be a punishment; it would be the fair thing to do for US taxpayers.

A mistake that will make banks riskier [Financial Times]

Bob Pozen — Tue, 12 Jan 2010 13:28:43 +0000

If Glass-Steagall were reinstated, we would be recreating the short-term funding weakness that forced Bear Stearns and Lehman Brothers into insolvency.

TARP shortchanging taxpayers [The DC]

Bob Pozen — Mon, 11 Jan 2010 15:55:03 +0000

If the Treasury bails out large banks in the future, it should demand the same terms as those received by sophisticated institutional investors. Some of the rescued banks will become profitable, while others will become insolvent. Taxpayers need to maximize their gains on the successful turnarounds to compensate for their losses on the bailouts that inevitably fail.

How to restore confidence in loan securitisation [FT]

Bob Pozen — Tue, 15 Dec 2009 20:18:37 +0000

By Robert Pozen. On Monday, President Barack Obama pressed 12 large US banks – all recipients of federal assistance – to increase their lending to businesses and consumers. In fact, during the third quarter of 2009, total loans at US banks fell by $210bn (€144bn, £129bn), or 3 per cent, the biggest quarterly decline since 1984.