After explaining the controversy, Pozen proposes a solution: new, transparent practices that would draw on the best of both historical cost and fair value accounting. If adopted, they could balance the banks’ desire to present assets in a good light with investors’ need to understand the banks’ exposures – and perhaps make everyone happy.

Back in February, the Obama Administration committed $75 billion to make mortgages more affordable to homeowners under financial pressure. Last week, however, the Congressional Oversight Panel for the financial bailout criticized the design of this mortgage modification program, and declared that “in the best case” it would prevent half as many foreclosures as the Administration predicted.

Pozen proposes a different kind of principal reduction program instead of the current mortgage modification program.

Industry luminary Robert Pozen offers his insights on the future of U.S. finance

(With foreward by Robert J. Shiller, Yale University)

The recent credit crisis and the resulting bailout program are unprecedented events in the financial industry. While it’s important to understand what got us here, it’s even more important to consider how we should get out. While there is little question that immediate action was required to stabilize the situation, it is now time to look for a long-term ..read more

The House Banking Committee has just finished drafting a bill intended to stop anyone in the future from putting together another Bernie Madoff scam. It’s a worthy aim that I wholly endorse, but I worry that passing the current draft will introduce more arbitrariness and cost into the regulatory system without solving the problems revealed by the Madoff debacle.

Within the context of state-based Connectors implementing the individual mandate, the most viable definition of the public option is a state-based health care plan currently serving governmental employees. That approach would sidestep the ideological debate, while helping to achieve the consensus goal of constraining health care costs.

The president wants to get tougher on the nation’s financial institutions, but can he? Six top money minds weigh in on his plans to regulate risk, control executive pay and protect consumers. Robert Pozen addresses the risk of moral hazard.

Unless we bring back the lower insurance limits for deposits, the FDIC’s rescue of failed banks could become very expensive. Taxpayers paid over $100 billion to resolve the S&L crisis, and Congress recently authorized the Treasury to lend the FDIC up to $500 billion.

Do you think that the limit on deposit insurance should go back again to $100,000?

The G-20, the group of the world’s largest economies, agreed last week to a US-led initiative called a “Framework for Sustainable and Balanced Growth.” This is an effort to rectify current global imbalances in trade and capital flows, in which the US runs huge trade deficits financed by huge Chinese investments in US Treasuries.

The solution? Chinese consumers should spend more and US citizens should save more. Progress on meeting these objectives will be monitored by the International Monetary Fund, which ..read more

As Rahm Emanuel, President Barack Obama’s chief of staff, once said, “Never let a serious crisis go to waste.”

But the current financial crisis won’t be the catalyst to rethink fundamentally the structure of U.S. financial regulation. Instead, Congress will fill a few holes in the regulatory foundation, and install new radar for detecting systemic risk within the existing framework of regulation according to financial function or service. Unfortunately, in some cases, that’s too little, too late.

What shape is financial regulation ..read more

Do you favor legal limits on individual bonuses of senior bankers or aggregate bonuses at an unprofitable bank?