Congress should extend the 1991 bailout law for banks to all financial institutions. In addition, any institution that lacks F.D.I.C. insurance for small depositors should be bailed out only if the Fed determines that its failure would materially jeopardize the entire financial system. In that case, the Fed should be required to evaluate, and document for subsequent review, whether a bailout is truly the least costly way of protecting the financial system. This is the only way to ensure that ..read more

Most markets for securitized debt have dried up. The cause is uncertainty: Since no one knows exactly who owns the potential losses from securitized mortgages, many investors stay away. When the Securities and Exchange Commission Advisory Committee on Improving Financial Reporting meets on Friday, it can take a big step toward reviving this critical part of our financial market. It should recommend that the regulators require someone to “own” the securitization process as well as require more disclosures about who ..read more

The increasing number of buyouts of public companies by private equity — 202 this year (so far) from 35 in 1997 — is putting more pressure on corporate boards to enhance shareholder value. Although private equity funds are currently on hold because of the credit crisis, they are very large and will return to action. During the hiatus, public companies should improve their performance and avoid being a future target by taking a few pages out of the private equity ..read more

As the dust settles on the recent frenzy of private equity deals (including transactions topping $20 billion), what lessons can companies glean? Directors and executives of public companies may now be slightly less fearful of imminent takeover, yet the pressure remains: They face shareholders who wonder why they aren’t getting private-equity-level returns. Rather than dismiss the value private equity has created as manipulated or aberrant, public company leaders should recognize the disciplined …

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Robert Pozen is chairman of MFS Investment Management and was recently appointed chairman of the new SEC Advisory Committee on Improvements to Financial Reporting (CIFiR). He recently answered questions from the JofA.*

* Mr. Pozen’s comments do not necessarily reflect the views of the committee, other committee members, the SEC or its staff.

JofA: What is the ultimate goal of CIFiR, and how will you measure progress toward achieving it?

Pozen: The SEC established CIFiR in order to ..read more

The Senate Banking Committee just approved a tighter definition of currency “manipulation” and the Finance Committee recently increased the penalties for alleged currency manipulators. While both committees are trying to reduce the large U.S. trade deficit with China, it would be more fruitful to examine the reluctance of Chinese consumers to buy imported goods and services. They understandably have deep concerns about their country’s weak social safety net. And without adequate retirement security or catastrophic medical insurance, rational Chinese consumers ..read more

In the past six months, three studies have been published on the declining role of the US in global capital markets. This decline is often blamed on the Sarbanes-Oxley Act (Sox, passed in 2002). But the US share of the global market for initial public offerings has been falling since the late 1990s. Hence this decline could not have been primarily due to Sox.Instead it resulted from a mix of factors including improvements in non-US markets and the threat of ..read more

In the last decade, the number of mutual funds has tripled to more than 6,000 funds with more than $4 trillion in assets and more than 60 million individual shareholders. Yet there is no book on the mutual fund business designed for MBA and undergraduate business courses. The Mutual Fund Business, assembled by a leading industry expert, fills this gap.

The book is divided into four parts. Part I contains a general introduction to mutual funds, a short history of the ..read more