Local banks, insurers, financial firms brace for a new regimen of rules. Tracking these investments [derivatives] is critical, according to many observers. More important even than putting them on an exchange, said Pozen, the chairman of MFS Investment Management, is having a central clearing firm that processes those trades and can be examined by regulators.
They’ve Got It: Fixes for the Financial System [New York Times]
By SEWELL CHAN and BINYAMIN APPELBAUM. Robert C. Pozen, chairman of MFS Investment Management and author of “Too Big to Save? How to Fix the U.S. Financial System” (Wiley, 2010), wants to require banks to issue an existing kind of bond known as long-term subordinated debt. “Subordinated debt is bought by very sophisticated investors who insist on conditions like capital requirements and covenants to make sure that banks don’t take on too much risk,” he says.
Since their investment is not guaranteed and their time horizon is long term, such creditors have interests closely aligned with those of government regulators, says Mr. Pozen, who is also a lecturer at Harvard Business School.
A better fail-safe than CoCo bonds [FT]
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?
Financial Crisis Reading List [New York Times - Economix]
By David Leonhardt. “One book that may deserve more attention than it’s received is “Too Big to Save,” by Robert Pozen, a former vice chairman of Fidelity Investments. I found Chapter 6 — on capital requirements — especially useful. As Mr. Pozen writes, these requirements are ‘the most criticial component of any regulatory system for commercial banks or investment banks.’ “
How to design a fair bank tax [Financial Times]
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.
Review: Robert Pozen’s Road Map for Financial Reform [Harvard Business Review]
Written by Stephen J. Hadley:
While there are many books on the financial crisis, too many of them say too much about what went wrong and not enough about how to fix the problem. Bob Pozen’s book Too Big to Save? (Wiley, 2009) breaks the mold. It not only analyzes the causes of the crisis with uncommon clarity, but also supplies a compelling road map for reform.
Defusing the Banks’ Financial Time Bomb [BusinessWeek]
Review by By Geoffrey Miller. Without tough reforms, writes Robert Pozen, we’ll probably face an ugly repeat of recent history
“Fixing the U.S. Financial System” [Center for Financial Policy]
This is the first ten minutes of the speech, see the full speech.
The Center for Financial Policyat the University of Maryland’s Robert H. Smith School of Business hosted a speech by Robert Pozen to discuss his book, Too Big to Save? How to Fix the U.S. Financial System, tracing the causes of the current financial crisis and actions taken to respond to it as well as exploring what lessons can be learned to avoid future crises.