Funding a down payment with the credit increases the odds the buyer will default.

By KAREN BLUMENTHAL. Bob Pozen, chairman of MFS Investment Management in Boston and author of a new book, “Too Big to Save?”, argues that increasing the insured amount to such a high level discourages companies and wealthy individuals from studying which banks are worthy of holding their money.

That essentially removes one of the private-sector checks in the system, he says.

Individuals who chase the higher yields offered by weaker banks could be taking an unforeseen risk. If the bank fails and is ..read more

It is a mistake to give the central bank vast new regulatory powers.

The government and banks can share in any upside.

The SEC should restore the uptick rule.

The government should guarantee interbank activity.

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

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

Almost 10% of U.S. public companies announced a record 1,420 financial restatements in 2006. It was a record — but continues an accelerating trend of financial restatements, from 2% in 2000 and more than 4% in 2004.

These restatements impose large costs on the capital markets. The GAO estimated that, between July 2002 and September 2005, the market capitalizations of restating companies decreased by a total of $36 billion in the days immediately following the initial restatement. Two academic studies have ..read more