Too Big to Save? How to Fix the U.S. Financial System

I had the pleasure of interviewing Robert Pozen on my Radio Show as well as reading his new book. This is the book we have all been waiting for on the financial and economic policies that put not only the U.S. but the world financial system at risk of collapse. Robert Pozen takes the reader through the explanation of how a number of the usual suspects are to blame. He guides the reader through an analysis of the government's response and more importantly, makes concrete and specific suggestions for reforms that encompass almost every aspect of financial reform. The book contains common sense analysis that demonstrate the way Wall Street and Main Street work and how it should look in the future. There are excellent charts and graphs illustrating the issues in a clear and understandable manner. Charts on the mortgage securitization process, investment bank leverage growth, foreign holdings of treasuries, and more will make this book a great reference source for educators of finance. As our legislators and elected representatives try to put the pieces back together again, they should read Robert's excellent commentary. He approaches moral hazard in an honest, straight forward manner. "In supporting financial institutions, the federal government should avoid whenever possible the creation of moral hazard, an economic term for the situation created by broad loss guarantees that remove all incentive for private investors to perform due diligence on their investments." There is a chapter discussing these issues as it pertains to Short Sell, Hedge Funds, and Leverage. Among Mr. Pozen's recommendations that I whole heartily agree with is "Congress should require all large hedge funds to submit regular confidential reports..." If we are going to monitor systemic risk, we need to do it for all large systemically important institutions be they a bank or other entity. Our leaders from the Federal Reserve to the SEC must see that their policies if not changed will only have limited value in protecting us from another similar situation. Mr. Pozen also talks about the need for international cooperation. I highly recommend that you read Too Big To Save? How to fix the U.S. Financial System by Robert Pozen Reviewed by Mark Seleznov [...]

Is anyone else having as much trouble as I am, trying to make sense of the current financial debacle? Feeling overwhelmed yet under-informed? Finally, here comes Bob Pozen to the rescue. This is a book for everyday people. Clear, concise, and chock-full of handy tools to understand the wealth of information, Too Big to Save? is a keeper. Here are some ways that Pozen puts a light at the end of the tunnel. The book easier read than one might expect. Pozen's prose is straightforward and down to earth. Its audience seems to be everyday people, as well as educators and other professionals who need to understand, analyze, and explain the world financial crisis. I'm a fan of indexes, and this book has an excellent one. Beyond the index, many other features of the book make it easy to find and understand complex information. For instance, each of the four major sections of the book begins with a few pages of summary, and each chapter in the section ends with a chapter summary. Reading these combined summaries alone can bring everything into focus. The visuals are especially strong and numerous. There are about 70 different charts, graphs, tables, and diagrams throughout the book. These include some of the most informative (and original) financial diagrams I've seen in a long time. The most elegant, in my opinion, are "Simple Diagram of the U.S. Financial System," "Mortgage Securitization Process," "Mortgage Securitization Process in the Private Sector," and "Collateralized Debt Obligation." The table of contents is clear, and the 10-page glossary is a godsend. Footnotes at the end of the book are handy and good reading in themselves. The overall layout and design of the book, using serif, is easy on the eyes and mind. Pozen's use of boldface type for his recommendations is an especially good idea, and it further illustrates his dynamic view of our situation. There's a forensic, almost cinematic quality to the way Bob Pozen unfolds the facts of our current economic drama and sets them (and us) on the world stage. Most importantly, he provides vision. We are all the protagonists in this drama, and there is a way out.

Too Big to Save is a clear and straightforward account of the financial crisis in 2008 and 2009. As Pozen states, the book is aimed at intelligent readers, who are not financial experts. The book sets out to answer three key questions: How exactly did a steep drop in U.S. housing prices result in a severe financial crisis throughout the world? What did the U.S. government do right and what did it do wrong in responding to the financial crisis? What actions should be taken in the future to resolve this financial crisis and prevent others from happening? Pozen accomplishes these goals. The book is easy to read and not only synthesizes the background and history of elements of the financial system (for example, of Fannie Mae and Freddie Mac, of credit default swaps, and of the 2008 Bailout Act), but goes much further. It includes detailed analysis and critique, and concrete policy proposals. Pozen explains complex concepts in a clear and understandable manner. The book is insightful and accomplished. The book also contains a helpful glossary.

Bob Pozen's book, "Too Big to Save: How to Fix the US Financial System" is the most important books on financial reform written to date. The book not only provides an overview of how the US economy entered into a deep recession, but also a comprehensive plan for reform and a return to growth. Filled with original insight, the book clearly explains the failure of our modern capitalist society that has morphed into one-way capitalism that penalizes taxpayers who do not participate in upside gains but are exposed to losses from bailed out financial institutions. The book offers pragmatic advice for policymakers and important guidelines for all readers to understand the nature, causes, and appropriate reforms associated with the current US financial crisis. There has not been a more timely and important book written this decade. Furthermore, Bob Pozen approaches each potential idea of reform with a well-reasoned perspective on the legal, economic, political, ethical and cultural implications of such reform. Pozen has a unique ability to describe complex phenomona such as the housing boom and bust and explosive growth in the use and complexity of financial derivatives with ease. His grasp of the complex issues is second to none, and his ability to convey these complex ideas in easily understandable, succinct prose is remarkable. Pozen's suggestions for reform - including reducing moral hazard problems, strengthening boards, and improving the regulatory system - present feasible, necessary steps that policymakers must head to improve financial markets and the real economy. "Too Big to Save" is comprehensive, rigorous, and not only descriptive but also prescriptive. The US economy is too important a global player to be ignored, and Pozen's analysis in "Too Big Too Save" is too important to not be read. This book is truly a gem and a strongly recommended read.