Robert Pozen has worked in numerous roles in the Government and private Sector. He is currently chairman of MFS Investment Capital, which manages more than $170 billion in assets for mutual funds and pension plans. He is also a senior lecturer at Harvard Business School. He also worked many years at Fidelity investments and held a senior position at the company. Pozen also played a role in Government which included working for the SEC, President Bush’s commission to strengthen social security and under Mitt Romney as Secretary of Economic Affairs. Robert Pozen’s opinions deserve serious attention. In late 2008, Pozen was rumored to be on the short list for SEC chairman.
The first thing one can see from the book is how much of a genius Robert Pozen is. He has a clear grasp on many complex issues facing the US and world economy. Too Big to Save is probably the best book about financial reform written so far.
The book consists of several parts. Too Big to Save off starts with an explanation of the housing slump and financial crisis. Robert Pozen then discusses the impact the crisis had on stocks bonds, and money market accounts. Robert Pozen provides the readers with an in depth analysis of TARP. Pozen ends off the book with the future of the American Financial system.
The author makes many common sense arguments for various reforms for the financial system. One does not have to agree with all of them, but he presents detailed analysis and logic for all of his arguments. Robert Pozen talks about a variety of topics including accounting rules, how to reform credit agencies, and how to reform the securitization process. He also discusses the sensitive topic of fixing the imbalances in global trade between the United States and emerging markets.
The most controversial topic which Pozen discusses is the way the Government should run TARP. Pozen calls the Government’s purchase of preferred shares “One Way Capitalism”, since the Government got below market rates on its investments. When Buffett investing in Goldman Sachs he received 10% dividend while when the Government invested in Citigroup it only received 5% despite the fact that it was much worse shape than Goldman. In addition Warren Buffett received better terms for his warrants from Goldman, than Uncle Sam received from Citigroup. Pozen calls this one way capitalism where the Government takes all the downside risk with little upside risk. Pozen instead calls for the Government to purchase common stock in financial institutions instead of preffered shares.
Too Big to Save is not a beachside thriller. However, Robert Pozen does an excellent job of explaining the current financial crisis and the problems with the current financial system. It is an important book to read for anyone interested in the topic of financial reform.
To purchase the book on Amazon.com click on the following linkToo Big to Save? How to Fix the U.S. Financial System
My next book review will beMr. Market Miscalculates: The Bubble Years and Beyond by James Grant. Following that I will be reviewingOn the Brink: Inside the Race to Stop the Collapse of the Global Financial System by former Treasury Secretary Henry Paulson. I am very interested to hear Hank Paulson’s account of the financial crisis.
Disclosure: New FTC guidelines require me to disclose I have a material connection because I received a free copy of the book to review.