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

Mortgage defaults, together with excessive debt and weak regulation, ultimately led to a major financial crisis in the United States in 2008. But 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 this financial crisis? And perhaps most importantly, what actions should be taken in the future to resolve this financial crisis and help prevent others from happening? In Too Big to Save?, Robert Pozen answers these and other key questions as he presents his vision for repairing the U.S. financial system.

Each chapter of this timely book analyzes the impact of the financial crisis on a major part of the U.S. financial system. Pozen first explains the globalization of the financial crisis through the sale of mortgage-backed securities around the world. He suggests how the securitization process should be reformed, including new approaches to credit rating agencies and credit default swaps.

Second, he assesses the impact of the financial crisis on the stock and bond markets. He criticizes the broad government guarantees of bank debt and money market funds, and calls for reinstating the incentives for large debt holders to scrutinize the condition of financial institutions.

Third, he evaluates the federal bailout of financial institutions by buying their stock and toxic assets. He shows how these bailouts constitute “one-way capitalism” whereby taxpayers bear most of the losses but stand to receive little of any potential gains.

Finally, he outlines what can and cannot be achieved realistically through international financial cooperation. For the United States, he proposes a concrete plan to address risks to the entire financial system and strengthen the functional regulation of each segment of the financial services industry.

Too Big to Save? will give you a sound framework to analyze the daily barrage of information about the financial crisis. It offers a blueprint for restoring the financial system without repeating the mistakes of the past.

Industry luminary Robert Pozen offers his insights on the future of U.S. finance

The recent credit crisis and the resulting bailout program are unprecedented events in the financial industry. While it's important to understand what got us here, it's even more important to consider how we should get out. While there is little question that immediate action was required to stabilize the situation, it is now time to look for a long-term plan to reform the United States financial industry.

That is where Bob Pozen comes in. Perhaps more than anyone in the industry, Pozen commands the respect and attention of the public and private sector. In this timely guide, he outlines his vision for the new financial future and provides actionable advice along the way. To Pozen, there are four high-priority problems that must be addressed, and this book puts them in perspective

• Analyzes alternative models for government stakes in banks
• Recommends a new board structure for large financial institutions
• Examines the importance of broader Fed jurisdiction over systemic risks
• Proposes a way to revive the securitization of loans

With Too Big to Save, you'll learn the likely future of the finance industry and understand why changes have to be made.