Robert Pozen is chairman of MFS Investment Management. His book, Too Big to Save (John Wiley & Sons, 2010), is a step by step analysis of each part of the financial system that was involved in creating the recent financial crisis. The depth and scope of Robert Pozen’s analysis is essential to establishing changed structures and regulations to prevent another global meltdown.
One of Pozen’s proposals is to create new boards of directors: a small group with extensive financial experience, who would spend a significant amount of
time on the bank’s business, and would be both accountable and incentivized.
In The Road to Financial Reformation (John Wiley & Sons, 2009), Henry Kaufman brings his years of Wall Street experience and monetary economics knowledge to the challenge of “Financial Reformation.” As he points out, business schools do not teach financial history. Few involved in the economic crisis had the sense of financial history to comprehend the dangers of an economy devoted to creating more and more debt. “There was a massive shift of corporate finance away from equity toward debt.” Many defined liquidity as the ability to borrow—a fatal misunderstanding.
Anyone who wants to know how or why the financial crisis happened should read both books. They offer answers, solutions, and suggestions on how to prevent future meltdowns. Too Big to Fail and The Road to Financial Reformation should be on every financial professional’s bookshelf.
–William A. Hayes
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