Robert Pozen on TARP

Robert Pozen:

The lesson from these transactions is clear. If the Treasury bails out large banks in the future, it should demand the same terms as those received by sophisticated institutional investors. Some of the rescued banks will become profitable, while others will become insolvent. Taxpayers need to maximize their gains on the successful turnarounds to compensate for their losses on the bailouts that inevitably fail.

Pozen, chairman of MFS Investment Management, is the author of Too Big to Save: How to Fix the U.S. Financial System