Heavyweights Join The Ticker Call

Posted 2009-08-19 09:06
by Karl Denninger
in Banking System

Aug. 19 (Bloomberg) -- Myron Scholes joined Robert Merton, with whom he shared the 1997 Nobel prize for economics, in calling for banks to give investors a clearer picture of their worth by providing better valuations for illiquid assets.
Banks should value illiquid assets by expanding the use of mark-to-market accounting or listing them on public exchanges whenever possible, Scholes said in a Bloomberg Radio interview yesterday. Scholes, winner of the Nobel with Merton for helping invent a model for pricing options, said investors need better pricing data to accurately value the debt and equity securities of banks.

I suppose I should be annoyed that this is of course presented as an "original idea", but I'm not.

I'm just happy to see folks who have serious "street cred" deciding to open their mouths on this important issue and speak.

Oh, and as for derivatives?

Regulators need to “blow up or burn” the private over- the-counter derivative markets to help solve the financial crisis, Scholes said on March 6. Because markets had frozen, investors weren’t getting timely prices to inform their decisions, he said then, speaking at New York University’s Stern School of Business.

Funny how all the good ideas eventually get co-opted and adopted.....

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