If allowing banks to misrepresent the value of their assets is the answer, someone’s asking the wrong question.
Well said.
The only problem (that I can see) with mark-to-market is that it forced a measure of truth into accounting. Forcing banks to adhere to it burst the bubble. But if the assets had been marked-to-market to begin with then at least one market distortion would never have formed.
I can’t see we’d be better off if all those toxic Tier 3 assets carried two values: a fraudulently high ‘accounting’ value, and the very low value people would actually pay for them.
Still, I’m a neophyte at this and could stand to be convinced otherwise.
Saying it is either mark-to-market or misrepresentation is a false choice.
A one year rolling average could be used, for example.