Brian Wesbury’s latest commentary offers an alternative to the $700 billion Mother of All Bailouts. It’s simple and I think would be effective – suspend mark to market accounting for some period to allow financial institutions to work out the bad loans on their own:

a simple, decentralized system of forgiving mark-to-market accounting temporarily, and in a targeted fashion is a much better option. This would help restore market sanity with much less government intervention. At the least, it ought to be incorporated in the current legislation so that the companies facing a fire sale of their assets would get to play on a level playing field with the government and private equity funds. It provides a free market solution, rather than a socialist one.

The rest of the article is well worth your time.

Print Friendly, PDF & Email