Mar 6, 2009
Steve Forbes on "Mark-to-Market"
Soon after the crash, Steve Forbes challenged the mark-to-market rule, and he discusses it here again on the Wall Street Journal's opinion site today.
He argues that the rule caused and is causing much of the financial crisis. He notes that banks have"twice the amount of cash on hand that they did a year ago," but the mark-to-market rule makes them leery of lending it.
While no single fix will solve all problems, Forbes' position highlights the dismal misdirection of the policies of the last few months. Something needed to be done to avert a liquidity crisis; but it has mostly been an exercise in raiding the Treasury and putting our children in hock to satisfy current favored constituents.
Forbes' proposal might be a good step -- but if things got better, how could the administration and Congress justify multi-trillion-dollar budgets?
He argues that the rule caused and is causing much of the financial crisis. He notes that banks have"twice the amount of cash on hand that they did a year ago," but the mark-to-market rule makes them leery of lending it.
While no single fix will solve all problems, Forbes' position highlights the dismal misdirection of the policies of the last few months. Something needed to be done to avert a liquidity crisis; but it has mostly been an exercise in raiding the Treasury and putting our children in hock to satisfy current favored constituents.
Forbes' proposal might be a good step -- but if things got better, how could the administration and Congress justify multi-trillion-dollar budgets?