Should We Really Be Marking to Market?


Kevin still likes the idea in general, but Joseph Stiglitz doesn’t like it when it’s applied to Timothy Geithner’s public-private investment plan:

Paying fair market values for the assets will not work. Only by overpaying for the assets will the banks be adequately recapitalized. But overpaying for the assets simply shifts the losses to the government. In other words, the Geithner plan works only if and when the taxpayer loses big time.

I get the sense Geithner knows this, too. Last week I was speaking with a Congressional staffer who said quite bluntly that the big problem with marking these assets to market was that there was no market for them. So Geithner had to create that market, and the only way to make it worthwhile for the banks and investors is to allow banks to overvalue those assets, even if the banks are unloading their worst, most risky ones. If the asset tanks, the bank—and perhaps the economy in the long run—still wins, the private investor loses a little, and the taxpayer loses big.

FACT:

Mother Jones was founded as a nonprofit in 1976 because we knew corporations and the wealthy wouldn't fund the type of hard-hitting journalism we set out to do.

Today, reader support makes up about two-thirds of our budget, allows us to dig deep on stories that matter, and lets us keep our reporting free for everyone. If you value what you get from Mother Jones, please join us with a tax-deductible donation today so we can keep on doing the type of journalism 2019 demands.

We Recommend

Latest

Sign up for our newsletters

Subscribe and we'll send Mother Jones straight to your inbox.

Get our award-winning magazine

Save big on a full year of investigations, ideas, and insights.

Subscribe

Support our journalism

Help Mother Jones' reporters dig deep with a tax-deductible donation.

Donate