This is the joy of retiring and getting to speak your mind.
Speaking at an event in South Dakota, outgoing Federal Reserve governor Gary Stern, admitted that our current problems have nothing to do with mark-to-market accounting:
Dow Jones Newswire (not online): “I don’t think it’s at the heart or anywhere near the heart of the problems we’re suffering,” Stern said in response to a question from the audience at the South Dakota Economic Summit in Sioux Falls, S.D.
The troubled assets on financial institutions’ balance sheets “are worth less than they were when they were bought and that’s a fact,” Stern said.
“I am not a critic of mark-to-market accounting. It’s not perfect, but I’m not aware of a better approach,” Stern said.
It doesn’t get much more simple than that. Lenders made a bunch of really horrible misguided loans for several years, and now that’s coming home to roost. What that has to do with accounting is beyond us — and obviously Gary Stern.