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Berlau & Smith on Dealing with the Threat of Global Recession

CEI President Fred Smith and Director of the Center for Entrepreneurship, John Berlau, wrote a piece for the Washington Times addressing the international economic summit to take place at the White House later this month.  The piece, published Sunday, pointed that transferring power from millions of American investors to a select few in Washington makes little sense:
The bailouts and partial nationalizations are still premised on what Friedrich A. Hayek, Nobel laureate in economics, called the "fatal conceit." Once again, it is assumed that government bureaucrats can plan the direction of the economy better than millions of consumers and investors can.
But even if goverment is less likely to be able to solve our problems than the free market, it seems that something still needs to be done to reform a broken system.  Berlau and Smith suggest that this reform should come in the form of rolling back the government mandates that pushed so many banks to make bad loans, often against their better judgement:
As Stan Liebowitz, a professor of economics at the University of Texas at Dallas Business School, noted recently in the New York Post, "some of these 'outdated' criteria included the size of the mortgage payment relative to income, credit history, savings history and income verification." In other words, the Boston Fed and other agencies were discouraging the very criteria that would have protected lower-income families from overextending their indebtedness and could have prevented the subprime meltdown.
Continuing along this deregulatory line, Berlau & Smith go on to suggest other reforms, such as freeing the financial system from the "contagion" of mark-to-market accounting:
So-called mark-to-market accounting forces financial institutions to take losses in their regulatory capital - which determines how much they can lend - if another bank sells similar loans at a fire-sale price, even if the loans at the bank in question are still performing and are being held to maturity.
Read the piece in-full at the Washington Times website.