walkitout (walkitout) wrote,
walkitout
walkitout

best quote ever

Okay, maybe not:

"To be frank, it has been frustrating to try to assess that viability when the value of an asset is based on the nature of its acquisition rather than the way in which it is managed or the way in which its economic value is likely to be realized."

Elizabeth Duke, a Fed Governor. Here's the whole thing:

http://www.federalreserve.gov/newsevents/speech/duke20090914a.htm

h/t Calculated Risk

That is an _awesomely_ wonderful quote. She is using it in a particular context (she's a regulator), but it is soooooooo true about damn near everyone in the financial community and as an investor it drives me fucking bananas.

ETA: I'm going to try to translate that into words of few syllables:

Sucks to judge by the price paid, instead of how well it is run or what it might earn.

As much as I prefer anglo-saxon roots to latinate ones, I still like the way she said it better.

ETAYA: CR's commentary is, as usual, limited, which is fine; at least he pointed to the speech and quoted it extensively. Where he summarizes Duke advocated two different valuations depending on whether the asset was acquired with intent to trade vs. hold and collect, he loses Duke's fine-tuning on what needs to be regulated (don't let people move stuff from one category to the other at will). Most of the speech is about the stress test -- a more detailed and informative description than I had previously read, particularly where it goes into details about how mergers lost transparency, especially in the wake of some regulatory changes, and how that poses problems for regulators and investors and others going forward.

STILL MORE: I can stop. Really, I can. But you should go read this speech. It is _good_ and it is important. Which regulatory approach we take (make 'em mark-to-market vs. make 'em treat as hold-to-maturity or not depending on the character of the security) has the potential to reshape _what_ the financial industry does over time. Want a world in which everything is worth what it's worth right at that second? That's FASB, a world of day-traders and investment bankers. Yuck.

MY LAST COMMENT I SWEAR: Altho the last bits worry me. Don't we sometimes _want_ to limit the free flow of credit?
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