Putnam's Reynolds: Suspend mark-to market accounting

Mar 12, 2009 @ 11:32 am

By Sue Asci

Suspending mark-to-market accounting would improve the credit system, Robert Reynolds, chief executive of Putnam Investments, said today.

“Balance sheets are being artificially hit when they should not be,” he said in a speech to the 150 members of the Greater Boston Chamber of Commerce in Boston. “Mark-to-market makes no sense.”

The rule requires financial firms to report the valuations of securities based on current market values, but it should be replaced with old-fashioned methods, Mr. Reynolds said.

Another priority is the banking system. “We need to clean out the plaque clogging the arteries of our nation’s banks,” he said.

This may involve a stronger Troubled Asset Relief Program and nationalization of institutions, “but you would want the government to take it over for as short an amount of time as possible, and then turn it out for privatization,” Mr. Reynolds said.

He called on the banking industry to increase lending and find ways to slow the foreclosure rate. “And legislators should support banks in doing that,” he said.

While government support has been crucial, companies should not be able to ask for more money without a recovery strategy in place, Mr. Reynolds said. “I hope we won’t keep these zombie companies on federal life support for years on end,” he said.

Concerning American International Group Inc. of New York and the automobile manufacturers, Mr. Reynolds said, “Absent a plan of telling us how [they] are going to get out of this, let them go.”

The crisis of confidence in the United States requires President Obama and Congress to act decisively, but prudently, Mr. Reynolds said. “This is an FDR moment to lead a country,” he said. “You need to show leadership and that is vastly missing at this point in Washington. I worry that our political leaders will overreact and over regulate.”

0
Comments

What do you think?

View comments

Recommended for you

Featured video

Events

Behind the scenes at Pershing Insite 2018

What goes on behind the scenes at one of the industry's biggest conferences? Join us for an all-access sneak peek!

Latest news & opinion

It's official: DOL fiduciary rule is dead

The 5th Circuit Court of Appeals issued a mandate Thursday making its March 15 decision to strike down the regulation effective.

Advisor Group acquires Signator Investors and plans on folding it into Royal Alliance

Advisor Group takes 'orphan' broker-dealer off the hands of John Hancock Financial Services.

Supreme Court curbs SEC administrative law judges

'Buckets of Money' adviser Raymond Lucia is entitled to a new hearing, court rules.

Opaque, outdated 401(k) plan disclosures harming investors, advisers

Morningstar report: Lack of data on fees, investments makes advice on rollovers costlier and more challenging for investors.

Mutual funds feel the pinch of platform fees

No-transaction-fee options are a big hit with investors, but funds wind up paying the costs — and passing them on.

X

Hi! Glad you're here and we hope you like all the great work we do here at InvestmentNews. But what we do is expensive and is funded in part by our sponsors. So won't you show our sponsors a little love by whitelisting investmentnews.com? It'll help us continue to serve you.

Yes, show me how to whitelist investmentnews.com

Ad blocker detected. Please whitelist us or give premium a try.

X

Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print