A recent Bloomberg article regarding its Freedom of Information application with regard to the assets accepted by the Federal Reserve
http://www.bloomberg.com/...
quoted Frank as saying
" the Fed shouldn't reveal the assets it holds or how it values them because of ``delicacy with respect to pricing.'' He said such disclosure would ``give people clues to what your pricing is and what they might be able to sell us and what your estimates are.'' He wouldn't say why he thought that information would be problematic.
I guess politicians are just allergic to the truth.
It would appear from Frank's comment and the actions of the Fed. that the regulators and Congress haven't yet figured out that underlying cause of the current financial crisis or how markets operate. Given that expect the problem to get worse.
Markets can deal with good news and bad news what they can't deal with is uncertainty. That is the root of the problem. Markets just don't how to price the stuff that is on the books of financial institutions. The effect of that is to freeze markets. One would have thought that there would be a consensus amongst all that the sooner markets can freely price assets and transact the sooner we will get out of this mess. Any government intervention that hastens price discovery is desirable while anything that hinders it will just exacerbate the problem.
The best thing the Fed could have done was to be as transparent as possible in its pricing of these assets and in fact should have put its valuation models in the public domain. The markets would then have something to lean on rather than groping the dark. They would be able to challenge the Fed's assumptions as being too conservative or too optimistic, input their own assumptions into the models to determine appropriate values and acted accordingly.
If in fact Frank is right "I talk to Geithner and he was pretty sure that they're OK" then placing those valuations in the public domain is fine. The only reason the Fed would not want to make public is valuations is precisely because they are not ok.