Newsletter Mar 2008: Professors urge banks to fully recognise losses

BRUSSELS – A group of European academics is urging the “complete recognition of losses” by global banks as the key to resolving the prolonged international financial crisis stemming from the wholesale downgrading of US sub-prime mortgage-backed assets. In a statement issued in early March, the European Shadow Financial Regulatory Committee (ESFRC), chiefly comprising professors of finance, says that the outcome of such radical recognition and disclosure of losses would “actually be benign, since it would open up avenues for keeping these losses within limits.”