Bert Ely has an op-ed in today’s WSJ that deserves some read time.  Ely has an interesting track record of being way ahead of the curve in predicting the S&L crisis several years ago, and he’s the principal of Ely and Company.  That’s not a picture of Ely as far as we know.

Here’s a link to the article in which he opines that “The mess in the financial system today is the result of previous government rules that pushed markets in the wrong directions. To prevent another crisis we need to change the rules, aligning the incentives of financial players with optimum market outcomes.”

He goes on to discuss his suggestions in the article.  We’ve seen posts around (such on up on BiggerPocket’s blog) that the best fix would be in changing the regulators and not the system, but at this point folks like Ely make sense when they talk about changing some of the rules of the game too. 

His suggestions make sense in that banks and lenders should rely more on risk based capital requirements (the use of covered bonds is a great example) instead of being currently incentivized to off-load / securitize riskier loans.   His concept of modifying fair value accounting rules makes sense but would probably be a tough sell to a Congress pandering for votes and lacking conviction to boot.   

We’d opine that most would agree it’s time to consider a broad array of options to address the issues in housing and the larger financial markets at hand. 

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