WASHINGTON, D.C.–In an effort to help fix the faltering economy and save it from asset toxicity, FDA regulators have initiated a new plan requiring labeling of toxic assets. All assets will be analyzed by NIH scientisits to determine toxicity levels, and then labeled by financial firms accordingly.
“Consider this to be a lot like the mark-to-market rules, but this focuses on the toxicity aspect of these assets. Once we find out just how toxic these assets really are, then we can move ahead,” said Robin Banks, chief economist with Risky Ventures, Inc.
“The FDA’s regulatory body decided that we can play a huge role in getting the proper warning labels on these toxic assets,” said FDA lawyer, Faye Kerr.
Scientists aren’t sure of the exact methods they will use to determine toxicity levels of different kinds of assets. The consensus is that it will be based on both the type of asset, as well the nominal amount of the asset.
“A mortgage-backed security would be very toxic. But one totaling $10,000,000 instead of $5,000,000 would be far more toxic. And then you have the credit default swaps, derivatives. Anything to do with the government, such as Treasuries, or Federal Reserve Notes, will probably be politically-off limits for a government agency to touch,” said an NIH scientist, speaking on condition of anonymity.
Investors aren’t sure how this will impact the capital markets in terms of risk assessment, but many have already expressed concern over the political process that would be involved in determining toxicity levels. They prefer that the market determine toxicity levels on its own, saying that the government can play favorites, giving their opponents a worse risk rating than they deserve.