Valuers are neutral. If you think about it, this is an unusual position in finance. Neutrality is enforced by valuers’ standards of professional practice and ethics, and by they way they are paid (no contingent fees). Standards are most widely promulgated by professional associations, and in the case of real estate appraisers, also state licensing boards. I regard this as a great strength of the financial system, and one that should be used to a greater extent to counter the misplaced incentives and self-dealing that has caused so much damage in recent years. It would have been helpful, for example, if the designers of various derivative securities had actually obtained advice from experienced asset valuers regards the relationship between current values and long-term trends. But, it seems like the participants had an incentive to be wildly optimistic, and we are all paying a big price.

Several other professions fall into this neutral position: accountants in some respects, academics and the judiciary. However, a case before the US Supreme Court on Tuesday considered whether a defendant obtained the swing vote on the West Virginia State Supreme Court by making a $3 million campaign contribution. Clearly a reminder that principles of neutrality need to be continuously monitored. I realize that the expert opinions of academics and valuers can also be swayed, but am encouraged that such behaviors are coming to light. Our financial system must have professions that the public can rely on for dispassionate and objective opinions and insight. It would be good if the public were to demand it, since there is quite enough of the other kind.