The New York Times reports that S&P held an investment conference yesterday at which leading bankers complained about a rule that requires them to report accurately the value of securities on their books that nobody else wants to own. They complain because this reporting has resulted in $300 billion of losses so far. That cuts into bank earnings and their own bonuses.

Banks naturally don't like having to mark down assets simply because the markets have frozen up. Bob Traficanti, head of accounting policy and deputy comptroller at Citigroup Inc. (NYSE: C), suggested that some assets could be marked as if they would be held until they matured. But this ignores economic reality. If nobody wants to buy an asset, then it has no price. Therefore, for those free marketeers out on Wall Street, the assets have no value at all.

So, as I posted, banks are left trying to make up a value for the assets using computer models on complex spreadsheets. Not surprisingly, different banks use different spreadsheets to value the same kinds of assets. One of the conference participants suggested that regulators should allow banks to get together and compare spreadsheets so they can become more consistent.

But consistency is not really the big issue. The problem is that these assets are so complex that the people who own them do not understand what they've bought. And they write their own report cards which determine how much of a bonus they receive. So they have every incentive to ignore these problems and hope nobody notices.

So until we get together and decide to give bankers an incentive to care about risk -- instead of just paying them to close deals -- society will need strong regulators to protect us from their greed.

Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter. He owns Citigroup shares.