Investors may now know what the two Bear Stearns funds are worth, but accountants are still unsure how to put a value on the instruments that got them into trouble. Many complex derivatives, such as mortgage-backed securities, do not trade smoothly and frequently in arm’s length markets. This makes it impossible for book-keepers to mark them to market. Instead they resort to mark-to-model accounting, entering values based on output of a computer.”]
Source: https://taosecurity.blogspot.com/2007/08/economist-on-peril-of-models.html