In a capital regulation system for financial firms that generally resembles our current one (risk is determined on an asset-by-asset basis), Professor Hunt suggests that there is a good case for incorporating a pure measure of credit risk into the regulatory regime. Hunt argues that recent events have not shown that we should get rid of mark-to-market accounting, but they have highlighted the fact that market prices reflect risks other than credit risk (as well as risk aversion) so that using them as a pure measure of credit risk is problematic. The article concludes that financial regulation should incorporate the function that credit rating agencies are supposed to perform, and that the function should be performed by independent third-party agencies.