Restoring confidence to worried financial markets will require more than just the infusion of new capital such as that sought earlier this week by Lehman Brothers Holdings Inc., says business strategist and author Don Tapscott.

To restore confidence in the marketplace the United States will quickly need to establish unprecedented levels of transparency among marketplace buyers and sellers, says the co-author of the best-selling business book Wikinomics.

“Former President Ronald Reagan was known for his expression to ‘trust but verify’,” said Tapscott, in a speech Wednesday morning to a Securities Industry and Financial Markets Association conference in New York. “Reagan was right. In today’s context, we need to use new technologies so that buyers of complex financial instruments such as collateralized debt obligations (CDO) know exactly what they are purchasing.”

“For example, investors should be able to ‘fly over’ and ‘drill down’ into a CDO’s underlying assets. With full data, they could readily graph the payment history, and correlate information such as employment histories, recent appreciation (or depreciation), location, neighborhood pricings, delinquency patterns, and recent neighborhood offer and sales activities. Now that AAA ratings have proved worthless, currently investors don’t have a glimmer of what they are being asked to buy. And they won’t start buying until they fully understand what they are purchasing, and that the price is fair,” Tapscott said.

More stringent regulation isn’t the answer for troubled financial markets, Taspcott said. What is called for is improved transparency.

“For over a century, we’ve understood the value of transparency in pricing for market goods. As securities become more complex, we can bring that same market approach (transparency and collaborative evaluation) to underlying information as well,” he said.

Many senior bankers in the US say that the worst is over, said Tapscott, but as the Lehman announcement illustrates, without the ability to accurately value, for example, the subprime assets on the bank’s books, no one really knows.