“Legislators and regulators fear that marking banks’ assets down to fair-value estimates will trigger automatic actions as capital ratios deteriorate.

But using accounting rules to mislead regulators with inaccurate information is a poor policy.

If capital calculations are based on inaccurate values of assets, the ratios are already lower than they appear.

Banks should provide regulators with the best information about their assets and liabilities and, separately, allow them the flexibility and discretion to adjust capital adequacy ratios based on the economic situation.

Regulators can lower capital ratios during downturns and raise them during good economic times.”

Financial Times, August 17, 2009

Transparency can be accompanied by flexibility… it’s truthfulness that creates confidence in markets….

http://freerisk.org/wiki/index.php/Mark-to-market_accounting