A nice discussion on the problem with "Mark to Market" accounting regulations
Few people realize how much of the present damage to markets is caused by the new regulations imposed by Sabannes Oxley and the “mark to market” rules imposed by FASB. How do you mark to market when there is no market? The market for troubled loans has dissolved for two reasons: no one knows what they are worth, and if an investment bank takes the loans into its portfolio it must mark them at the market price. The market is illiquid and facing not mere risk. They are facing uncertainty. No one knows what the values are or what the probabilities are. . . .
You can read the entire discussion here.