......they could cancel the mark to market rule.....
If the rule is canceled, how will the assets be remarked?
One fact involved but not often noted is that it is only possible to establish the value of any specific asset at the time of sale. This means that the historical value has always been wrong at any given moment. If it is necessary to deal with a company on the basis of asset valuations, some evaluation must be made on the basis of all available information.
That is the definition of what the market does. Assets should be valued at the price of the last sale and leave the market to make an evaluation.
The problem with mark to market is it forces banks to value real estate/properties based on what someone says those properties are worth at this exact current moment ... today.... when in fact many banks plan on keeping those mortgage investments for years or decades (or until maturity)
I saw a reasonable proposal that would allow banks to categorize their assets into two groups: ones they are going to keep for long term (10 years or until maturity) ---- and those which could be resold.
The bank would be required to declare legally whether or not they intended to keep properties to maturity (with penalties if they didn't)
Thus if the market today is lousy, the bank would not be forced to write down the value based on today's lousy market.
Many of these devalued assets in fact are still viable properties, where the 'owner' is making on-time payments and being responsible.
Also there is another proposal (I think) that would limit the downside accounting to 5% a year (or something like that) so as to prevent banks from having to go from 100% to 0% all at once.
Bottom line: it is extremely unlikely that real estate will drop in value forever, and thus why force these banks to value long term properties that way.