Liar loans and bank assets

Benjamin Friedman recent piece in the New York Review of Books (The Failure of the Economy & the Economists) had this wonderful comment on "mark-to-myth":

In the same effort, the Financial Accounting Standards Board--the independent organization designated by the SEC to set accounting standards--acting at the strong urging of Congress, recently changed its rules to allow banks more latitude to claim that assets on their balance sheets are worth more than what anyone is willing to pay for them. (Next time you apply for a loan, try mentioning FAS 157-4 and telling your banker that you should be allowed to calculate your net worth with your house priced not at what comparable houses are selling for now but at what you paid for it and what you hope you'll get for it if you hold on to it for some years. The banker will laugh, even while the bank applies just such standards to its own balance sheet.)

Good point, since it was "mark-to-myth" with the original loans - aka "liar loans" - that caused the problem in the first place.