The basic job of a retail bank is to fund long-term loans with short-term deposits. A bank which is doing this optimally is still curiously vulnerable to bank r

The basic job of a retail bank is to fund long-term loans with short-term deposits. A bank which is doing this optimally is still curiously vulnerable to bank runs. If all short-term deposits decide to redeem at once, that collective decision might render the bank insolvent and incapable of returning deposits at par, because not all long-term loans can be immediately redeemed/sold at par. In the normal course of business, nobody thinks too hard about this. Asking such an institution to MTM (which is intrinsically about immediate redemption/sale value) is asking everyone to document and consider a bank's inability to immediately redeem all depositors. We're doing more of that, which has pros and cons. (Recent MTM disclosures set off the SVB run in advance of a planned SVB equity fundraise.) Finance is an imaginary staircase that only works until we look down and freak out. We don't document the robustness of the stairs because the stairs aren't real.