The problem with valuing things at something other that mark-to-market is you can get an illusion of stability. This is especially the case with bonds: so long

The problem with valuing things at something other that mark-to-market is you can get an illusion of stability. This is especially the case with bonds: so long as the issuer is paying, the buyer pretends all is fine, regardless of how close to default the issuer came. Now this isn't a situation where the government backed bonds held by SVB would default, but the principle is the same: you wouldn't get the same money for them today, so why pretend that your bank is well capitalized when it isnt? This is part of why bonds and credits cause problems that you don't find with equities. It's the normal thing to value an equity book as the market price, so if you have losses you have to do something about it. Somehow that isn't universal in credit markets (partly to do with illiquidity, sure, but some of these instruments aren't illiquid), so when there are swings you sometimes get everything being fine, other times gigantic losses that become too big to do anything about. This whole thing with having a Hold-To-Maturity book is a problem. The image in everybody's mind should be Wiley E Coyote running off a cliff. He doesn't fall until he looks down and finds nothing under. Of course it would be interesting to hear another perspective. I'm basically just saying "why isn't this bank just run like a hedge fund" because that's what I'm used to.