First, as commenter That Anonymous Dude puts it, “MTM is the worst form of accounting, except for all those other forms that have been tried from time to time.”
Second, investors and regulators and reporters and corporate executives need to learn not to take any financial reporting numbers, whether marked-to-market or not, at face value. The health of a bank or any corporation can never be adequately measured by a single bottom-line number. Understanding the assumptions and uncertainties inherent in accounting numbers is crucial to understanding how to use them.
Third, Congress really ought to stay out of this. The last time the people on Capitol Hill seriously messed with accounting standards was with stock options in 1994. In the process they ruined America. As some guy wrote in Fortune a few years ago:
[W]hat it came down to in 1994 was that the powers that be in American economic life decided that dishonesty in the service of prosperity was no vice. In doing so, they may have paved the path for the outrages that followed. “Once CEOs demonstrated their political power to, in effect, roll the FASB and the SEC, they may have felt empowered to do a lot of other things too,” says Warren Buffett, a lonely voice in opposition to the options steamroller back then