The problems in mark to market accounting wasn't so much in the accounting itself which generally should prove irrelevant given that the disclosure ends up being in the notes. The problem is because of regulatory accounting which requires that you need a certain threshold of regulatory capital - and the writedowns (even on bonds that companies intended to hold for their full maturity) meant that they were immediately undercapitalized or overcapitalized based on the whims of the market - an almost perfect storm at the time because these were relatively new regs.

Granted, you could make the argument that these banks should have had greater reserves, but it is also useful and relevant to note that many of these banks may not have failed if they were not forced to sell of some of these assets at their lows as a result of regulatory requirements that did not exist only a year or two earlier (I forget the date).