A child-like regulatory question: Why aren’t HTM portfolios for retail banks frequently marked to market? Wouldn’t this force more accurate accounting in the event a bank needed to sell bonds in a capital crunch?
No cash? Then sell your assets. Creditors/depositors ain't gonna wait. Realised loss? That's your balance going down in true accounting terms now. Accountings get disclosed? Those quarterly release are mandatory for all publicly trading company: that could cause worry among investors, and in the case of a bank a panic a bank run.
What a market valuation made at each quarter could achieve is give a momentarily evaluation of what a fund's assets is made of if they were to liquidate right then, or that day. But it isn't how it works*
It does work for goods though, amortization is accounted for and a well oiled exercise. Futures, bonds, stocks? Good luck with that. If we could predict the future the game would be a whole lot different.