> These are all fancy ways of talking about accounting tricks that banks are allowed to employ in order to hide economic losses from their financial statements. Banks would argue that their accounting tricks are blessed by the priesthood of professionals accountants, so it's perfectly legal. Which it is. It is not obvious that real-time mark-to-market accounting would have made things any better, but pretending that massive economic losses were not real was not a sustainable trajectory as soon the accounting fiction (no losses) collided economic reality (the need to sell holdings, in order allow depositors to withdraw their cash demand deposits).

Oh, man, this made me recall the "borrow, then die" strategy mega rich people use to avoid capital gains taxes:

* Step 1 is to have a large investment portfolio.

* Step 2 is to get a loan from a bank against that portfolio with a sweetheart interest rate, very long term, and interest only payments with a final balloon payment.

* Step 3 is to let the dividends and appreciation on the portfolio pay back the loan.

* Step 4 is to die, leaving the entire portfolio to your heirs. This gives them the ability to take advantage of the step up basis, so they pay no capital gains should they sell, which also gives them the ability to immediately sell a portion of the assets to pay off the loans. They can then go on to implement this same strategy themselves.

There's not a direct mapping between this and the "held-to-mortality" book, but the spirit is certainly very similar. While it's losses being hidden by banks using the "held-to-mortality" book strategy, it's gains being hidden by people using "borrow, then die." In both cases, it's essentially done by delaying realizing those losses/gains until as late as possible.