"Mark-to-market accounting has received a lot of criticism during the current financial crisis. But a recent email from Less Antman, a CPA and financial planner, offers the best explanation I've seen of why government-mandated capital requirements are the real source of the problem. Economists now realize that reserve requirements, designed to make banks more LIQUID, have the unintended reverse impact during a panic, tying up cash that banks need to pay out in order to stem the panic. As a result, reserve requirements are fast disappearing as a tool of bank regulation. Similarly, capital requirements, designed to make banks more SOLVENT, also have the reverse impact during a crisis."
Yes i did read it all. It is about to where I start to drown. (over my head) But I do learn.