This sounds like a nice solution -- wave a magic wand called "changing the accounting rules", and suddenly everybody will have lots of assets against which to borrow money. Too bad it wouldn't work.<p>This is exactly what Japan tried: Banks held loans which everybody knew were never going to be paid back, and pretended that they were still worth something. Instead of having a wave of bankruptcies, Japan had a decade where banks weren't willing to loan money to each other because they knew that they couldn't trust each other's balance sheets.<p>Now, if Sarbanes-Oxley and mark-to-market had never been put into place, it's entirely possible that this financial crisis would have been avoided -- nobody would have ever realized just how bad the situation was. But now that everybody knows that the situation is bad, allowing companies to overvalue their assets won't do anything to help; and might even make the situation worse, since allowing insolvent banks to fudge their accounting would make it impossible to identify the banks which <i>aren't</i> insolvent.