6

Anyway, regular accounting procedures require that you (a company incl banks) carry an asset on your books at the lesser of cost or market.

If you buy a car for some price. When it is used or damaged and worth only $20k you have to report it as a $20k asset. The only value you can report is the value you can sell something for, otherwise, you are doing what Enron did.

But banks have special rules.
If they bought a bond for $100 they can keep claiming it is worth $100 because eventually one day they will get their $100. If it worth-less they have to talk about that fact (disclose it) but on their accounting statement they can still claim the bond is worth more than they could sell it for.

Thus Bank of America reports $222.6b in net assets even though if they sold those assets today they’d get $109b less than that. (Shhhh! Don’t tell anyone.)