That's what "mark-to-what-you-feel-like" is all about: use the rules in full when they are to your advantage, and relax them when they aren't.

Some banks have actually been buying up their own bonds (for amounts less than their full face value), so it's not completely cut off from reality.

And think of when companies make losses - they suddenly get to pay less taxes, which ends up increasing their net profit is they can deduct these losses from significant earlier (or book provisions for later) gains...

In the long run, we're all dead. John Maynard Keynes