Mark-to-Market Accounting rule relaxed !

With the global Financial Crisis getting deeper, we know that banks are finding it very difficult to lend and raise capital. To tackle this problem, seems like banks are coming up with new ways to make their portfolios "look" better than before. But how are they trying to achieve this?
By de-regulation ! Let me explain below what i mean

Recently FASB (Financial Accounting Standards Board) relaxed the rules for mark-to-market accounting. Now you may ask what is mark-to-market? Simply put, it means reflecting the market (fair) price of assets in your account. For e.g. if 1 year ago, you bought an asset at 50$ and today its market value (worth measured by investors) is 30$. This means the asset is now worth 20$ less than the price at which you bought it. So it makes sense to report the asset in your account at 30$ (which is the fair market price).

This erosion in Portfolio value is giving banks many sleepless nights. Their assets (like mortgages, and complex derivatives) which they thought were Apples a year ago have turned into Lemons ! thereby causing huge losses. So these banks now want to convert their lemons into Oranges ! How? by relaxing accounting rules.

I think this is outrageous. These are the same banks who asked the regulators to enforce Mark-to-Market accounting regualtion in the 1990 boom period and later. Why? Because at that time, prices were on the rise so reflecting a higer value in assets would surely prove to be beneficial. Banks wanted to show fair prices on their balance sheets which were higher than the prices at which they first bought the assets. But now the economy on the down-turn and assets fetching only Lemon value (literally!), they want to de-regulate the system.

The question now arises "Is regulation something that is flexible and can be tweaked as per the need or should it be permanent and fair enough irrespective of the global economic health"? I prefer the latter.