It's true, I suppose, that there can be temporary market conditions such that "fair value accounting" might give an inaccurate picture, but the financial and mortgage lending crisis we're in isn't temporary. Those foreclosures are real, those loans aren't being paid back, and all of the investors who bought CDOs are going to be getting a bit less than 100 cents on the dollar.
There's really no chance that the housing market will suddenly rebound, that prices will appreciate 30%, that people trapped in mortgages they can't repay - some due to crazy lending terms, some simply because they have big mortgages they could never afford - will cease to be underwater and be able to refinance or sell.
