[javachip]

Only the actual cash flow from the assets can be counted as capital for reserve requirements and not whatever its potential may or may not be.

Except under mark-to-market, the actual cash flow wasn't a factor in valuing the asset. The last market price determined the value, whether that was a distressed sale or not.

[garbanzo]

That’s fine...it would be like in my analogy marking the value of the lottery tickets at the sale price of the tickets. The broader point was that having lottery tickets as an investment is probably a bad idea regardless of how you are allowed to mark the value of the tickets for capital ratio purposes.