Accounting magic: Suspend one rule and watch banking woes disappear

The dire financial condition of the biggest U.S. banks has inspired a lot of talk about nationalization in recent weeks. It has also stoked a long-running argument over an accounting rule that governs how banks value their investments, including all the toxic mortgage-related bonds and derivatives eating holes in their balance sheets.

Some observers say it is making banks' problems appear much worse than they really are; other say the rules are essential to keeping shareholders informed about financial institutions' true health.