Clearly, the fair valuing or “marking to market” of commercial bank trading portfolios and the implied short-term holding periods of such positions factor into the different approaches. We must remember, however, that the MRA was adopted at a time when bank trading portfolios looked very different from today.
Significant growth in structured transactions, collateralized debt obligations, and credit derivatives are just a few examples of the significant developments over the past several years. Moreover, the MRA was structured with commercial banks in mind and not broker-dealers who, as you know, mark most of their balance sheets to market.