Why banks & their clients deserve the poor accounting standards they have

By now, post the infamous Lehmann 105 repo/Bear Sterns portfolio valuation etc, many laymen(and a not insignificant number of industry veterans) blame accounting for the subprime crisis. They argue that if financial instruments were required to be valued consistently at MTM(mark to market), the sudden earnings shock would not have happened.

This argument is flawed given that  the widening CDS spreads(insurance premium for insuring the bonds against default) were widening for the overall market quite early on-so there was enough of early warning. That said, the standards ARE a hogmash of inconsistent principles and valuation basis. But for that, the banks/their clients have themselves to blame.

1. Many of the cumbersome provisions in these standards(like hedge documentation, anti tainting provisions) were inserted to prevent financial engineering led abuse by structuring transactions to achive unintended results. 
2. And the standards are quite vague because when you give 'bright line' guidance, the effort goes to achieve the bare minimum effort necessary to do so. 
3. Also, when the standard setters wanted to apply a consistent fair value framework, doing so for financial assets was easier because of the excellent markets there. But banks lobbied the EU to prevent macro hedging and other rules from coming into place. And when politics enters the equation, good practice does tend to go out
4. Also, response to the discussion papers tends to be skewed and repetitive. As any reader of the various response letters would attest to, each take their own parochial limited views and argue for a rule benefiting them, instead of a rule which is fair, transparent and workable. In that context, even the standard setter has limited options to work with.

 Hopefully, my own future interactions with the standard setters will not commit the above mistakes.