Did Mark-to-Market Create a Phony Banking Crisis?

Last spring, the banks and the Feds had a clear choice:

A) leave M2M as-is, and allow all these securities to be valued at "???" (which essentially means ZERO) then act as if the sky was falling, scream bloody murder, "too big to fail", etc, and get a huge chunk of free taxpayer money AND have the government take the worst assets off your books. Gratis.

-or-

B) let M2M be amended to something more sane, allow the assets to be properly valued, but lose anywhere from 20-50% because you made bad business decisions.

Hmmm... I know which one I'd choose.