What are the arguments of those supporting fair value accounting after reading those paragraph?

Fair Valuing Subprime Contracts Under U.S. accounting standards, the reporting for financial instruments depended on whether management intended to hold or trade the instruments in question. Under FAS 115, Accounting for Certain Investments in Debt and Equity Securities, most traditional financial instruments (e.g., banks' loans held for investment, deposits, and debt) were classified as "held to maturity" and reported at amortized cost. Financial assets classified in this way were typically subject to impairment tests that required write-down to fair value if there had been a permanent decline in value, with losses being reported in the income statement. Financial liabilities could also be subject to accrual of probable and reasonablv estimable losses. Securities considered "available for sale" under FAS 115 and cash-flow hedge derivatives under FAS 133, Accounting for Derivative Instruments and Hedging Activities, were recorded at fair value on the balance sheet. Any unrealized gains and losses on these instruments were recorded in accumulated other comprehensive income, a component of owners' equity, but were not included in net income Finally, "trading securities" under FAS 115, non-hedge derivatives and fair-value hedge derivatives and hedged items under FAS 133, and fair-value instruments under FAS 159, The Fair Value Option for Financial Assets and Financial Liabilities, were required to be reported at their fair values on the balance sheet, with unrealized gains and losses included in net income each period. In late 2007, the Financial Accounting Standards Board adopted FAS 157, Fair Value Measurement to provide guidance on how to measure fair values. FAS 157 became effective for fiscal years beginning after November 15, 2007. However, most large financial institutions adopted the standard in the first quarter of 2007. Under FAS 157, fair value was defined as "the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date."26 FAS 157 created a hierarchy of inputs into fair-value measurements, from most to least reliable Level 1 inputs were unadjusted quoted market prices in active markets for identical items. With a few narrow exceptions, FAS 157 explicitly required firms to measure fair values using level 1 inputs whenever they were available. Level 2 inputs were other directly or indirectlv observable market data that could be used to value assets with no observable price. They included quoted market prices in active or inactive markets. These inputs were used to generate mark-to-model measurements that were disciplined by market information, such as yield curves or exchange rates. While the inputs to these models were reliable, the values depended critically on the validity of the models used