Mark-to-market accounting means valuing the financial instruments on a bank's (or any company's) balance sheet at what they would fetch on the open market today, as opposed to at their historical cost, which is the way things used to be done. It's also often called fair-value accounting, and it's been the law of the land--or, more accurately, the GAAP of the land--since the early 1990s--read more here. 

Here is a simplified illustation of how GAAP (Generally Accepted Accounting Principles) become the pillars of accounting: