There is enough wiggle room in the accounting rules for banks not to be bound by this price level but the news from Merrill signals the likelihood of more fair-value losses to come.
Because the issuer determines the fair value of the CVR by designating a discount rate that purportedly estimates the likelihood that the milestones will or will not occur, the fair value measurement itself is highly controversial.
For example, the slippery slope concern is a proper brake on public policy when a given policy seeking to curb a specific, discreet problem would have a likelihood of curbing similar behavior that is in fact not a problem, and indeed, behavior that might be of value to the society.