Banks battered by the credit crisis may look cheap, but so far neighbors have mostly resisted the temptation to gobble up neighbors, thanks in no small part to an accounting peculiarity that threatens to turn a target’s balance sheet into a ticking time bomb set to explode on purchase.

Under U.S. accounting rules, if a company acquires another, it must record the value of the target’s assets and liabilities at their market value at the time of purchase. For banks acquiring banks now, that is a problem. The purchase could end up cutting into the acquirer’s capital.

But Jamie Dimon is not going to let one thorny accounting issue hold him back.

The JPMorgan chief, fresh from digesting Bear Stearns, said at a conference call after announcing higher-than-expected quarterly profits that he expects the current crisis to lead to more mergers in the banking sector over time.

And although purchase accounting makes doing a deal difficult, he seems poised to do one when he sees one.

“I think the mark-to-market accounting makes it harder for a bank to buy a bank because you have to basically write the loans to a market value,” Dimon said. “But it does not make it impossible. Certainly not for us.”

His finance chief, Mike Cavanagh, echoed the sentiment.

“We wouldn’t do a deal or not do a deal based on pure accounting…we would do or not do a deal based on how much value we thought it adds to shareholders,” Cavanagh said. “Just makes it harder, that’s all.”

(Photo credit: Reuters)