How do regulators design bank capital requirements when banks can misreport the value of their assets? We show that the answer depends critically on the existence of secondary markets for bank assets. Without secondary markets, capital requirements based on banks' reporting are more socially desirable than a fixed capital requirement if savings on costly bank capital are sufficiently high. Yet with secondary markets, banks can reduce the burden of a fixed requirement by selling their assets. And they have stronger incentive to misreport and game capital requirements based on their reporting, because low quality assets can be sold for elevated prices. We argue that the contemporary banking system, where many bank assets are tradable, can benefit from simpler but harder to game forms of capital regulation.