Backing the Call for Greater Reserves

March 11, 2009, 1:00 a.m. EDT 1 Min Read

To the Editor:

Alex J. Pollock's letter, "An Old Lesson on Bank Reserves" [Mar. 11], was absolutely right on point!

Accountants gave up cash basis, market value accounting 50 or 60 years ago only to have it reinstated. Accounting rule interpretations forced banks to effectively go to a cash basis method of accounting where a loss could not be provided for until it had already happened.

Many community bankers have spent a lot of time trying to build reserves for the inevitable only to be frustrated by accounting rules.

We can't relive the past, but we can make changes so we don't have to go through this same learning experience again.

James Koltveit
Manager

The Bank CEO Network
Kansas City, Mo.

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