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A long-expected change to the rules for provisioning against bad loans is coming soon, and opponents are going on the offensive, arguing that it is impractical and would be especially hard for small banks to comply with. But few concessions, if any, are predicted.
September 29 -
A seemingly minor change to accounting rules governing the treatment of loan losses could effectively serve as a tax on bank acquisitions, say critics. Or not even accounting experts are split, if not confused, about the rule, after three years of debate.
June 12 -
Comptroller of the Currency Thomas Curry strongly supported an accounting proposal on Monday that may force banks to increase reserves based on predictions of credit losses in addition to looking at past performance.
September 16 -
A new accounting framework could give banks a leg up in small-business lending by making it cheaper for companies to provide accurate financials, but accounting experts are divided over whether the standards are an improvement or risky and confusing.
January 27
The Financial Accounting Standards Board has postponed the release of a rule to overhaul how banks calculate loan losses.
The board, which sets accounting guidelines, will release the rule in the first quarter of next year rather than this year as previously planned, a spokeswoman for the board said Wednesday. The FASB board discussed the topic at a meeting on Wednesday but did not vote on a final rule.
The controversial loan-loss model,
Although the rule is still being written, the FASB voted Wednesday that it will take effect in 2019 for public companies and 2020 for all others.
Banking regulators
Critics, however, argue that the proposed rule would turn loss provisioning into a speculative exercise, and would require modeling calculations beyond the capabilities of small banks.
While it did not vote on the loan-loss model, the FASB's board voted Wednesday to change rules for disclosing the valuation of some equity investments, debt and loans.
These changes are significant but won't affect banks' profits and losses, according to Mike Gullette, vice president for accounting and financial management at the American Bankers Association.