WASHINGTON — The Financial Accounting Standards Board proposed steps Thursday for simplifying the classification of loans and securities on banks' balance sheets as part of a broader project to harmonize U.S. accounting standards with those of other countries.
Financial institutions currently classify loans and securities into one of five categories. Loans are classified either as held-for-investment, or held-for-sale. Securities fall into one of three buckets: long-term investments that a bank will likely never sell; investments that may be sold; and those likely to be traded. (Under accounting rules, each category has parameters on how a bank is able to value the asset.)