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To the Editor:
Bankers battled the accounting standard-setters for years before finally agreeing to set loan-loss allowances based on current conditions.
When did the risk of loss occur? The risk occurred when the loan was made. The probabilities increased when economic conditions changed, but economic conditions always change.
The conservative (and, I believe, appropriate) accounting principles of the past have given way to principles that are focused on the "correct" current evaluation. Never mind that the current evaluation is based on assumptions that may be faulty and certainly don't anticipate future events, even though history shows they are likely to repeat.
It now seems like bank regulatory agencies are starting to flex their muscle. Too bad it didn't happen a few years ago.James Koltveit
Manager
Bank CEO Network
Kansas City, Mo.
