CECL vs CCAR: banks fear loan-loss reserves mismatch

Lifetime loan loss estimates will look much worse under CCAR stress scenarios than accounting measure

US flag

US banks fear a clash is looming between a forthcoming new accounting standard and the US Federal Reserve’s annual round of Comprehensive Capital Analysis and Review (CCAR) stress tests.

The Current Expected Credit Loss (CECL) accounting standard, which is intended to better align accounting with risk management when it takes effect from 2020, requires banks to set aside reserves to cover potential lifetime loan losses based on their own internal forecasts. CCAR, however, requires banks to

Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.

To access these options, along with all other subscription benefits, please contact [email protected] or view our subscription options here: http://subscriptions.risk.net/subscribe

You are currently unable to copy this content. Please contact [email protected] to find out more.

To continue reading...

You need to sign in to use this feature. If you don’t have a Risk.net account, please register for a trial.

Sign in
You are currently on corporate access.

To use this feature you will need an individual account. If you have one already please sign in.

Sign in.

Alternatively you can request an individual account here: