Banks question CECL procyclicality research

Banks dispute Fed paper showing accounting switch will lessen loan reserve procyclicality

dollar questions

US banks are taking issue with official sector research that concludes new accounting standards will likely reduce procyclicality in required loan-loss reserves.

A recent Federal Reserve paper concludes the forthcoming current expected credit loss (CECL) accounting standard will generally lessen the degree to which reserves are overstated at the trough of an economic cycle and understated at its peak, compared with the current incurred loss standard, and depending on the forecast and modelling

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