With the clock ticking towards implementation of the US’s new Current Expected Credit Loss (CECL) accounting standard, banks are increasingly hopeful regulators will give ground on a conflict between the regime and the Federal Reserve’s annual stress testing programme.
CECL requires banks to set aside provisions to cover potential losses on all loans using a bank’s own macroeconomic forecasts and information about past loss history. The aim is to arrive at a realistic view of future losses.
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