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A new accounting rule on loan losses could be disastrous for the economy

Joshua Ronen
A new accounting rule on loan losses could be disastrous for the economy

Beginning in 2020, the Financial Accounting Standards Board (FASB) will require large financial institutions and smaller banks to estimate and report loan losses upon origination according to the Current Expected Credit Loss (CECL) standard, commonly referred to as the loan-loss rule. One can appreciate the salutary transparency the anticipation of losses required by the FASB rule can engender.