FASB proposal would cause banks to set aside higher reserves

12/23/2012 | Wall Street Journal/CFO Journal, The · Accounting Today

The Financial Accounting Standards Board has proposed a rule for accounting for credit losses that would result in banks, financial firms and companies that offer financing having to increase their loan-loss reserves as much as 50% and recognize losses from nonperforming loans faster. The rule would call for them to estimate expected credit losses and set aside reserves based on those projections. The Center for Financial Research and Analysis said in a research note that the model could give companies more discretion in determining loan losses and "create a powerful earnings management tool."

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Wall Street Journal/CFO Journal, The · Accounting Today

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