Cecl pitting risk managers against accountants, says quant boss
Banks are ‘all over the place’ on modelling expected credit losses, says Regions’ Maglic
Bank risk managers and accountants are at odds over how to deal with the uncertainty of future credit losses under new accounting standards.
The Financial Accounting Standards Board’s Current Expected Credit Loss (Cecl) standard, which takes effect in 2020, requires US banks to estimate expected credit losses over the lifetime of a loan. Banks can either use risk models to make ‘reasonable and supportable’ forecasts of expected credit losses or rely on historical loss information.
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