Bloomberg Tax
March 29, 2023, 5:46 PM

Accounting Plan Aims to Fix Bank Loan Loss ‘Double Count’ Woes

Nicola M. White
Nicola M. White

US accounting standard-setters want to fix a much-maligned accounting rule that has been forcing banks to “double count” loan losses when they buy or merge with another bank.

The Financial Accounting Standards Board on Wednesday voted to release for public comment a proposal that will erase the accounting distinction between acquiring a pool of healthy loans instead of loans where customers have already missed payments. Banks complain that current accounting is counterintuitive; they end up reporting more losses when they buy performing loans versus loans that are deteriorating.

“We were criticized all kinds of ways, questioning our competence,” FASB member ...

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