CECL regulation explained: How it will impact banks, lending - Business Insider

, a consumer advocacy group that has pushed for a delay in the new rule.

Banks can't predict whether any individual loan will go sour, of course. But in the aggregate, historical experience and computer models can predict that, say, X% of a bank's subprime mortgages or Y% of its credit-card loans will default in a recession. The banks will use that information to estimate total future losses and set aside more reserves for them.

Just how big will vary from bank to bank, and depends significantly on where they see the economy heading. If banks foresee a recession — very possible in 2020 — they'll project higher loan losses and reserve more. When a recession hits, they say, that could create a vicious circle: Projections of future loan losses will rise, which will lead banks to set aside more reserves, so they'll have less money to lend, which will slow the economy further and thus cause more borrowers to default, leading to still higher reserves, and so on.

Banks have pressed their case with the FASB, members of Congress, and regulators, lobbying for modifications or a delay in CECL so that its impact could be studied further. In June, Rep. Vicente Gonzalez introduced a bill in the House to force a delay.

Seems a good rule to me...

retheauditors I would have expected the automated decisioning processes for consumer lending already identify these numbers, it is whether the directors follow through and provide for the potential bad debt. Remember they operate on the principle 'the optimum level of bad debt is non zero'.

Great explainer from rapoportmike Keep on writin’ Mike!

Liar 🤥

The Secret History of How Banks Assumed Control of the U.S. Economy

Россия Последние новости, Россия Последние новости

Similar News:Вы также можете прочитать подобные новости, которые мы собрали из других источников новостей

Online banking isn't just for millennials anymore — it's quickly becoming the norm - Business InsiderMany Americans have a bank they're happy with, but online banking's convenience, lower fees, and higher interest rates could change that. Correction, Bitcoin is here to stay
Источник: BusinessInsider - 🏆 729. / 51 Прочитайте больше »

Prosper, a pioneer in consumer lending, has held talks to sound out potential buyers - Business InsiderProsper Marketplace, the first peer-to-peer lender in what later became an entirely new industry, has been exploring a sale, according to people familiar with the process.
Источник: BusinessInsider - 🏆 729. / 51 Прочитайте больше »

Why Bank of America's mortgage business is booming - Business InsiderBank of America's mortgage tech bets have helped save billions and spark a boom in home lending. here's how it's outpacing JPMorgan and Wells Fargo. ctoricky Where's his top lip tho?
Источник: BusinessInsider - 🏆 729. / 51 Прочитайте больше »

The Content Moderation Report from Business Insider - Business InsiderThis report analyzes a pressing issue currently facing social platforms — content moderation — and lays out how we expect the debate to evolve.
Источник: BusinessInsider - 🏆 729. / 51 Прочитайте больше »

Starling has hit the 1 million account milestone - Business Insider - Business InsiderWhile Starling's total number of accounts may trail other big UK neobanks, it could have an edge over competitors due to the sustainability of its growth:
Источник: BusinessInsider - 🏆 729. / 51 Прочитайте больше »

Trucking startup Convoy's cofounder explains edge over Uber Freight - Business InsiderConvoy just got another $400 million to fight Uber Freight for control of the digital-freight market. Its ex-Amazon cofounder revealed to us the next steps for the $2.75 billion company's quest to dominate truck brokerage.
Источник: BusinessInsider - 🏆 729. / 51 Прочитайте больше »