For Immediate Release
December 20, 2012
ABA Media Contact: Meghan French
(202) 663-5468
Follow us on Twitter: @ABABankingNews

ABA Statement on FASB Impairment Model Proposal

By Bob Davis, ABA’s executive vice president for mortgage markets, financial management and public policy

         ​“We appreciate FASB’s commitment to improving impairment accounting and addressing concerns expressed by bankers, investors and regulators about previous models considered by FASB and IASB.  By its nature, impairment accounting for loans and securities involves significant judgment, making it vital that the standard is clear and reflects how credit risks are managed. 

         “FASB’s proposal is a move in the right direction for both bankers and investors as it seeks to simplify many areas of impairment accounting.  However, we believe additional work is needed to ensure that the model better reflects how banks manage credit risk.

          “More specifically, the proposal appears to require banks to extend some estimates of losses so far into the future that reliability will likely be called into question.  The model’s applicability to many debt securities also must be explored in more detail.  We believe a better reflection of estimable losses would provide improved information to the investment community and regulators.

          “We value FASB’s outreach during the development of the proposal and look forward to continuing the effort to make it workable for banks and useful for investors and regulators.”

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