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Issue

Lease Accounting

Regulators need to adjust capital requirements to rebalance the increase in capital requirements due to this accounting change

ABA Position

The standard impacts the financial statements of banks and of their customers who lease equipment and real estate. Leverage and debt-to-equity ratios will deteriorate, ROA, and operating cash flow will change. Further, the change is a de facto increase to required capital as the additional on balance sheet assets resulting from the change in accounting without and change in underlying risk. ABA's comment letter to FASB emphasized the need for an in-depth cost/benefit study and the need for banking regulators to adjust capital requirements to rebalance the related increase in capital requirements due to the accounting change. 

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