Bank Regulator Cautions Against Optimistic Loan Loss Forecasts

Banks examiners over the next year will carefully monitor how banks calculate credit losses, the methodologies they use, and how assumptions change, an official said Tuesday.

Economic uncertainty and inflation will make these accounting estimates more challenging, said Amanda Freedle, chief accountant at the Office of the Comptroller of the Currency.

“At this point, I would caution against formulating assumptions that are overly optimistic, given the significant uncertainty posed by our current environment,” Freedle said at an American Institute of CPAs banking conference.

• Most large banks started following major accounting rules for loan losses in 2020, right before ...