Banks Eye Accounting Fix for Loan-Loss ‘Double Count’ Woes (1)

US accounting rulemakers are angling to fix one of the most reviled parts of major new bank accounting rules—a quirk that forces banks to “double count” losses on healthy loans when they buy or merge with another bank.

The Financial Accounting Standards Board on Tuesday issued a proposal that would eliminate the accounting distinction between acquiring a pool of healthy loans versus loans where customers have already missed payments. The goal is to curb complaints that accounting rules counterintuitively make banks report more losses when they buy performing loans versus loans that show signs of deteriorated credit quality. After weighing ...