Banks to Get Relief From Troubled Debt Accounting Requirements

Separate accounting requirements for loan breaks that banks give to struggling customers could be on their way out.

The Financial Accounting Standards Board on Tuesday proposed nixing special recognition and measurement requirements that banks have long complained of for loan modifications that qualify as so-called troubled debt restructurings.

Banks no longer would have to record an incremental expected loss when they give a customer a concession such as extra time to pay back a loan or a lower interest rate. Measuring these losses requires special, separate cash flow models that banks have long complained are onerous.

Instead, banks would have ...