Coronavirus Disrupts Historic Credit Loss Accounting Overhaul

At the end of 2019, as the biggest change to bank accounting loomed, bankers took comfort in one fact: they’d at least get to overhaul how they calculate losses on loans during a stable, relatively predictable economy.

The coronavirus pandemic upends that assumption. Shuttered factories, travel disruptions, broken supply chains, and quarantined personnel all threaten to skew predictions on where loan quality is headed.

“You couldn’t have written this drama any worse,” said Stephen Masterson, CEO of SM & Co. LLC, a financial services advisory firm.

The economic upheaval strains the calculations large publicly traded banks like JPMorgan Chase ...