SEC Ups Scrutiny of Unrealized Losses on Bank Long-Term Assets

Banks that stash assets in long-term holdings better be able to justify that so-called unrealized losses haven’t actually happened, a senior SEC official said Tuesday.

Banks deciding whether they need to recognize losses in their held-to-maturity portfolios should look at the Securities and Exchange Commission’s Staff Accounting Bulletin No. 119, which outlines how to establish methodologies to record allowances for loan and lease losses — another sensitive bank calculation. The guidance also covers the documentation the SEC expects banks to prepare and maintain to support their calculations, said Rachel Mincin, associate chief accountant in the SEC’s Office of the ...