Banking Agencies Amend Policy Statement on Credit Losses

The OCC, Federal Reserve Board, FDIC and National Credit Union Administration revised an interagency policy statement on allowances for credit losses.

The revisions were in response to amendments the Financial Accounting Standards Board made to GAAP accounting standards on the topic in March, 2022. Amendments to Topic 326 ("Troubled Debt Restructurings and Vintage Disclosures") eliminate[d] the recognition and measurement accounting guidance for Troubled Debt Restructurings (TDRs) by creditors." Consistent with the FASB's amendments, the banking agencies removed any references to TDRs, in addition to correcting a regulatory citation in a footnote, but made clear that no other changes were made to the original statement.

The revised interagency policy statement will become effective at the time of each institution’s adoption of FASB Accounting Standards Codification Topic 326.