Banks are rushing to meet a 2020 deadline for a new bookkeeping rule. They will need to estimate possible losses on a loan when it’s originated.
Under today’s accounting rules, banks don’t book loan losses until they have evidence that a loss will occur. This change may make it even more difficult for people with suspect credit to get a loan.
Financial firms will also have to change how they set aside funds to cover portfolio losses. Consumer lenders will be particularly affected American Express, Ally Bank, Capital One, Synchrony. While banks that focus on commercial lending could benefit.