Banks with significant holdings of defaulted commercial real estate are needlessly suffering at the hands of FASB and bank regulators. While the rules that govern banking are supposed to protect customers, investors and taxpayers, the rules that force banks to take immediate write-downs on collateral are, in fact, only jeopardizing banks.
I have written before about the need to decouple GAAP rules for valuing collateral-dependent impaired loans from regulatory calculations for determining capital ratios. When a borrower falls too far behind on loan repayment, the bank . . .
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