Additional points about volatility and strange movements in provisions for loan losses (expense in the income statement) from inaccurate predictions of the future.
While regulators and FASB sell scalability, remain skeptical, the PCAOB is only one reason…
As noted in the article, it has been reported that expected increase in ALLL’s may not be as much as originally predicted, which is largely due to the peculiarities of model results, particularly in relation to expected lives of loans (great acronym in the article – LOL). So if this only makes 6-8% difference in ALLL, are benefits going to be worth the costs?
I agree with ABA – this is complicated.