Federal Banking Agencies Issue Policy Statement Concerning Allowance For Loan And Lease Losses
The four federal banking agencies, acting jointly under the aegis of the FFIEC, issued a definitive policy statement (the "Policy Statement") concerning the methodologies and documentation banks and thrifts (collectively "financial institutions") should use in establishing and adjusting their allowance for loan and lease losses (" ALLL"). The Policy Statement permits financial institutions, as a means of guarding against potential losses and meeting safety and soundness obligations, to use their judgment as well as objective criteria in determining when adjustments to their ALLL are appropriate, provided that the criteria used by the financial institution in making the decision is documented thoroughly and supported by consistently applied methodology. The Policy Statement was developed in consultation with the SEC and reflects minor revisions from a proposed version of the Policy
