The Federal Reserve’s policy guidance provides background information that is intended to assist institutions and their auditors in understanding the SEC announcement and the FASB article in the broader context of other accounting initiatives and discussions between the SEC and the Federal Reserve on allowance accounting matters.
Moreover, our policy letter sends a clear message that the Federal Reserve wants banks to maintain prudent reserving practices and not to over-react as a result of a narrow interpretation of the FASB guidance. The other banking agencies appear less sanguine about the intent of the FASB guidance and have registered protests on Capitol Hill.