Allowance for loan and lease losses Finally, I want to talk about two accounting and reporting issues. Financial regulators want to encourage banking organizations to strengthen their processes and documentation associated with their determination of the adequacy of their allowance for loan and lease losses (ALLL). As you know, accounting standardsetters recently questioned the methodology for loan loss reserves and proposed new guidance.
The good news is that they now recognize that reaffirming existing guidance could address many of the questions raised. But the fact that loan loss reserve methodology is a recurring issue reflects the reality that concerns about how the ALLL is being estimated and its impact on earnings do arise from time to time.