This week, the Financial Times reported that new reporting rules set to take effect in the autumn will allow banks to hide troubled loans and conceal signs of distress in their lending portfolios. The new rules mean U.S. banks no longer have to disclose the total outstanding amount of loans whose terms were modified to keep borrowers from falling behind on repayments. Instead, banks need only report loans modified within the past 12 months. This shift may make it harder to track a key indicator of portfolio health, since a high share of troubled loans can be an early sign of financial stress.
