This week in charts
U.S. unemployment
Canadian unemployment rates on the rise
Used vehicle price discount
Historical U.S. asset returns
Historical U.S. sector returns
Large- vs. Small-cap and Value vs. Growth
Market participation
Hyperscaler annual capex
S&P 500 Index firms mentioning AI
Composition of the global equity market
US banks could hide troubled loans under new reporting rules
A rule change by US financial watchdogs risks making it easier for banks to hide troubled loans and conceal signs of distress in their lending portfolios, economists and analysts warn.
The new requirements are set to come into effect this autumn as President Donald Trump steps up a sweeping effort to cut regulation across the US economy.
They mean that banks no longer have to disclose the total amount of loans whose terms have been modified to prevent borrowers from falling behind on repayments.
Instead, banks need only report loans that have been modified in the past 12 months. The shift may make it more difficult to track a leading indicator of the health of their portfolios, since a high percentage of troubled loans can be an early sign of financial stress.
The changes come after three years in which borrowers have had to contend with higher interest rates. Banks commonly modify the terms of loans to help their clients avoid falling into distress.
The previous reporting standard, which had been in place since the 1970s, required a modified loan to be classified as such for the remainder of its life.
The new regulations were announced in July by the three main US banking watchdogs — the Federal Reserve, the Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency — and are set to come into force as early as the third quarter of this year. It will affect quarterly filings made to the FDIC.
The total amount of modified loans reported to the FDIC in the second quarter was $81bn, according to industry tracker BankRegData. This represented about 0.62 per cent of all loans, the highest share in almost four years.
Advocates for the change, including industry lobby group the Bank Policy Institute (BPI), argue that the move brings clarity and uniformity to the reporting of loan modifications.
The BPI has said the 12-month timeframe still presents a sufficiently accurate picture of loan modifications where the borrower may be in financial stress.
It also follows a similar move in 2022 by the Financial Accounting Standards Board, which sets the accounting principles used by US companies, including the results banks report to shareholders.
That change has already resulted in fewer modified loans being flagged in bank earnings reports.
This week’s fun find
The Simple Weekend Habit That Makes You Less Unhappy
Picture this: You’re scrolling through your phone on a Saturday morning, already feeling the weight of the week ahead pressing down on your chest. Your mind is racing through your to-do list, replaying last week’s stressful moments, and somehow managing to worry about Monday’s meetings all at the same time. Sound familiar?
We’ve all been there. But what if we told you that one of the world’s leading happiness experts has a simple practice that could help you, and it only takes half a Saturday?
Mo Gawdat is more than your typical happiness guru. The former Chief Business Officer of Google X—the guy who helped open Google’s businesses worldwide—knows a thing or two about the relentless pace of modern life. But after experiencing unimaginable loss and depression despite his massive success, Mo discovered something profound: sometimes the most productive thing you can do is appear to do nothing at all.
