Vol. 90, No. 4
Fourth Quarter 2005
How Should Banks Account for Loan Losses?
George J. Benston and Larry D. Wall
This article reviews the generally accepted accounting principles (GAAP) currently used, which are based on historic-cost values for assets and liabilities. It then analyzes economic-value, or fair-value, accounting, which is being discussed as a substitute.
Macroeconomic Models with Heterogeneous Agents and Housing
To understand how this sector and related government policies affect households and the economy, economists attempt to incorporate housing and housing finance into heterogeneous agent models—macroeconomic models that capture the economic and demographic diversity among households. This article provides a progress report on this line of research via a discussion of four papers, presented at an Atlanta Fed conference in May 2005, that use such models.
Bank Crisis Resolution and Foreign-Owned Banks
Robert A. Eisenbeis and George G. Kaufman
This article explores some special problems in the efficient resolution of insolvent banks raised by cross border banking, particularly weighing the costs and benefits of foreign bank entry via branches versus subsidiary banks.