Banks must maintain an ____________ adequate to absorb estimated credit losses from payday loans. Banks should evaluate the collectability of accrued fees and finance charges on payday loans and ensure that this income is appropriately measured.

Question

Quizplus · Accepted Answer

ALLL stands for Allowance for Loan and Lease Losses, which is a reserve that banks must maintain to cover estimated credit losses on loans, including payday loans. This reserve is necessary to ensure the bank has enough funds to cover losses in case borrowers default on their loans. TILA (Truth in Lending Act) and FCRA (Fair Credit Reporting Act) are regulations related to consumer lending and credit reporting, respectively, but they do not specifically address the issue of loan loss reserves.

Banks Must Maintain an ____________ Adequate to Absorb Estimated Credit