Validating ALLL models under CECL – What might change?
What does model validation mean for the allowance for loan and lease losses and what will it mean under CECL? Ever since the 2011 Interagency Guidance (2011-13) was issued and began to be applied to ALLL model, model validation has been going through a maturing process. Every model is different, and there have been some... Read more »
Included in the 2006 Interagency Guidance was a statement that “Policies should require periodic validation of the methodology.” It is typically recommended that these model validations take place annually to ensure the methodology complies with Interagency Guidance/GAAP, and that it is appropriate for the portfolio.