>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.
>“It’s a terrible decision,” said Rebel Cole, a former Federal Reserve Board staff economist who is now a finance professor at Florida Atlantic University. “It’s more opacity during a time when we already have too much opacity.”
>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.