Table: Aggressive Accounting?
One analyst claims Household's policies understate losses and delinquencies. The company disagrees
HOUSEHOLD IS ACCUSED OF:
-- Rolling over late loans by adding missed payments to ends of loans, thus masking delinquencies
-- Delaying recognition of charge-offs to boost earnings Moving loans from its bank subsidiary to minimize need for reserves
-- Cutting on balance sheet reserves, though its portfolio is riskier
-- The practice is an industry norm, and collection rates improve after loans are "re-aged"
-- Charge-off policy follows industry standards closely
-- Applying bank regulatory rules would barely increase the amount of charge-offs
-- Total reserves are at the highest level in company history
Data: BusinessWeek, Household International Inc.