Why are Some Banks Recording Lower OTTI Losses in 2009 Income Statements? By: Rocky J. Levkulich, CPA Date: 7/9/09 Much has been written about the accounting changes in recording losses on Other Than Temporary Impairment on investment securities in the 2009 income statements of banks.  One significant difference is due to the discount rate assigned to estimated future cash flows from an investment security.  The larger the discount rate the larger the loss.   Previously cash flows were discounted at large discount rates which were based on current risk rates and increased for the illiquidity of the security.  Many discount rates were as high as 25%.  Now securities are written down through the income statement for credit losses, and estimated future cash flows are discounted at the effective interest rate implicit in the security at the date of acquisition which may only be 5 to 6%.