He admitted some bankers he supervises did a poor job of documenting the reasons they felt their institutions needed higher reserves. But he added, 'I think some in the bank accounting profession placed too much reliance on the lack of historical loss rates and missed the resulting build up of credit risk on the banks' balance sheet.'

Going into the recession banks had historically low reserve levels, but Long said examiners pushing for higher reserves found accounting rules in their way and the application of those rules limited banks' ability to build reserves to meet easily anticipated losses. Long said this stemmed from a rigid adherence to the incurred loss model, a view that he said was also that of the Financial Stability Board's Working Group on Provisioning.

"I believe we have made the provisioning for loan losses much too complicated for the industry, for our examiners, and for auditors," Long continued. "Whether we adopt the expected loss model or something else, we need to get back to a fundamental understanding about the loan loss reserve and what it's meant to represent."

With the economy improving banks are under pressure from auditors to reduce reserves. However, Long believes that is premature.