Adversely Classified Asset

  

Categories: Banking, Education

The term "Adversely Classified Asset" is banker-speak for a loan that seems unlikely to get paid back. It probably sounds better on internal memos than "likely deadbeat."

The assets come in three classifications of adversity. First there's substandard, which is code for "hmmm, this seems a bit dodgy." Second, there's doubtful, which is the most straight-forwardly named of the categories, as in "I'm doubtful this deadbeat is going to pay." Finally, there's loss, which is the banker's way of saying "we're never getting that money back."

So the loan itself is classified as "adverse" or "against" the interests of the risk-takers who loaned the deadbeat the money in the first place.

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