WASHINGTON—Speaking during a Federal Reserve roundtable on the implementation of the Current Expected Credit Loss accounting standard Tuesday, Federal Reserve Vice Chair for Supervision Michelle Bowman said CECL “clearly did not improve safety and soundness” and called for community banks to receive relief from the rule through repeal, exemption or a practical expedient, the ABA Banking Journal reported.
The comments came during a Federal Reserve-hosted roundtable discussion tied to the Financial Accounting Standards Board’s post-implementation review of CECL, which has drawn criticism from many smaller financial institutions and trade groups since taking effect. Community banks and credit unions have long argued the methodology is overly complex for smaller institutions with simpler loan portfolios.
Credit unions also remain subject to CECL requirements. NCUA previously implemented the accounting standard for federally insured credit unions beginning with 2023 reporting periods, while also offering a Simplified CECL Tool for smaller institutions.