ARLINGTON, Va.—NAFCU has again urged the Financial Accounting Standards Board to open up its current expected credit loss standard (CECL) proposal for a second comment period.
The request followed FASB Chairman Russell Golden’s defense of the board’s proposal in a letter responding to concerns lodged by Reps. Scott Tipton (R-CO) and Patrick Murphy (D-FL), and a bipartisan group of 60 colleagues about the potential ill effects on credit unions and community banks.
“NAFCU and our members appreciate Mr. Golden’s response to the serious concerns expressed regarding FASB’s current expected credit loss standard,” said NAFCU President and CEO Dan Berger in a statement. “We will continue to work with FASB and Congress to ensure that careful consideration is given to the potentially damaging impact of the final standard on credit unions and the economy. We urge FASB to open the proposal up for a second comment period and extend the implementation date, as NAFCU has requested.”
In his response to legislators, Golden wrote, “Your letter highlights community bank and credit union fears that they will no longer be able to draw from their direct personal knowledge of their customers and local economic conditions when determining loan loss reserves, and asks specifically whether we will consider more practical alternatives to a complex modeling requirement. We want to emphatically say that this is not the FASB’s intention and it is not the case.”
Golden said FASB responded to similar concerns in 2014 by making the standard more flexible for credit unions and community banks. Golden also said FASB is developing educational initiatives to help stakeholders implement the new standard.
Berger also urged FASB to reconsider the CECL standard in two letters earlier in February. NAFCU said it will continue to push FASB to consider the proposal’s potential effect on the industry and to advocate regulatory relief for credit unions.
Tipton, Murphy and 60 other House members sent the NAFCU-endorsed letter to FASB in January. In it, lawmakers asked that FASB consider the standard’s potential impact on credit availability and economic growth. The lawmakers also asked the board to consider more practical alternatives to the proposed complex modeling requirement and a tiered implementation system for different regulatory agencies to ease the regulatory burden on credit unions and community banks.
FASB is expected to finalize its CECL standard near the end of the second quarter of 2016. For credit unions and other nonpublic business organizations, the current implementation dates are fiscal years beginning after Dec. 15, 2019.