FASB credit loss proposal still stoking concerns
Sept. 19, 2013 – Comptroller of the Currency Tom Curry got a little push-back from community bankers yesterday over his stated support of a proposed accounting standards rule on anticipated credit losses – a proposal NAFCU has warned will be difficult if not impossible for credit unions to implement as well.
Following a speech Wednesday at Washington’s Exchequer Club that focused on cybersecurity issues, Curry was questioned by community banking representatives in the audience concerned that the credit losses proposal, issued by the Financial Accounting Standard Board, will interfere with Basel capital requirements and tax their limited resources. They also said it’s difficult to predict how loans will behave.
Curry responded, stating he was sensitive to the community banks’ concerns, particularly those pertaining to Basel and limited resources.
NAFCU, in an official comment in May, told FASB its credit-loss proposal will be very difficult for credit unions to implement. The proposal, NAFCU wrote, will:
- result in an increase in credit unions’ allowances, misleading members and possibly affecting regulatory capital requirements; and
- impose significant costs on credit unions by requiring increased data collection and triggering added costs for recording systems and the hiring and training of personnel to conduct forecasts.
NAFCU said credit unions don’t have the resources required to project credit losses as envisioned by FASB. Carrie Hunt, the association’s senior vice president of government affairs and general counsel, said preventing implementation of this proposal remains a “key priority” of NAFCU’s regulatory affairs program.
NAFCU comment letter to FASB