NAFCU maintains that credit unions should not be subject to CECL because they were not a part of the poor lending practices that precipitated the financial crisis. We urge policymakers to consider the impact of the CECL standard on credit unions and their members.
The fundamental design of CECL as an accounting standard for a broad range of institutions makes it difficult for credit unions to ascertain a straightforward implementation plan. Even at a preliminary stage, CECL requires credit unions to assess trade-offs in the selection of a loss estimate methodology, which can be difficult to determine. The CECL standard will lead to increased compliance costs – both in dollars and staff time – that many credit unions cannot afford. Those resources would be better spent serving credit union members. Additionally, credit unions will need to plan for CECL’s impact on capital, as any corresponding increase in loss reserves will have a proportionate impact on net worth.