January 29, 2016

62 in House echo CUs' CECL concerns

Reps. Scott Tipton, R-Colo., and Patrick Murphy, D-Fla., along with 60 other House members sent a NAFCU-endorsed letter to the Federal Accounting Standards Board to raise concerns about how its proposed current expected credit loss standard (CECL) could hurt credit unions and community banks.

"FASB must proceed with the utmost caution in finalizing this ASU [accounting standards update], as it has the potential to irreversibly damage community banks' and credit unions' ability to continue to adequately serve their customers/members and communities and sustain the economic recovery," the lawmakers wrote, echoing concerns raised by NAFCU in recent weeks.

"The method for determining expected losses should be simple, straightforward, and easy to apply," they continued. "A requirement that lenders use complex, theoretical forecasting models … is impractical, costly, and time consuming for community banks and credit unions."

NAFCU was one of three financial industry trades listed as endorsers of Friday's the "Dear Colleague" letter. 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.

"We appreciate the leadership of Representatives Tipton and Murphy and the bipartisan support of their fellow signers of the letter," said Brad Thaler, NAFCU's vice president of legislative affairs.

FASB is now expecting 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.