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JPMorgan Chase, Citigroup and Wells Fargo last week voiced their concerns over the Financial Accounting Standards Board's (FASB) current expected credit loss (CECL) standard and how it will impact their capital, among other concerns. Credit unions have also been vocal about the impacts of this standard, and NAFCU maintains that the industry should never have been included within its scope.

The CECL accounting standards requires financial institutions – including credit unions – to record expected losses whenever they make a new loan. This is causing concern within the industry as it could mean financial institutions may have to either raise more capital or lend less.

Recently, FASB offered CECL clarifications, including a proposed update to the standard's effective date for non-public business entities – including credit unions – making clear that the implementation of the standard is only required for fiscal years after Dec. 15, 2021. The FASB's proposal would also clarify that operating lease receivables are not covered within the scope of CECL – a clarification welcomed by NAFCU.

However, NAFCU continues to urge the FASB to coordinate with the NCUA to establish better resources for credit unions as they implement the CECL standard. According to recent NAFCU Economic & CU Monitor data, credit unions are still waiting for substantive guidance on the CECL standard.

NAFCU's Regulatory Committee will be discussing CECL Tuesday, and the association will continue to look for potential relief opportunities for credit unions. Credit unions can learn more about some of the key qualities and trade-offs under various CECL implementation models in a study NAFCU released last year.