April 21, 2021

FASB to host CECL roundtable May 20

CECLThe Financial Accounting Standards Board (FASB) is hosting a roundtable on the current expected credit loss (CECL) standard May 20. The standard is set to take effect for credit unions in 2023; NAFCU continues to urge FASB to grant credit unions an exemption given their unique structure and potential impacts on capital and net worth classifications.

The roundtable is set to begin at 9 a.m. Eastern May 20 and will be livestreamed on FASB's website. During the discussion, FASB seeks to gather additional feedback on CECL implementation, including technical issues related to purchased financial assets with credit deterioration (PCD) and troubled debt restructurings.

NAFCU President and CEO Dan Berger met with FASB Chair Rich Jones in September to share the association's concerns about CECL's impact on the credit union industry. NCUA Board Member Rodney Hood, while serving as the agency's chairman, backed NAFCU's call for a credit union exemption from the standard.

The NCUA has proposed a three-year phase in of the day-one adverse impacts of CECL on federally-insured credit unions' net worth ratios, though NAFCU has advocated for a longer phase-in option and additional examination flexibility. In its 2021 supervisory priorities, the NCUA announced that examiners "will not be assessing credit unions' efforts to transition to the CECL standard until further notice" amid the coronavirus pandemic and temporary delay of the standards implementation.

In addition, lawmakers and others have cited concerns about the standard's implementation hindering recovery efforts. The Treasury Department has also said more study on CECL's impact on regulatory capital and financial institutions' lending practices is needed.

The association will continue to share with NCUA, FASB, Congress, and other stakeholders the impact CECL is having on credit unions and push for an exemption and additional relief to reduce regulatory burdens.