Treasury: More study needed on CECL's impact
The Treasury Department this week released a study on the current expected credit loss (CECL) standard – as required by Congress – to determine if any changes are needed to financial institutions' regulatory capital requirements. CECL is set to take effect for credit unions in 2023; NAFCU has long held that credit unions should be exempt from the standard due to their unique capital framework.
In the report, Treasury said it has monitored "CECL's potential effects on regulatory capital and financial institutions' lending practices" as some institutions have begun to implement the standard. However, it noted that "[a] definitive assessment of the impact of CECL on regulatory capital is not currently feasible, in light of the state of CECL implementation across financial institutions and current market dynamics."
"Drawing conclusions right now regarding CECL's impact since its initial implementation in early 2020 is challenging because CECL has not been fully implemented by all entities, and numerous market factors relating to the COVID-19 global pandemic (including government responses) have affected the economy, financial institutions, and borrowing and lending dynamics," the report stated. "While some information has emerged indicating that credit availability declined and lending standards tightened in some financial product categories in early 2020, identifying a definitive linkage between any such trends and the introduction of CECL is difficult due to various factors related to the COVID-19 global pandemic."
Treasury also made several recommendations, including that financial institution regulators should continue to monitor CECL's impact on capital and lending practices and adjust capital requirements if necessary. It also said prudential regulators should extend or amend transitional relief already granted as needed.
The department encouraged the Financial Accounting Standards Board (FASB) to further study CECL's impact and coordinate with financial institution regulators to fully understand costs and benefits of its implementation, including for smaller lenders.
NAFCU President and CEO Dan Berger, along with other senior NAFCU representatives, met Wednesday with FASB Chair Rich Jones to share credit unions' perspective on CECL and discuss the NCUA's authority to mitigate harmful effects. NCUA Chairman Rodney Hood is supportive of an exemption for credit unions under the standard; the NCUA Board has proposed a three-year phase-in plan for CECL, which also included an exemption for credit unions under $10 million from complying with the standard.
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.
Add to Calendar 2020-12-14 14:00:00 2020-12-14 14:00:00 Understanding Current Expected Credit Losses (CECL) Hear directly from the Financial Accounting Standards Board (FASB) staff regarding the credit loss accounting standard – Current Expected Credit Losses (CECL). In addition to covering recent FASB staff Q&A documents, including the Weighted Average Remaining Maturity (WARM) method, the FASB staff will answer your questions. PROGRAM UNDERWRITTEN BY Key Takeaways Review FASB’s Post Implementation Review activities regarding CECL Understand the Weighted Average Remaining Maturity (WARM) method Learn more about other FASB Staff CECL Q&A documents Register Now For On-Demand AccessRegistration is complimentary, but you must register to attend.One registration gives your entire credit union access to the on-demand recording until December 14, 2021.Already registered? Go to the Online Training Center to view live. Who Should Attend? Chief Executive Officers (CEOs) Chief Financial Officers (CFOs) Accounting titles Education Credits CPA credit information is below; recommended 1.5 CPE credits. CPA Certification Credit Information Reviewer: Josie Collins, Associate Director of Education, NAFCU Learning Objectives: Review FASB’s Post Implementation Review activities regarding CECL. Understand the Weighted Average Remaining Maturity (WARM) method. Learn more about other FASB Staff CECL Q&A documents. Program Level: Basic Prerequisites Needed: None Advance Preparation Needed: None Delivery Method: Group Internet-Based Recommended CPE Credits: 1.5 credits Recommended Field of Study: Accounting – Technical National Association of Federal Credit Unions (NAFCU) is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. Learn more. About Our Webinars Our webinars are streamed live from NAFCU headquarters near Washington, D.C. Your audio/video feed of the presenters includes presentation slides and downloadable handouts. You can easily submit your questions to the presenters at any time during the live broadcast, with no dialing over the phone! The audio and video stream directly through your computer. Web NAFCU email@example.com America/New_York public
Program underwritten by NAFCU Services
Get daily updates.
Subscribe to NAFCU today.