WASHINGTON–CUNA has sent comment letters on two proposed interagency documents aimed at updating existing regulatory accounting guidance. The updates are related to FASB’s credit losses standard, which includes the current expected credit loss (CECL) methodology.
Separately, several members of CUNA’s senior advocacy team were named to a list of the most effective lobbyists in Washington.
The first letter is in response to the Proposed Interagency Guidance on Credit Risk Systems. CUNA said it believes the proposed guidance describes a broad set of practices that an institution—including most credit unions—can use to form a credit risk review system that is consistent with safe-and-sound lending practices. CUNA further maintains the proposed guidance generally reflects current sound practices for an institution’s credit risk review activities.
“While we appreciate the agencies’ efforts in trying to draft the proposed guidance to allow it to apply to institutions of varying size and complexity, we are concerned there will be instances where its application to certain credit unions is simply not feasible or appropriate. Therefore, we urge the NCUA to recognize the nature of the proposed guidance as simply guidance that credit unions can look to when establishing and maintaining credit risk review systems,” wrote CUNA Senior Director of Advocacy and Counsel Luke Martone. “We believe it would be inappropriate to examine credit unions for strict adherence to the exact guidance as outlined in the proposal.”
The full letter can be found here.
Allowance for Credit Losses
The second proposal statement addresses a number of credit-loss related issues, including supervisory expectations for documenting and validating expected credit loss estimation processes; responsibilities of boards of directors and management, and examiner reviews of allowances for credit losses.
In addition to other suggestions included in its comment letter, CUNA has requested NCUA and other agencies ensure the statement and any supplemental material remain in compliance with generally accepted accounting principles (GAAP) and GAAP alone—as opposed to regulatory accounting principles (RAP).
Further, the letter reiterates the trade organization’s call for NCUA to continue its outreach to credit unions on CECL as well as increase its focus on compliance resources specific to credit unions.
“We urge the NCUA to recognize that credit unions—in addition to other reporting entities—are in the very early stages of understanding what CECL means for them and how to implement changes necessary for compliance,” the letter reads. “Therefore, we request the NCUA continue to be proactive in its outreach to credit unions in terms of examinations and guidance,” wrote Martone. “While credit unions will not be examined in the context of CECL for a few years, the agency has been seeking input from credit unions during examinations to understand where they are in the process and to determine any areas that may be particularly problematic as credit unions work to come into compliance.”
The second letter can be found here.
CUNA Team Named Among Top Lobbyists
Separately, several members of CUNA’s advocacy team have been named to the Top Lobbyists list as published by The Hill.
CEO Jim Nussle and Chief Advocacy Officer Ryan Donovan were both named as among the most effective in the Associations category.