WASHINGTON—NAFCU has asked House Financial Services Committee Chairwoman Maxine Waters (D-CA) and Ranking Member Patrick McHenry (R-NC) to hold a hearing to explore the effects the Financial Accounting Standard Board's (FASB) current expected credit loss (CECL) standard will have on financial institutions, particularly small credit unions, and consider committee member Blaine Luetkemeyer's (R-M) proposed legislation to not require compliance with the standard.
NAFCU said it maintains that credit unions should not be subject to CECL.
"The CECL standard is an unnecessarily complex accounting method for credit unions and only adds to mounting regulatory stress," wrote Brad Thaler, NAFCU vice president of legislative affairs. "In such a climate, we urge continued attention to the detrimental costs that will likely result from implementation of the standard, particularly for small credit unions."
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Luetkemeyer introduced the Eliminating CECL Accounting Standard Act, H.R. 7914, last week, which specifies that "no person shall be required to comply with the CECL Rule under any Federal statute or regulation."
Although CECL isn't set to take effect for credit unions until 2023, Thaler noted "credit unions have wrestled with its potential impact on data warehousing processes and loan loss reserves. Although the majority of credit unions remain well-capitalized, NAFCU continues to hear from credit unions about the significant investments that are necessary to implement CECL and the serious impact to operations that could soon take place."
As CUToday.info reported, NCUA has proposed a three-year phase-in plan of the day-one adverse impacts of CECL on federally-insured credit unions' net worth ratios, which is on par with a rule issued by banking regulators for community banks. The proposed rule would also exempt credit unions under $10 million from complying with CECL.