WASHINGTON—NAFCU President and CEO Dan Berger met this week with Financial Accounting Standards Board (FASB) members Sue Cosper and Fred Cannon to discuss an exemption for non-public filers, including credit unions, from the Current Expected Credit Losses (CECL) accounting standard.
The meeting comes as a response to a letter from Berger to FASB that asked it to exclude credit unions and other non-public filers from the CECL standard. NAFCU’s Senior Vice President of Government Affairs Greg Mesack, Vice President of Regulatory Affairs Ann Kossachev, and Regulatory Affairs Counsel James Akin were also in attendance.
Berger told FASB CECL imposes a “tremendous burden” on credit unions, while “failing to provide many of the purported benefits of the new standard.” While a primary goal of CECL was to provide more transparency on credit loss exposure to outside investors, outside capital is not available to most credit unions, meaning that the standard addresses a problem that does not exist in the credit union industry, NAFCU said.
‘Taxing’ Resources
As credit unions continue to face uncertainties related to the pandemic, Berger further told FASB CECL-related requirements would tax CU resources and undermine their ability to focus on their members and offer affordable products.
Additionally, Berger stated NCUA’s “limited authority to accommodate CECL’s impact on net worth,” coupled with already limited availability to capital, would leave credit unions and their members disproportionately affected.
Immediate Exemption Requested
Berger urged FASB to immediately provide an exemption from CECL to all non-public filers including credit unions and for those groups to continue to use the Allowance for Loan and Lease Losses (ALLL) incurred loss-standard. Alternatively, FASB should provide credit unions with additional resources and work with the NCUA to determine a substitute for CECL.