WASHINGTON—JPMorgan Chase, Citigroup and Wells Fargo are all voicing concerns over the Financial Accounting Standards Board's (FASB) current expected credit loss (CECL) standard and how it will impact their capital, among other issues.
Credit unions have similarly also been vocal about the impacts of this standard, noted NAFCU, which maintains that the industry should never have been included within its scope in the first place.
The CECL accounting standards requires financial institutions – including credit unions – to record expected losses whenever they make a new loan. This is causing concern within the industry as it could mean financial institutions may have to either raise more capital or lend less.
Recently, FASB offered CECL clarifications, including a proposed update to the standard's effective date for non-public business entities – including credit unions – making clear that the implementation of the standard is only required for fiscal years after Dec. 15, 2021. The FASB's proposal would also clarify that operating lease receivables are not covered within the scope of CECL – noted NAFCU, which said it supports the clarification.
However, NAFCU continues to urge the FASB to coordinate with the NCUA to establish better resources for credit unions as they implement the CECL standard, the trade association said. According to recent NAFCU Economic & CU Monitor data, credit unions are still waiting for substantive guidance on the CECL standard.
NAFCU's said its Regulatory Committee will be discussing CECL today, and that the association will continue to look for potential relief opportunities for credit unions.