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News Now

Washington
FASB listens to fair-value concerns at first roundtable
NORWALK, Conn. (10/12/10)—The Credit Union National Association (CUNA) during a Tuesday roundtable again made the case that the Financial Accounting Standards Board's (FASB) proposed update to financial instrument accounting standards would provide no benefit to credit unions while substantially increasing their compliance costs. CUNA also continued to oppose the proposed application of fair value accounting rules to loans and other credit union products. The FASB proposal would require most financial assets and liabilities to be reported under Generally Accepted Accounting Principles (GAAP) at fair value. The proposal would also require the funding of the Allowance for Loan and Lease Loss Accounts to be under the expected loss model. Credit unions over $10 million in assets are required to comply with GAAP. CUNA Accounting Subcommittee Chairman and Patelco CU Chief Financial Officer Scott Waite also reiterated CUNA’s claim that reporting fair value under GAAP is simply not useful to the members, creditors, board members, and regulators of credit unions. Waite told the FASB panel that credit unions “provide an economic value to consumers by leveraging their not for profit status in the higher rates on deposit and lower rates on loans.” “For us to be unfairly fair valued on this business model changes the purpose of accounting standards,” he said. “Accounting standards should not be the driver of shaping acceptable business models,” but should “provide comparability, transparency, and relevancy,” Waite added. FASB held the Tuesday roundtable, which is the first of several, in an effort to collect commentary from industry insiders. Representatives from the National Credit Union Administration (NCUA) and the American Institute of Certified Professional Accountants, as well as several community bankers, were also in attendance, though the regulators did not take part in the forum. The roundtable discussion follows a number of comment letters on the fair value proposal. FASB released the fair value proposal in May. Though FASB expects the final rule to take effect sometime in 2013, that date is not concrete, and CUNA Senior Vice President/Deputy General Counsel Mary Dunn said CUNA will “continue pursuing a positive result for credit unions on this issue.”


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