Removing Barriers Blog

CECL concerns shared with HFSC Subcommittee prior to hearing on FASB
Posted January 15, 2020 by CUNA Advocacy

CUNA wrote to Chairman Sherman and Ranking Member Huizenga prior to the House Financial Services Subcommittee on Investor Protection, Entrepreneurship and Capital Markets prior to their hearing entitled, “An Examination of the Financial Accounting Standards Board and the Public Company Accounting Oversight Board.” In the letter, CUNA wrote how the Financial Accounting Standards Board’s (FASB) current expected credit losses (CECL) standard will have a significant impact not only on covered financial institutions but also consumers and the broader economy.

During the hearing, Representative Blaine Luetekemeyer of Missouri cited a CUNA study showing it will cost credit unions $14-15 billion to implement CECL.

While CUNA understands and supports FASB’s independence, it urges Congress to utilize the authority it does have in order to improve CECL, or “at a minimum, ensure there is sufficient, relevant information regarding CECL’s impact from which future decisions can be made.”

CUNA supports the CECL Consumer Impact and Study Bill of 2019, introduced by Representatives Vicente Gonzalez and Ted Budd.

The legislation would delay implementation of CECL by one year and require the Securities and Exchange Commission, in consultation with FASB to conduct a study on:

  • The potential effect CECL implementation may have on the accessibility of credit, particularly consumers and small businesses;
  • Any potential systematic risks CECL may pose during a recession;
  • The potentially disproportionate burden on smaller, less complex financial institutions; and
  • The potential competitive effect it might have on the U.S. as a result of differing international accounting standards.