Removing Barriers Blog

CUNA Pushes FASB for CECL Relief
Posted March 04, 2019 by CUNA Advocacy

Today, CUNA filed a comment letter with the Financial Accounting Standards Board (FASB) regarding its Targeted Transition Relief proposal that is intended to ease transition to the credit losses standard (CECL) by providing the option to measure certain types of assets at fair value.

Some stakeholders—including auto financing institutions that extend credit to borrowers with limited or impaired credit histories—noted that if they elect to measure certain assets at fair value, CECL would require they also measure those assets at amortized cost. The proposal would allow preparers to irrevocably elect the fair value option for eligible financial assets measured at amortized cost basis upon adoption of CECL. We agree with FASB that the proposed change is likely to increase the comparability of financial statement information provided by institutions that otherwise would have reported similar financial instruments using different measurement methodologies, potentially decreasing costs for those financial statement preparers while providing more useful information to investors and other users.

While we support true relief associated with CECL, regardless of who it benefits, based on discussions with our member credit unions, it is our understanding that credit unions are unlikely to adopt the proposed transition relief. Thus, the changes included in proposal will be of little benefit to credit unions, as they continue to struggle with implementing changes necessary under CECL. As noted in our letter, we urge FASB to explore ways much needed relief can be achieved for credit unions.

We reiterated to FASB our longstanding position that application of CECL to credit unions is inappropriate. We also asked FASB to review the standard for opportunities to reduce unnecessary compliance challenges as well as develop compliance resources in coordination with the prudential banking regulators, including NCUA.