Removing Barriers Blog

CUNA Rep Tells FASB How CECL Proposal May Hurt Credit Unions
Posted February 05, 2016 by CUNA Advocacy

Credit union and community bank representatives urged the Board and staff of the Financial Accounting Standards Board (FASB) to recognize the difference between large and small entities that will be impacted by FASB's pending credit impairment proposal. As we've reported, FASB is in the final stages of reviewing a proposed standard that would drastically change the accounting method for assessing credit impairment. The proposal would require a forward-looking “current expected credit loss”—or CECL—model instead of the current “incurred loss” approach. 

CUNA member Jeanne D'Arc Credit Union of Lowell, MA, represented by SVP & CFO Susan Hannigan, reiterated to the Board credit unions' concerns with the proposal. Highlighting the unique nature of credit unions, Hannigan told the room the importance of understanding how the proposed standard will adversely affect credit unions and other smaller reporting entities that will be covered by the rule change. CUNA staff was also present at the roundtable. This is the third meeting CUNA has had with FASB to discuss the proposal. 

All seven FASB Board members were joined by representatives of the federal financial regulators, including Scott Neat, Director of Supervision in NCUA's Office of Examination and Insurance. In June of 2015, CUNA sent NCUA Chairman Matz a letter urging the agency to recognize the significant impact the FASB standard is likely to have on credit unions and instruct field examiners to make the appropriate adjustments in assessments of capital adequacy to minimize the negative impact. 

FASB expects to issue a final standard in the second quarter of this year.