Removing Barriers Blog

CUNA and ICBA Urge FASB to Improve Credit Impairment Proposal
Posted March 17, 2016 by CUNA Advocacy

Today, together with the Independent Community Bankers of America (ICBA), we sent another letter to FASB Chairman Russell Golden urging the accounting standard-setter to reevaluate its pending proposal on credit impairment.

Our letter stated that dramatic increases in loan loss allowances with no credible evidence of heightened risk and forceful adoption of modeling techniques is a sure path to stunt economic growth. The end result is a significant reduction in extension of credit, purchases of homes, and creation of small businesses. 

The letter provides a simple ask of FASB: that it consider communities across the nation as it finalizes CECL to ensure that it does not bring harm to the country. We believe that a more sensible approach to projecting credit losses is the remedy. The final accounting standards update (ASU) should specifically mandate the avoidance of day one loss recognition at transition and on newly originated loans by community financial institutions. Additionally, the use of modeling tools that deviate from the community financial institution’s current techniques used in provisioning for credit losses should not be required.

In addition, we are still asking credit unions to visit our Grassroots Action Center to send a message directly to Chairman Golden expressing their concerns with the proposal. So far, over 800 letters have been sent to FASB through our Action Center. We are asking credit unions to submit their letters by tomorrow, March 18.