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we have previously noted, the Financial Accounting Standards Board (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. This new standard would require
credit unions to hold additional capital well above their current loan loss
reserves—a requirement that will have significant consequences on lending in
Along with ICBA, we’ve
been pounding the pavement on Capitol Hill in the last few weeks to urge members
of Congress to sign on to a letter by Representatives Tipton (R-CO) and Murphy
(D-FL) to FASB Chairman, Russell Golden. The letter has had strong
bipartisan support and asks FASB to pause its current work on the standard and
thoroughly evaluate the potential harm the rule change will have on financial
institutions’ ability to lend. So far, 62 Members of Congress have signed the
letter and we have had positive conversations with congressional staff about
the serious ramifications of the proposed standard.
the standard from being implemented as proposed has been a top priority for us. In
2013, we filed a formal
comment letter with FASB during the open comment period, we sent
follow up letters in August of
2014 and February of
2015. In addition to letters, in the spring of 2013, we met
with FASB Chairman Golden to ensure he and his fellow board members know
exactly where we and credit unions stand on the proposal.
the summer of 2014, our staff and the chair of our Accounting Subcommittee,
Julie Renderos of Suncoast Schools Credit Union, were invited to and
participated in an all-day FASB workshop on the proposal at FASB’s headquarters
in CT. The workshop provided us with another opportunity to make sure FASB
staff and board members are aware of our specific concerns with the proposal.
Further, we will be present at a February 4 FASB roundtable to reiterate
concerns with the proposal.
addition to FASB, we are pressuring NCUA to minimize the effects of the
standard. In June of 2015, we 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.
We reiterated our
concerns directly to Matz during NCUA’s Open Forum held last fall.
We will continue to closely
monitor this issue and provide an update following next week's FASB
roundtable on the proposed standard.
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Credit Union National Association is the most influential financial services trade association and the only national association that advocates on behalf of all of America's credit unions. We work tirelessly to protect your best interests in Washington and all 50 states. We fuel your professional growth at every level and champion the credit union story at every turn.
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© 2017 Credit Union National Association |
ADA Compliance Notice & Legal