CECL’s January compliance deadline for larger US banks is fast approaching. As everyone expected, the states of readiness vary widely among financial institutions. The CECL team leader at Citi, a charter member of FASB’s Transition Resource Group for Credit Losses, is on record as to how aggressive and committed and successful the bank was in its preparation and how unwelcoming it would be of any further delay or reconfiguration. But other banks continue to besiege their congressmen and the SEC in the vain hope that the cup will pass.
The month of May is shaping up to be a notable one on the CECL front now that the 116th Congress has organized and is settling into its business.
The Financial Accounting Standards Board (FASB) just took another important step in the runup to CECL implementation, scheduled for January 2020 for SEC registrants and later for others.
CECL watchers will recall that, amidst the crescendo of attacks on FASB in the second half of 2018 from banks, their national and state associations and Congressional Republicans, one of the most noteworthy events was the November release of a proposal by an alliance of 20 prominent US regional banks – “the Group.” (more…)
FASB just held its long-awaited public meeting on CECL. Contrary to the expectations of many, it was not a heated procession of opponents arguing against CECL from all sides. Rather, it was a gathering of interested parties, including several familiar TRG members, whose purpose was to address a single “Proposal.” FASB had received it on November 5th from 21 major financial institutions intent on diminishing the threat they perceived in CECL to the availability, price and tenor of credit to consumers and small businesses. These were themes that the ABA, all 50 state bankers associations and BPI had also addressed in nearly simultaneous public correspondence.
The banking industry and its allies in Congress have been outspoken in their fierce opposition to CECL since the broad outlines became clear, well ahead of FASB’s formal promulgation – its Accounting Standards Update (Topic 326) – in June 2016. However, the last few months of 2018 saw a marked intensification of that hostility. Blaine Luetkemeyer, R-MO, garnered frequent attention as Chairman of House Financial Services Committee’s Subcommittee on Financial Institutions and Consumer Credit. The start of the New Year, along with the new Congress, represents a good time to review these recent CECL developments and to anticipate the next big battle.