The Financial Accounting Standards Board voted earlier today to delay the implementation of their current expected credit losses standard until 2023 for credit unions and most other lenders.
The CECL standard has been controversial since it was first announced because it would drastically alter how financial institutions account for projected loan losses.
The FASB’s decision today will delay when most financial institutions must implement the standard until January 2023. The nation’s largest banks—those registered with the Securities and Exchange Commission—must still comply with the standard in January 2020.
“This is a positive development for the nation’s credit unions and smaller financial institutions,” said New York Credit Union Association President/CEO William J. Mellin. “I thank the Financial Standards Accounting Board for listening to and considering stakeholder feedback. This delay will give credit unions much-needed additional time to develop an appropriate CECL implementation plan.”
In May of this year, Mellin penned a letter to Rep. Gregory Meeks, who serves on the House Financial Services Committee and is chairman of the Subcommittee on Consumer Protections & Financial Institutions. In his letter to Meeks, Mellin urged the congressman from Queens to take a “stop and study” approach to the new standard and support legislation that would require a qualitative study on the impact of CECL.
“The Association understands and respects the FASB’s independence,” Mellin wrote to Meeks. “But we also believe Congress has a role to play in the implementation of an accounting standard that would have such far-reaching consequences on the nation’s financial institutions. Implementing the CECL standard as-is would be an extraordinary and costly burden on credit unions, and drastically alter credit unions’ accounting practices.”