Rodney Hood, NCUA chairman, on Thursday called on the Financial Accounting Standards Board to provide relief by exempting credit unions from complying with Accounting Standards Update 2016-13, current expected credit losses — commonly referred to as CECL.

“I believe the compliance costs associated with implementing CECL overwhelmingly exceed the benefits,” Hood stated in the letter to Russell Golden, the FASB chair. “Even before the current pandemic, credit unions had approached the NCUA with concerns about the unintended consequences of requiring credit unions to implement CECL.”

Hood said that of the more than 5,000 credit unions under NCUA’s purview, nearly 70 percent are under $100 million in total assets, and attempting to recognize all expected credit losses, “even using the weighted average remaining maturity method, is fraught with data collection challenges for the smallest of our supervised credit unions.”

For most credit unions, Hood said that implementing CECL would have an immediate negative impact on net worth, and, although FASB enabled credit unions to delay implementation of CECL until Jan. 1, 2023, the additional time credit unions were afforded to collect data, review data processing systems and analyze various models is now being used to support the credit and depository needs of their members amid the pandemic.

“This critical work is being performed under the additional constraints imposed by strict social distancing protocols and stay-at-home orders,” Hood stated. “Thus, I urge the FASB to provide needed relief to all credit unions by providing, at a minimum, a Private Company Council alternative that retains the framework of the incurred loss methodology.”

Hood’s full letter can be accessed on NCUA’s website.