FASB Advisory Group Split on Loan Loss Accounting

The Financial Accounting Standards Board’s own Investor Advisory Committee last week became the latest group to express mixed opinions on FASB’s current expected credit loss proposal, which would require expected credit losses over the life of a loan to be recorded at the time of origination.

The 10-member IAC includes a member from the Federal Reserve Bank of New York and is co-chaired by a private equity investor in banks and other financial services industries. IAC members were split in their support for FASB’s overall CECL model, but were united on some subjects that garner banker approval, such as acquisition accounting, as well as some required disclosures that bankers may oppose.

Aligned with ABA’s numerous calls for further stakeholder feedback, however, IAC members cited implementation concerns in their unified call for more dialogue prior to issuing a final standard. ABA has updated its CECL discussion paper to include the concerns of IAC members.


About Author

Michael Gullette is vice president for accounting and financial management policy at ABA.