The Federal Reserve Bank of Richmond yesterday distributed tips on how bankers can be preparing now for the new credit loss standards expected to be issued early next year. According to a conference call last month with Fed staff, the Financial Accounting Standards Board’s new “current expected credit loss” model for impairment accounting is expected to be a significant overhaul to current practices.
The Richmond Fed recommended that financial institutions become familiar with FASB’s proposed standard, discuss the changes with peers and auditors, begin collecting data for all existing credits and new originations that might be used in CECL, begin drafting a plan for CECL implementation, and begin evaluating capital levels to ensure they are sufficient on “day one” of the CECL transition — which is expected no later than 2018. For more information, contact ABA’s Mike Gullette.
