Three-quarters of bank investors disagree that change is necessary to loan loss accounting rules, while just 17 percent support a change, according to a recent survey of non-management bank investors conducted by FIG Partners. Eighty-five percent said that current accounting rules are sufficient, and just 17 percent said they supported the implementation of the Financial Accounting Standards Board’s Current Expect Credit Loss framework starting in 2020.
Investors were especially worried that CECL will be procyclical, magnifying fluctuations in credit losses throughout the credit cycle. Eighty-three percent said CECL would be procyclical. More information and American Bankers Association resources on CECL are available at aba.com/CECL. For more information, contact ABA’s Mike Gullette.