Rep. Blaine Luetkemeyer (R-Mo.) today warned of the negative consequences that the Financial Accounting Standards Board’s current expected credit loss standard could have on community banks and consumers if implementation moves forward. In an American Banker op-ed, Luetkemeyer pointed out that “CECL threatens to eliminate some lending services and restrict access to credit, particularly for low-income families.
Recounting a recent conversation with a Midwestern banker, Luetkemeyer added that “for smaller institutions, the banker said in no uncertain terms that CECL has no benefit for their customers nor would it have any bearing on the safety and soundness of their institution, but it will present onerous operational challenges.”
Luetkemeyer also raised concerns that no effort has been made thus far to conduct a quantitative study that would gauge the potential effects of CECL—something the American Bankers Association has long advocated for. “It is simply reckless for FASB to move forward with the implementation of the CECL standard without adequate information on possible outcomes,” he wrote.