Podcast: Where Banks Are on CECL, and Where They Need to Be

With the Current Expected Credit Loss standard for loan loss accounting coming into effect for many banks — and the vast majority of bank assets — on Jan. 1, 2020, where are bank CFOs and managers in the process of implementing CECL, and what challenges are they seeing? ABA accounting experts Michael Gullette and Joshua Stein provide a CECL update on the latest issue of the ABA Banking Journal Podcast. In this episode, Gullette and Stein explain:

  • How CECL — which requires “life of loan” estimates of losses to be recorded for unimpaired loans at origination or purchase — may affect bank capital, and thus banks’ capacity to lend
  • The untested performance of CECL in a stressed economic environment
  • How forecasting uncertainty is already affecting longer-maturity loans, including to consumers
  • The challenge of retrieving and formatting data and translating forecasts into financial statements
  • How regulators and auditors are expected to address CECL — and why any regulatory flexibility provided may not be available under audit

If you can’t see the audio player above, click here to listen to this week’s episode.

In this episode:

Michael Gullette
SVP, Tax and Accounting

Joshua Stein
VP, Tax and Accounting

Evan Sparks
ABA Banking Journal