FASB Keeps CECL Unchanged; ABA Continues to Urge Impact Study

The Financial Accounting Standards Board today declined to make changes to its current expected credit loss model, as proposed by a group of regional banks, speeding CECL on its path to being implemented for Securities and Exchange Commission registrants as scheduled in 2020. The regional banks’ proposal called for recognizing in other comprehensive income the credit losses forecasted beyond 12 months, rather than in earnings, as CECL calls for.

“While FASB may not have accepted this specific proposal, that does not mean there is a consensus to move forward with CECL in its current form,” said ABA SVP Mike Gullette. “ABA and others, including many bank investors and members of Congress from both parties, have raised significant concerns about the impact this accounting change could have on banks and their ability to lend. This is why we continue to call for a delay until a quantitative impact study can be conducted to assess both financial reporting and regulatory capital concerns raised by CECL.”

In related news, FASB voted five to one to determine that the disclosure of gross charge-offs and recoveries by vintage is not required—although further discussion on this point is expected. For more information, contact ABA’s Josh Stein.