Led by Sens. Thom Tillis (R-N.C.) and Doug Jones (D-Ala.), a bipartisan group of 15 senators wrote to the Federal Reserve and FDIC today urging a delay in the implementation of the Current Expected Credit Loss model for loan loss accounting until after the agencies can study CECL’s economic effects. The senators highlighted concerns raised by the American Bankers Association and banks that CECL may reduce credit availability and exacerbate economic cycles, arguing that the “potential economic disruptions of the new standard mandate careful study before it goes into effect for any bank.”
“Bankers with deep knowledge of the local communities they serve should make lending decisions based on their judgments and supported by sound risk management practices,” the group of seven Republicans and eight Democrats wrote. “They should not be artificially constrained by sophisticated, yet imprecise, forward-looking models that cannot accurately predict the future.” The letter follows a similar bipartisan letter to the Securities and Exchange Commission from House members earlier this week.
