In a bipartisan letter, Reps. Gregory Meeks (D-N.Y.) and Blaine Luetkemeyer (R-Mo.) today joined the chorus of voices—including FDIC Chairman Jelena McWilliams—calling for the Financial Accounting Standards Board to suspend and delay its Current Expected Credit Loss standard amid the coronavirus pandemic.
“There is simply too much uncertainty at this time to implement a foundational change to our financial accounting system,” wrote Meeks and Luetkemeyer, who are chairman and ranking member, respectively, of the House Financial Services Subcommittee on Consumer Protection and Financial Institutions. As our country once again faces a potentially deep economic crisis, we call on FASB to suspend CECL implementation, and allow for further study on the economic implications of this new accounting standard.”
Meeks and Luetkemeyer specifically expressed concern about how lenders will be expected to model future credit losses from a pandemic that “remains poorly understood by scientists” and whose economic effects are highly uncertain and dependent on a wide array of variables out of lenders’ control. “CECL implementation is likely to prove pro-cyclical, deepening the curtailment of credit in an economic slowdown or contraction, including in particular for borrowers with marginal credits and underbanked communities,” they added.