In an op-ed published today in The Hill, industry veterans William Isaac, former chairman of the FDIC and Thomas Vartanian, former general counsel of the Federal Home Loan Bank Board, pointed out the peril of imposing accounting standards without sufficient oversight or study.
The authors warned specifically about the Financial Accounting Standards Board’s current expected credit loss standard, which due to its procyclical nature could have significant effects on community banks during an economic downturn and could endanger staple financial products like 30-year mortgages. They also noted that FASB has implemented ill-fated standards in the past—including the mark-to-market accounting rules—and that unlike other federal government agencies, it is not subject to checks by the public.
Isaac and Vartanian highlighted advocacy efforts by community banks and industry trade groups—including ABA—who have called on congressional leaders to intervene. Among these efforts is an ABA-supported bill introduced by Sen. Thom Tillis (R-N.C.) calling for a delay in CECL implementation until a quantitative impact study can be completed.
