A group of very engaged bankers and representatives of national trade groups met with the Financial Accounting Standards Board (FASB) last week to discuss concerns with FASB’s controversial proposed accounting reforms. The roundtable comes after increasing concerns regarding the proposed Current Expected Credit Loss (CECL) model, which creates a complex protocol for determining adequacy of the ALLL.
CECL would significantly change community bank accounting methods, increasing costs and potentially decreasing the availability of credit. Also at issue is the unnecessary impairment of capital – with the OCC estimating banks would need to add 30-50% to their ALLL. During the meeting, community bankers present stressed that the current proposal would reduce community bank lending, harm local economies and cost thousands of jobs nationwide.
Following the meeting (archived audio select 2/4/16, Part 1 and Part 2), ICBA continues to call on FASB to pause the standard-setting process until community bankers’ concerns have been explored and ultimately, remedied with an alternate approach. For more than two years, IBAT has also been engaged on this issue and provided a comment letter to FASB in 2013. Additionally, IBAT has taken every opportunity with the federal regulatory authorities to express our serious concerns—highlighting the costly and complex methodology community banks would face to properly implement the change—far in advance of the anticipated issuance of CECL by March 31, 2016.
Staff contact: Steve Scurlock, firstname.lastname@example.org, 512-275-2226