WASHINGTON–Both credit union trade groups have expressed support for so-called “stop and study” legislation that would delay implementation of FASB’s CECL standard. The bill, the Continued Encouragement for Consumer Lending Act (S.1564), would require a quantitative study on the potential impact of the CECL. It was introduced in the Senate by Sen. Thom Tillis(R-NC).
Similar legislation has been introduced in prior sessions of Congress but did not advance.
“We thank Senator Thom Tillis and the cosponsors for introducing legislation to halt the enforcement of the CECL standard until its impact can be fully studied and understood,” said NAFCU President/CEO Dan Berger. “We encourage the Senate to act swiftly on this bill. As it stands, CECL is an unnecessarily complex accounting method that only adds to the mounting regulatory stress placed upon credit unions. Taking the time to fully study the consequences of this new regulation on consumers’ access to credit and the economy as a whole is a necessary step that must be taken. More so, we continue to maintain that credit unions should be exempt from CECL.”
Separately, CUNA has sent a letter that also supports the bill, which calls for the SEC, along with NCUA and other regulators, to conduct the study.
“CECL is intended to address delayed recognition of credit losses resulting in insufficient funding of the allowance accounts of certain covered entities. However, underfunding of allowance accounts has not generally been an issue for credit unions,” wrote CUNA President/CEO Jim Nussle. “Further, the typical user of a credit union’s financial statements is not a public investor—such as with large, public banks—but instead is the credit union’s prudential regulator, the NCUA.”
CUNA recognizes that the Financial Accounting Standards Board (FASB), which issued the standard, is an independent entity, but Congress should utilize its authority to “improve CECL, or at a minimum, ensure there is sufficient, relevant information regarding CECL’s impact from which future decisions can be made.”
CUNA’s letter includes research it conducted indicating nearly one in five credit unions expect CECL to negatively impact their members ability to obtain credit
The full CUNA letter can be found here.