The Credit Union National Association last week renewed its effort to convince the Financial Accounting Standards Board to amend the controversial Current Expected Credit Losses standard, contending that credit unions should not have to comply with it.
“Even though it has not yet become mandatory for credit unions, the FASB’s current expected credit losses (CECL) standard continues to be one of the most problematic and arguably unnecessary regulatory requirements in recent history,” CUNA President/CEO Jim Nussle wrote in a letter to Richard Jones, chairman of the board. “CUNA has steadfastly maintained that CECL is inappropriate for credit unions.”
Under CECL, institutions will have to recognize the expected lifetime losses at the time that a loan or financial instrument is recorded. The Financial Accounting Standards Board has delayed implementation until January 2023.
Credit union trade groups and members of the National Credit Union Administration board have tried to convince FASB that CECL is not appropriate for credit unions.
In his letter, Nussle said that policymakers consider credit unions to be unique financial institutions much different than profit-making banks. Nussle said that CECL will hinder credit union efforts to assist low-income and moderate-income borrowers because it will force lenders to be more discerning of potential borrowers with less-than-perfect credit.
If FASB is unwilling to exempt credit unions from CECL, Nussle asked that the board delay the effective date until the end of the pandemic or Jan. 1, 2024, whichever is later.