WASHINGTON (12/4/15)--CUNA and the Independent Community Bankers of America (ICBA) are partnering to encourage federal lawmakers to weigh in before the Financial Accounting Standards Board (FASB) finalizes its proposal related to the impairment of financial assets. Reps. Scott Tipton (R-Colo.) and Patrick Murphy (D-Fla.) sent the letter to colleagues this week.
“The proposed reforms would require banks and credit unions to estimate expected credit losses for the life of a financial instrument and recognize the net present value of those losses at the moment of origination,” Tipton and Murphy to their colleagues. “This would be a stark departure from today’s practices where financial institutions follow generally accepted accounting principles (GAAP) and recognize credit losses when there is evidence they will actually incur a default.
In a joint letter, CUNA and the ICBA asked members of Congress to contact FASB with the concerns credit unions and banks have with the proposal. Those concerns have been put into a letter, addressed to FASB Chair Russell Golden, which Tipton and Murphy asked their colleagues to sign.
“FASB must proceed with the utmost caution in finalizing this accounting standards update, as it has the potential to irreversibly damage community banks’ and credit unions’ ability to continue to adequately serve their customers/members and communities and sustain the economic recovery,” the letter to Golden reads.
Specifically, the letter asks Golden to:
CUNA is also asking state leagues and credit union members to reach out to their representatives and encourage them to sign onto the letter.