NORWALK, Conn. (1/14/16)--The Financial Accounting Standards Board (FASB) may not issue its final credit impairment standard until the second quarter of 2016, according to its most recent newsletter.
The Credit Union National Association (CUNA) has expressed strong opposition to the proposed standard, most recently in a letter asking members of Congress to step in.
The proposed reforms would require 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. This is a change from today’s practices, in which financial institutions recognize credit losses when there is evidence they will actually incur a default.
FASB is planning to hold a roundtable in February to discuss the impacts of the proposed standard. CUNA has been in touch with FASB staff and anticipates credit union representation at the discussion.
CUNA has also asked the National Credit Union Administration’s Office of Examination and Insurance to instruct examiners to make the appropriate adjustments in assessments of capital adequacy to minimize negative impact on credit unions.