WASHINGTON (3/10/16 UPDATED 11:40 a.m. ET)--The Credit Union National Association (CUNA) has activated its Voter Voice grassroots action center to allow credit union stakeholders to share concerns about a current expected credit loss (CECL) proposal that raises numerous concerns for credit unions. CUNA is calling on credit unions to share those concerns directly with the Financial Accounting Standards Board (FASB), which issued the proposal.
“This is an important issue for all credit unions. Not only will the proposed standard present compliance challenges for all credit unions, it will also likely require an immediate increase to credit unions’ loan loss reserves,” said Elizabeth Eurgubian, CUNA’s deputy chief advocacy officer. “FASB is a non-governmental body, and can be more difficult to persuade than governmental agencies, which is why credit union participation is essential to improve this proposal.”
By using CUNA’s grassroots action center, stakeholders can send a letter directly to FASB Chair Russell Golden, expressing the numerous CUNA and credit union concerns with the proposal.
The CECL proposal would utilize a single “expected loss” measurement for the recognition of credit losses, which would replace the multiple existing impairment models in U.S. generally accepted accounting principles that generally use an “incurred loss” approach.
Under the proposal, the reporting entity would be required to estimate the cash flows that it does not expect to collect, using all available information, including historical experience and forecasts about the future.
CUNA continues to advocate for legislative and regulatory solutions to the issue, getting 62 lawmakers to sign a letter highlighting the proposal’s issues, and has conveyed concerns directly to FASB through seven separate letters and a number of in-person meetings.