Members of the House Financial Services Committee cited CUNA data on the current expected credit loss (CECL) standard during a hearing Thursday with federal financial regulators including NCUA Chairman Rodney Hood. CECL is a new accounting standard that standard that recognizes lifetime expected credit losses, issued by the Financial Accounting Standards Board (FASB).
Rep. Blaine Luetkemeyer (R-Mo.), ranking member of the House Financial Services subcommittee on consumer protection and financial institutions, cited data CUNA has sent to Capitol Hill about the negative effects CECL might have on credit union products and services and asked Hood his thoughts on the standard.
“I share the concerns that have been raised, by the industry groups you’ve cited. We as an agency are also doing our own internal studies with our chief economist,” Hood said. “I find the operational burdens that are going to be imposed by CECL to really be difficult for our smaller credit unions to manage and operate in that environment. We will need some assistance from FASB to address some of these issues.
“I do have a little bit of confidence that a lot of our institutions, whether it be credit unions or community banks, will be exempted from doing a lot of the complex form of forecasting that’s required,” he added.
Rep. David Scott (D-Ga.) said CECL will be “devastating” to credit unions and community banks.
“We thank the members of the committee and Chairman Hood for highlighting credit union concerns with CECL and using CUNA data to illustrate the negative impact this standard could have and agreeing that something needs to be done,” said CUNA Chief Advocacy Officer Ryan Donovan. “These are issues CUNA, the leagues and credit unions have raised repeatedly with policymakers, and we’re pleased they are being heard. We look forward to continued engagement with NCUA, FASB and Congress to find a solution for credit unions and the 115 million Americans they serve.”
CUNA wrote a letter prior to the hearing raising the CECL concerns, as well as praising NCUA for its modernization efforts and listing several improvements NCUA could make. This letter follows a similar one CUNA sent to the Senate Banking Committee earlier this week for Hood’s appearance before that committee.