Reps. Gregory Meeks (D-N.Y.) and Blaine Luetkemeyer (R-Mo.) are the latest legislators to echo CUNA’s call for a delay in implementation of the current expected credit loss (CECL) standard due to the coronavirus disease (COVID-19) pandemic. CECL, a new accounting standard that recognizes lifetime expected credit losses as opposed to the current “incurred-loss” approach, is currently scheduled to become effective for credit unions starting in January 2023.
CUNA called on the Financial Accounting Standards Board (FASB), the entity issuing the standard, to delay CECL implementation, and a group of Representatives and Federal Deposit Insurance Corporation Chairman Jelena McWilliams have called for a similar delay in a letter.
Meeks chairs, and Luetkemeyer serves as ranking member of, the House Financial Services subcommittee on consumer protection and financial institutions.
“Many small financial institutions have struggled since the financial crisis and CECL could be an additional blow to the dwindling number of community banks and minority depository institutions...if CECL causes further small lenders to close their doors, the problem of banking deserts and unbanked individuals will only grow,” the letter reads. “The devastating coronavirus pandemic is an unparalleled public health crisis in the modern era. Closures of cities across the country are wreaking havoc on small businesses around the country and deepening the need for credit across numerous sectors of the economy. Congress has already expressed a number of serious concerns with the CECL standard, and these fears are only heightened by the coronavirus crisis now engulfing the country.”