Berger calls for CU CECL exemption as FASB gets new chair

NAFCU President and CEO Dan Berger sent a letter to new Financial Accounting Standards Board (FASB) Chairman Richard Jones outlining the association’s concerns with the impact the current expected credit loss (CECL) standard will have on credit unions and urging an exemption for the industry.

“Although NAFCU appreciates the one-year delay of the adoption of CECL for non-public business entities adopted in October 2019, the COVID-19 pandemic and current economic crisis have highlighted apprehensions about the appropriateness and efficacy of CECL implementation for not-for-profit, member-owned cooperative financial institutions,” Berger wrote. “As such, credit unions are not publicly traded and do not have equity investors. The CECL standard was intended to better protect such investors and preserve the health of the financial system. The National Credit Union Administration (NCUA) ensures the safety and soundness of credit unions and guarantees that the type of risks that led to the 2008 financial crisis, which credit unions had no part in, are not present in the credit union system.

“Given the unique nature of credit unions as non-public financial institutions, FASB should exempt credit unions from the CECL standard,” Berger added.

Berger also cited concerns about procyclicality and the standard’s propensity to exacerbate capital and liquidity issues during economic downturns as well as lawmakers’ calls for additional studies on the impact of CECL.


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