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Berger calls for CU exemption from CECL during FASB meeting
NAFCU President and CEO Dan Berger met Wednesday with Financial Accounting Standards Board (FASB) members Sue Cosper and Fred Cannon to discuss an exemption for non-public filers, including credit unions, from the Current Expected Credit Losses (CECL) accounting standard. The meeting comes as a response to a letter from Berger to FASB asking to exclude credit unions and other non-public filers from the CECL standard. NAFCU’s Senior Vice President of Government Affairs Greg Mesack, Vice President of Regulatory Affairs Ann Kossachev, and Regulatory Affairs Counsel James Akin were also in attendance.
Berger highlighted the tremendous burden that CECL imposes upon credit unions, while failing to provide many of the purported benefits of the new standard. While a primary goal of CECL was to provide more transparency on credit loss exposure to outside investors, outside capital is not available to most credit unions, meaning that the standard addresses a problem that does not exist in the credit union industry.
As credit unions continue to face uncertainty from the pandemic crisis, Berger explained that requiring them to comply with the CECL standard would tax their resources, undermining their ability to focus on their members and offer affordable products.
Additionally, Berger noted that the NCUA’s limited authority to accommodate CECL’s impact on net worth, coupled with already limited availability to capital, would leave credit unions and their members disproportionately impacted.
Berger urged FASB to immediately provide an exemption from CECL to all non-public filers including credit unions and for those groups to continue to use the Allowance for Loan and Lease Losses (ALLL) incurred loss-standard. Alternatively, FASB should provide credit unions with additional resources and work with the NCUA to determine a substitute for CECL.
NAFCU remains engaged with both FASB and the NCUA to obtain relief for credit unions.