Both Democrats and Republicans devoted considerable time at a House Financial Services Committee hearing last week to lamenting how the accounting standard will hurt small lenders.
The American Institute of Certified Public Accountants says banks are fighting accounting fatigue — thank CECL for that — and wants the FASB to push back a deadline for privately held firms to put operating leases on their balance sheets.
Banking officials can reasonably disagree on new standards for current expected credit losses, but the accounting body developed the rules over many years and based them on extensive feedback.
The standards board has been granted vast authority without having to answer to policymakers, and its latest accounting method, CECL, will be a disaster for small banks.
Rep. Blaine Luetkemeyer, R-Mo., told the mortgage giants' chief federal regulator that the Financial Accounting Standards Board’s new model for estimating loan losses could pose risk across the mortgage market.
Despite recent chatter about a delay, there’s reason to believe the Current Expected Credit Losses accounting standard will go into effect next year. Regulators should do more to help smaller institutions prepare.
Bigger banks complained that a two-tier system would force them to rethink their models, while smaller banks raised concerns about adding more complexity to an already burdensome process.
