Consumer Advocates, Industry Agree: CECL Should be Delayed
For months, the American Financial Services Association and other financial-services industry partners have urged the Financial Accounting Standards Board (FASB) to delay implementation of the new Current Expected Credit Loss (CECL) standard until its potential effect is studied. The new standard would require financial institutions to reserve for the lifetime expected losses of a loan at origination. Now, the Center for Responsible Lending (CRL), a consumer advocacy organization, has indicated it agrees with those pressing for a delay.
In particular, CRL shares AFSA’s concerns about the impact of the new CECL standard on credit availability, especially for low- and moderate-income consumers. AFSA has submitted several comments to FASB and Congress emphasizing these concerns, and is strongly supporting H.R. 3182, legislation sponsored by Vicente Gonzalez (D-TX) that would delay CECL’s implementation until a full impact study is conducted. The legislation currently has 52 bipartisan cosponsors.
On Tuesday, October 15, Congressmen Gonzalez and Ted Budd (R-NC) penned a letter to FASB Chair Russell Golden urging him to delay the upcoming Current Expected Credit Loss (CECL) accounting standards, citing the growing coalition supporting a delay.
The letter notes that financial institutions of “all sizes and charters have raised serious concerns about CECL’s potential to depress lending and borrowing artificially, especially during an economic downturn.” It goes on to say that the Center for Responsible Lending, a consumer advocacy organization, has confirmed what financial institutions have long said: CECL will have an adverse effect on lending.
“At this point, every segment of the market – lending institutions, bank investors and consumer advocates – sees the danger ahead and the need to slow down. We urge you to consider extending the delay of the effective date of CECL to all companies and to immediately start the process to perform a quantitative impact study,” the letter continued.
October 16th, 2019
