Senate Banking Chair Includes CECL Amendment in COVID Bill
Senate Banking Chairman Mike Crapo (R-ID) introduced an amendment to the proposed COVID relief package that delays the Current Expected Credit Loss (CECL) accounting standard for all entities, not just depositories, until either the first day of the fiscal year after the pandemic national emergency ends, or January 1, 2023, whichever comes first.
AFSA has long supported a delay in the CECL standard, as well as parity among financial institutions. The CECL standard requires financial institutions to recognize and reserve for the full estimated credit loss on a loan at origination, thereby injecting uncertainty and unpredictability in credit loss decisions. Particularly now, in the face of an economic recession, when lending is most needed, financial institutions will have to limit the credit they offer because they have to reserve all expected credit losses at origination if CECL is not delayed.
Delaying CECL would allow all financial institutions to focus on meeting consumer and business needs during this unprecedented time. We applaud Chairman Crapo for the amendment and will work for its incorporation into the final COVID relief package.
August 5th, 2020
