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Grassroots Call to Action: CUs Needed to Comment on FASB Proposal
Thursday, March 10, 2016 7:00 AM

The Financial Accounting Standards Board (FASB) is working on a proposed accounting standards update on credit losses. FASB is the prime organization tasked with establishing the standards of financial accounting that govern the preparation of financial reports by nongovernmental entities.

As proposed, this new standard from FASB would force credit unions to attempt to forecast the future, requiring them to assess credit impairment using a forward-looking, current-expected credit loss (CECL) model—as opposed to the current incurred-loss approach. Not only will the standard require a dramatic and immediate increase to credit unions’ loan loss reserves, it will be quite costly and challenging from a compliance perspective. 

What We Need From You

While CUNA has conveyed concerns with the proposal to FASB through several letters and in-person meetings, FASB is a non-governmental body and can be more difficult to persuade than governmental agencies. To increase our effectiveness, we are activating our grassroots on this effort. 

Credit unions are encouraged to take the time to go to CUNA’s Grassroots Action Center and send a comment letter to FASB Chairman Russell Golden. A letter has already been drafted, and you can use it or write your own. Cornerstone advocacy and regulatory staff will be directing all advocates to this Grassroots Action Center for that purpose. If there are other members of your staff who would be willing to send an email, Cornerstone highly encourages you to pass this along.

For additional information, including links to the proposed standard as well as to CUNA’s numerous letters to FASB and NCUA, please check out the Advocacy page on CUNA’s website found here.

If you have further questions, do not hesitate to contact Jim Phelps, SVP Advocacy, with any specific questions about the proposal.