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Important: FASB Needs to Hear From You by Friday!
Tuesday, May 28, 2013 6:30 AM

If you've never written a comment letter on a proposed regulatory change, this is the time to do it. A pending proposal at the Financial Accounting Standard Board (FASB) threatens to double the credit impairment allowance for credit unions. FASB needs to hear from you by this Friday, May 31. Don't be intimidated -- the comments don't have to be lengthy or too formal. Just make sure FASB hears from you on this important matter.


Credit unions are urged to submit comment letters to FASB that:

  1. Voice concerns that the proposal could double or triple a credit union’s impairment allowance resulting in a reduction in many credit unions’ retained earnings;
  2. Explain that a decrease in earnings can lead to a reduced capital ratio which could trigger prompt corrective action (PCA) implications for numerous credit unions that do not currently have PCA concerns;
  3. Voice concerns that the proposed “expected loss” approach would require use of speculative forecasting of the performance of an asset over the remainder of the asset’s life;
  4. Explain that the expected credit loss approach has the potential to lead to quarterly adjustments in expected loss projections, possibly resulting in more volatility in provision expense and earnings;
  5. Explain the cost of compliance to the credit union and ultimately credit union member-owners; and
  6. Urge FASB to exempt credit unions from the proposed changes based on their unique structure as private, not-for-profit, cooperatively owned, financial institutions.

As it stands today, the proposed model would utilize a single “expected loss” measurement for the recognition of credit losses.  This would replace the multiple existing impairment models in U.S. generally accepted accounting principles (GAAP) that primarily use an “incurred loss” approach. Under the proposal, a credit union would estimate the cash flows that it does not expect to collect, using all available information, including historical experience and forecasts about the future. The proposed approach (referred to as current expected credit loss or “CECL”) considers more forward-looking information than is currently permitted under GAAP. 

To access CUNA’s detailed summary of the proposal, click on the following link: Credit Losses for Financial Instruments Proposal.  To view CUNA’s draft talking points, click here.  For the FASB proposal, click here. For FASB’s FAQs relating to the proposal, click here. Want to see what others are saying? View already submitted comment letters by clicking here.

 You may submit comments in any of the following ways:

 Use the electronic feedback form available on the FASB’s website at Exposure Documents Open for Comment;

Email a written letter to director@fasb.org, File Reference No. 2012-260; or

Send written comments to ―Technical Director, File Reference No. 2012-260, FASB, 401 Merritt 7, PO Box 5116, Norwalk, CT 06856-5116.

And don't forget to share you comments with TCUL by emailing them to Suzanne Yashewski at syashewski@tcul.coop. It is vital that we hear your concerns so we can best represent Texas credit unions on regulatory matters. We track comments, so be sure to get your participation on the record! Questions? Contact Suzanne Yashewski at syashewski@tcul.coop or(512) 853-8516

 ONE LAST THING: Don’t feel intimidated by the comment process; your comment letter can be short and to-the-point.  A formal business letter is great, but a short and simple email works too; you don’t have to hit every talking point. Just be sure to let FASB know who you are and how this proposal would impact the credit union and its members.