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Financial Services

Mortgage Bankers Association Wants a Delay in Credit Losses Standard

Another banking group wants the Financial Stability Oversight Council (“FSOC”) to postpone the effective date of Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. In a letter last month, the Mortgage Bankers Association (“MBA”) urged the FSOC to complete a quantitative impact study to examine the effects of the Financial Accounting Standards Board’s (“FASB”) credit losses standard. The MBA considers the study critical to helping banking agencies, banks, and others understand the standard’s full impact and any unanticipated effects. Echoing concerns from the Bank Policy Institute , the MBA says the credit losses standard. Read More.

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FASB Proposes Slight Updates to Three Major Accounting Standards

Multiple clarifications are in the works for three of the Financial Accounting Standards Board’s (“FASB”) top accounting standards. On November 19, the FASB issued a proposal featuring changes to the following Accounting Standards Updates (“ASU”): ASU No. 2016-13, Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments The proposal features 11 changes to the credit loss standard. The proposed clarifications include how companies calculate the allowance for credit losses on accrued interest receivable balances and accounting for the allowance when moving debt securities between measurement categories. Also proposed are clarifications regarding when a company must. Read More.

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Bank Regulators Propose Phase-in Implementation of Credit Loss Standard

As banks, industry groups, and others continue to raise concerns over Accounting Standards Update No. 2016-13, Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, three bank regulators have a plan to reduce the capital effects of the Financial Accounting Standards Board’s credit loss standard. The Federal Reserve, Office of the Comptroller of the Currency, and Federal Deposit Insurance Corporation have proposed a phased-in implementation of the current expected credit loss model. Over a three-year period, banks could phase in the standard’s adverse effects on regulatory capital when they implement the new accounting guidance. This phase. Read More.

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Update Pushes Credit Loss Standard Effective Date to 2022 for Community Banks

After unanimously approving last month several amendments to Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments—Credit Losses (Topic 326) , the Financial Accounting Standards Board (“FASB”) published an update that will give credit unions and community banks an extra year to comply with the credit loss standard. The update, ASU No. 2018-19, Codification Improvements to Topic 326, Financial Instruments—Credit Losses, aligns the implementation dates for private companies’ annual financial statements with their interim financial statements. The new guidance states that private companies must apply the credit loss standard to fiscal years, including interim periods within such years, starting after December 15, 2021. This change means smaller institutions like credit unions and community banks can apply. Read More.

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Credit Loss Standard Update Could Benefit Subprime Auto Lenders

To help lenders that provide auto loans to customers with little to no credit, the Financial Accounting Standards Board (“FASB”) will issue a proposed amendment to the transition guidance for Accounting Standards Update No. 2016-13, Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. Scheduled for release next year, the proposal would allow subprime auto lenders and other businesses to measure financial instruments, which were previously recorded at amortized cost, at fair value when they apply the credit loss standard beginning in 2020. Existing auto loans would be calculated similarly to loans distributed after the. Read More.

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Group of Banks Ask FASB to Change Credit Loss Standard

Twenty-one regional banks are asking the Financial Accounting Standards Board (“FASB”) to consider a different approach for calculating loan loss under Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. In a letter submitted last week to the FASB, the group of banks warned that the credit loss standard could lessen regulatory capital and cause banks to restrict their lending in economic downturns. The regional banks propose amending the requirement for recognizing credit losses to alleviate any drastic changes in earnings and mitigate problems the standard may cause with. Read More.

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