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Banks and Trade Groups Want More Time to Implement FASB Credit Loss Standard

August 13, 2018

A few months have passed since bank regulators introduced a proposal to alleviate the regulatory capital impact of the Financial Accounting Standards Board’s (“FASB”) credit loss standard. Several banks and trade groups, however, believe more time is needed to examine the effects of Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.

In comment letters to regulators, individual banks and trade groups propose extending the phase-in period of the standard from three years to five years. Representatives from groups like the Independent Community Bankers of America said that the additional time would help institutions become better prepared for implementing the new guidance. Some banks also suggested that the FASB consider changes to ASU No. 2016-13, and the American Bankers Association asked regulators to examine the standard’s impact on capital before it is implemented.

The Federal Reserve, Federal Deposit Insurance Corporation, and Office of the Comptroller of the Currency declined to comment on calls for an extended implementation period. Separately, a FASB spokesperson said the board would continue to work with regulators and banks to ensure efficient implementation of the credit loss standard, and it is prepared to answer any questions that may arise.