SEC Chairman Says FASB Should Decide on Credit Loss Standard Delay
With pressure mounting for the Financial Accounting Standards Board (“FASB”) to postpone implementation of Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, Securities and Exchange Commission (“SEC”) chairman Jay Clayton is tiptoeing around the prospects of a delay. Talking to reporters at a recent conference, Clayton said while his agency oversees standard-setting organizations, it is ultimately up to the FASB to decide whether delaying the credit loss standard is necessary. His remarks come as banks and trade groups have asked for more time to implement ASU No. 2016-13.
Banking groups like the Mortgage Bankers Association and the Bank Policy Institute are concerned over the costs to comply with the standard. Both groups have written to the Financial Stability Oversight Council (“FSOC”), a panel in which Clayton is a voting member, warning that the current expected credit loss model will limit lending practices during an economic downturn. Before ASU No. 2016-13 becomes effective, the banking industry hopes regulators will examine the standard’s impact on the economy and public policy.