Hood Calls for CECL Exemption for Credit Unions

NCUA Chairman Rodney Hood on Thursday asked federal accounting officials to exempt credit unions from the Current Expected Credit Losses (CECL) standard.

The CECL standard could have a chilling effect on lending, including loans to low-income borrowers, Hood wrote in a letter to Russel Golden, chairman of the Financial Accounting Standards Board.

Under the CECL standard, institutions will have to recognize the expected lifetime losses at the time a loan or financial instrument is recorded. The effective date of CECL has been pushed back until January 2023 for credit unions.

The NCUA has the authority to phase in the CECL standard, as the agency measures its impact, according to Hood.

Credit union trade groups have argued that credit unions should be exempt from the standard, but so far, the accounting board has only been willing to delay it.

“I believe the compliance costs associated with implementing CECL overwhelmingly exceed the benefits,” Hood wrote in his letter.

He said he was worried about the impact of CECL even before the coronavirus crisis, but that the economic impact of the pandemic makes the exemption even more urgent.

He said that credit unions have had to begin preparing for the implementation of CECL — a task that has become even more difficult as a result of social distancing and stay-at-home orders.

He urged that at a minimum, the standards board allow credit unions to use an alternative that retains the current framework they use.