NAFCU: NCUA should update guidance on new CECL tool

The NCUA should make it clear that more credit unions may use its recently announced simplified Current Expected Credit Loss (CECL) Tool, NAFCU said last week.

“It is imperative… that as many credit unions as possible have access to and permission to use a backstop like the NCUA’s Tool,” NAFCU Regulatory Affairs Counsel James Akin wrote, in a letter to the agency.

Understanding CECL

Under the CECL standard, issued by the Financial Accounting Standards Board (FASB), financial institutions will have to recognize the expected lifetime losses at the time a loan or financial instrument is recorded. It will go into effect next year and many credit union officials have complained about the cost of implementation.

The NCUA’s CECL tool is intended for credit unions with less than $100 million in assets, although larger credit unions may choose to use it based on the discretion of their management and auditors.

 

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