Fed proposes financial statement changes for CECL

A notice for comment on the proposed, three-year extension of financial reports of Federal Reserve-supervised banking organizations also invites input on report changes addressing the transition to the current expected credit loss (CECL) accounting standard as well as the 2018 financial regulatory relief law.

The Fed’s proposal, slated for publication in the Federal Register Wednesday for a 60-day comment period, would implement changes for the revised accounting standards for CECL across all of the reports. It would also:

  • extend for three years through the normal delegated review process certain revisions to the FR Y-9C that the Fed Board previously approved on a temporary basis to implement changes under the Economic Growth, Regulatory Relief, and Consumer Protection Act (EGRRCPA, S. 2155) regarding the risk-weighting of high value commercial real estate (HVCRE) exposures and the treatment of reciprocal deposits;
  • clarify reporting of unrealized holding gains and losses on equity securities on the FR Y-9C report; and
  • make several revisions to the FR 2886b report, including updating references to applicable capital requirements, revising the eligibility criteria for reporting the trading schedule and implement changes related to the accounting treatment of equity securities.

The changes related to CECL are tied to the revisions in the CECL notice of proposed rulemaking (the CECL NPR) by the Fed Board, the Federal Deposit Insurance Corp. (FDIC), and the Office of the Comptroller of the Currency (OCC) to revise their regulatory capital rules related to the implementation and capital transition for CECL; and to the corresponding proposed CECL revisions to the Consolidated Reports of Condition and Income (Call Reports) (FFIEC 031, FFIEC 041, and FFIEC 051; OMB No. 7100-0036).

If the agencies’ final rule on CECL differs from the proposal, the Fed will adjust the proposed financial report revisions before finalizing them, the notice says.

Notice; request for comment