Banking agencies’ interim rule delaying CECL impact out for comment until May 15

Federal banking agencies’ recent decision to delay the estimated impact on regulatory capital stemming from implementation of the accounting industry governing board’s current expected credit losses (CECL) standard took effect officially on March 31, and regulators are accepting comments from the public until May 15.

“The interim final rule provides banking organizations that implement CECL before the end of 2020 the option to delay for two years an estimate of CECL’s effect on regulatory capital, relative to the incurred loss methodology’s effect on regulatory capital, followed by a three-year transition period,” the rule summary states. “The agencies are providing this relief to allow such banking organizations to better focus on supporting lending to creditworthy households and businesses in light of recent strains on the U.S. economy as a result of the coronavirus disease 2019 (COVID-19), while also maintaining the quality of regulatory capital.”

The interim rule, announced last week, was issued by the Federal Deposit Insurance Corp. (FDIC), the Federal Reserve Board, and the Office of the Comptroller of the Currency (OCC).

Interim final rule; request for comments (Federal Register notice)