Queuing up Thursday’s planned action regarding the credit loss accounting standard, National Credit Union Administration (NCUA) Board Chairman Rodney Hood told a credit union group Wednesday that he remains concerned about the standard’s potential impact on credit union lending.
In prepared remarks for the 43rd Credit Union Leadership Convention (held virtually), Hood reiterated his concern that requiring credit unions to comply with the Financial Accounting Standards Board’s “current expected credit losses” (CECL) methodology could affect credit unions’ ability to serve their members during the current pandemic.
“Even before the current pandemic, credit unions had approached the NCUA with concerns about the unintended consequences of implementing the new accounting standard,” Hood said in the prepared remarks. “In our current environment, I am especially concerned that adopting CECL will have a chilling effect on lending, including loans to low-income borrowers.”
Hood reminded he had urged FASB to grant credit unions a permanent exemption from CECL, but he also said the NCUA Board has the authority to provide some relief to credit unions to minimize the standard’s effects.
The NCUA Board chairman, in his remarks, noted the board’s planned action Thursday on proposed regulatory amendments that he said will mitigate the adverse consequences of the capital adjustments resulting from CECL. “The Board will also exercise its statutory authority to exempt small credit unions with less than $10 million in assets from generally accepted accounting principles (GAAP),” he stated.
Under the current timetable set by FASB, credit unions will need to begin using CECL Jan. 1, 2023. The NCUA’s spring regulatory agenda (published as part of federal regulators’ Unified Agenda at reginfo.gov) shows this would be similar to the “day one” phase-in approved previously by banking regulators.
Thursday’s open NCUA Board meeting is set to begin at 10 a.m. and can be viewed online. In addition to the CECL transition proposal, the meeting agenda includes consideration of a final field-of-membership rule (the proposal last year focused on community charters); a proposed rule on fees paid by federal credit unions (operating fees assessed to help cover NCUA operations); a request for comment on the overhead transfer rate and operating fee methodologies; and a mid-year budget briefing.