NAFCU Supports NCUA Proposal for Three-Year CECL Phase In

WASHINGTON—In response to NCUA's proposed rule to create a three-year phase-in of the day-one adverse impacts of the current expected credit loss (CECL) accounting standard on federally-insured credit unions' net worth ratio, NAFCU expressed support for the concept, but also again called for a longer phase-in option and additional examination flexibility.

As the standard currently does not become effective for credit unions until 2023, NAFCU Senior Counsel for Research and Policy Andrew Morris suggested there is still time for an intervention to occur before the industry transitions to a standard that has the potential to "chill lending activities during a period of critical economic recovery."

"NAFCU maintains that credit unions should not be subject to the CECL standard given our industry’s record of prudent fiscal management before and after the financial crisis, limited complexity, and structure as not-for-profit, member-owned cooperatives," wrote Morris. "The NCUA should recognize this difference and identify opportunities to work with the FASB and Congress to exclude credit unions from coverage under CECL."