Sharp Credit – Credit News – Credit Information
WASHINGTON — A bipartisan group of House lawmakers have introduced a bill to require the Securities and Exchange Commission and other federal agencies to study a new accounting standard for loans losses before it takes effect.
The bill, introduced by Reps. Vicente Gonzalez, D-Texas, and Ted Budd, R-N.C., would delay the Financial Accounting Standards Board’s new Current Expected Credit Loss standard, known as CECL, which smaller banks have warned would be overly burdensome.
Rob Nichols, president and CEO of the American Bankers Association, lauded the bill’s introduction.
“A rigorous study conducted by regulators is needed to assess the effect this new standard will have on the ability of financial institutions to serve their customers and support the broader economy, particularly when the economy is under stress,” Nichols said.
The House effort comes after a group of Republican senators introduced similar legislation requiring the SEC to report on the effects of CECL on credit availability, banks of various sizes, and U.S. competitiveness. At a hearing last month, a bipartisan group of House lawmakers mounted an attack on CECL.
CECL is set to take effect for publicly traded banks Jan. 1, 2020, while privately held institutions and credit unions will have until Jan. 1, 2022. Analysts expect CECL to become effective, despite the legislative effort.
“We are bearish on legislative delay efforts and peg the odds of successful legislation” at roughly 20%, said Isaac Boltansky, director of policy research at Compass Point Research & Trading, in a note Tuesday. “Given the congressional calendar, considering either this bill or its companion bill in the Senate through regular order will be an uphill climb.”