Luetkemeyer Statement on Federal Regulators’ Two-Year CECL Delay
WASHINGTON, D.C. – Congressman Blaine Luetkemeyer (MO-03) released the following statement regarding a two-year delay in the capital requirements of the Current Expected Credit Loss (CECL) accounting standard from federal regulators that was announced today.
“Today’s announcement should be the nail in the coffin for CECL. For years financial institutions, consumer advocates, members of Congress from both sides of the aisle, and now prudential regulators have warned that the procyclical nature of CECL threatens lending capabilities and would have disastrous effects in an economic downturn. With the economic effects of COVID-19, we now have a real-life case study of its procyclicality and exacerbation of stress on financial institutions’ balance sheets that cannot be ignored. While a two-year delay in the capital requirements of CECL is certainly welcomed news, it is long-passed time that FASB fully rescind the standard. The fact that they have not done so by this point further suggests the board itself is in desperate need of fundamental reform.”
Background: Last year, Congressman Luetkemeyer led a bipartisan letter to Treasury Secretary Steven Mnuchin urging FSOC to require OFR to conduct a study on the CECL accounting standard. He also introduced the Responsible Accounting Standards Act, legislation that would increase accountability at FASB by requiring it to follow the Administrative Procedure Act. Luetkemeyer also joined a bipartisan group of colleagues on legislation that would stop and study the potential impacts of CECL.
Last week, Congressman Luetkemeyer introduced legislation to delay the implementation of CECL in order to free up billions of dollars for financial institutions to lend to the small businesses and consumers who have been affected by the spread of the coronavirus. He also led a letter to Congressional leadership requesting a CECL delay be included in Congress’ third coronavirus funding package, and joined colleague Congressman Gregory Meeks in sending a bipartisan letter to FASB urging the suspension of the implementation of CECL in response to the coronavirus.