Federal Reserve officials are touting the benefits of the soon-to-be-released Scaled CECL Allowance for Losses Estimator (SCALE).
The spreadsheet-based tool would help community banks implement the Current Expected Credit Losses (CECL) accounting standard. The CECL methodology was effective for most public financial institutions last year. Most community banks with assets under $1 billion will implement CECL in 2023.
The scope of SCALE focuses on publicly available regulatory and industry data to help community banks with assets of less than $1 billion in calculating CECL allowances.
“The SCALE tool responds directly to one of the consistent concerns I’ve heard from across community banks—navigating the complexity of complying with CECL,” Federal Reserve Governor Michelle W. Bowman said. “I’m confident smaller banks will find this tool greatly simplifies that work and provides a practical solution to this important compliance challenge.”
The SCALE tool is slated to be launched via an “Ask the Fed” webinar on July 15, 2021, with time allotted for participants to ask questions regarding the offering. The session targets community banks and will feature participation from the Financial Accounting Standards Board and the Conference of State Bank Supervisors. Registration information is available at AsktheFed.org.