Reps. Roger Williams (R-TX) and Vicente Gonzalez (D-TX) are urging Securities and Exchange Commission (SEC) Chairman Jay Clayton to delay the implementation of the Current Expected Credit Loss (CECL) accounting standard.
The proposed CECL standard – which goes into effect Dec. 19, 2019 — marks a shift in the way credit losses on loans and financial assets are recorded. It will impact financial institutions internal accounting policies and procedures and may affect how they manage capital.
“I have tremendous concern with this new accounting standard and the far-reaching effects it will have on the local Texas economy, banks, and consumers,” Williams said. “Both Republicans and Democrats agree, we need to take the time to fully understand the implications of such a drastic accounting change before we proceed. I urge the SEC to hold on implementation until our concerns are addressed and there is a proven path forward.”
Williams and Gonzalez were among 25 members of Congress who recently sent a letter to the SEC warning it against the unintended consequences of this new accounting standard. In the letter, they posed key questions the SEC should consider before moving forward.
“The implementation of the CECL accounting standard has far-reaching consequences for many industries,” Gonzalez said. “Although our primary concerns relate to the impact on independent and community banks, I also worry about how implementation will affect trade and the insurance industry to name a few. I believe that a one-year delay is not too much to ask while we obtain additional information about possible unintended consequences in the marketplace.”
The American Bankers Association (ABA) also supports the call for the delay.
“We are gratified that Rep. Williams and Rep. Gonzalez and so many lawmakers from both sides of the aisle share our concern about the potential impact the CECL accounting standard could have on banks, the customers they serve and the broader economy,” ABA officials said in a statement. “We agree that the right answer for FASB is to delay CECL implementation until a Quantitative Impact Statement can be completed that fully assesses the repercussions of this significant accounting change. As the lawmakers’ letter makes clear, hitting pause right now is in the public interest, and we hope the SEC and FASB will recognize that.”