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Fed to Watch CECL Implementation ‘Very Carefully,’ Chairman Says

Fed to Watch CECL Implementation ‘Very Carefully,’ Chairman Says

Posted: Mar 26 2019
As banks prepare to implement the Financial Accounting Standards Board’s current expected credit loss standard, Federal Reserve Board Chairman Jerome Powell said that the agency will be “watching carefully” to see how the standard will affect banks and the economy.

“We’re doing everything we can to avoid a big change that’s disruptive to lending,” Powell said during his annual testimony before the House Financial Services Committee. “We’ve tried to work with banks so that they’ll be able to implement this FASB decision in ways that are not too disruptive and too expensive and too complicated.” He added that the Fed is allowing banks to phase-in the new standard over a three-year period.

Powell stopped short of weighing in on whether conducting a quantitative impact study on the standard would be useful. He did suggest, however, that the Fed does not expect the standard to have a pro-cyclical effect.

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