Two Dates To Which You Should Really Pay Attention

11:45 am Correction: An earlier version of this blog said that NCUA was proposing a two-year extension of the RBC effective date. I subsequently read Chairman McWatter’s letter which indicates that the effective date will be January 1, 2020.

Two issues I hear credit unions expressing concern about are the enhanced risk based capital requirements for credit unions with $100 million dollars or more in assets and the Current Expected Credit Loss Standard (CECL) requirements mandating that financial institutions account for anticipated losses earlier in the lending cycle. As a result, two pending proposals are ones you should pay attention to.

First, the Financial Accounting Standards Board (FASB) is proposing to clarify the effective date of the new accounting standards so that community banks and credit unions have until January 1, 2022 to comply with the new standards. Although it has always been the FASB’s intent to give smaller financial institutions more time than the banking behemoths to implement these new accounting standards, the effective date has always been confusing. CUNA joined the American Institute of CPA’s (AICPA) in urging the Board to move the effective date to 2022 as opposed to 2021.

Although I personally remain hopeful that the new standard, if properly policed by regulators, will not have as big an effect on small to medium-sized credit unions as some fear it will, this is a minority view. Unlike the Risk Based Capital rule, this new accounting standard applies to all credit unions. Even with the extra time, credit unions should already be assessing how to implement the new standards and the impact this implementation could have on your credit union.

As for the Risk Based Capital rule, remember that starting in 2019 sophisticated credit unions, those with $100 million or more in assets, will be subject to a new regulatory framework under which various asset classes and products will be weighted for purposes of determining an institutions capital adequacy. In this letter to Congressman Posey and Heck, Chairman McWatters indicates that when the NCUA meets on Thursday it will propose pushing back the implementation date from January, 2019 to January, 2020. NCUA will also propose lifting the threshold for RBC compliance from $100-$500 million. This is a huge victory for credit unions and the next best thing we could ever hope for other than an outright reconsideration of the entire regulation.

Group Sues For More Info On CFPB Nominee

The Washington Post is reporting that Allied Progress is seeking to enforce the Freedom of Information request they filed last month, requesting information about Kathy Kraninger, the White House official through the Trump Administration nominated to be the new head of the CFPB. The news follows her somewhat contentious nomination hearing before the Senate Banking Committee.

Fed Starts New Compliance Newsletter

I think I died and went to heaven. The Federal Reserve unveiled a new compliance newsletter dedicated to giving overviews of what it considers to be the most important compliance topics of the day. Someone just accused me of being a nerd, but in fact I believe publications like these can provide important insights into what regulators are thinking. I wish NCUA would consider coming out with a similar publication but I’m not holding my breath.