Reps. David Jolly (R-FL) and Patrick Murphy (D-FL) are among 62 members of Congress who signed a letter in support of Financial Accounting Standards Board’s (FASB) proposal related to impairment of financial assets. CUNA and state leagues, including the LSCU & Affiliates, urged members of Congress to weigh in on FASB before the proposal was finalized.
The Congressional letter, which began being circulated in December, points out that the new proposal would be a major concern for financial institutions. The letter stated that “The proposed reforms would require banks and credit unions to estimate expected credit losses for the life of a financial instrument and recognize the net present value of those losses at the moment of origination. This would be a stark departure from today’s practices where financial institutions follow generally accepted accounting principles (GAAP) and recognize credit losses when there is evidence they will actually incur a default.”
The letter was sent to FASB Chairman Russell Golden and asked the board to “proceed with the utmost caution in finalizing this accounting standards update, as it has the potential to irreversibly damage community banks’ and credit unions’ ability to continue to adequately serve their customers/members and communities and sustain the economic recovery.”
FASB is expected to host a meeting this week on the issue. You can read more on the proposal on CUNA’s website.