Four governing bodies are responsible for the oversight of thousands of financial entities in the United States. These consist of:
- Office of the Comptroller of the Currency (OCC)
- Federal Deposit Insurance Corporation (FDIC)
- Federal Reserve (FED)
- National Credit Union Administration (NCUA)
These regulatory bodies share several commonalities in their approach to governing financial institutions, yet each has its own discrete regulatory expectations.
Can a financial institution’s allowance be lower under CECL?
Will examiners challenge financial institutions if the current expected credit loss method (CECL) results in a lower lower allowance than under the incurred loss model? Banking agencies addressed this question during a recent webcast.
Preparing for CECL questions during upcoming bank exams
Bankers preparing for the Financial Accounting Standards Board’s (FASB) new current expected credit loss model, or CECL, have many questions about implementation, including what to expect in the way of CECL scrutiny during 2018 visits from banking examiners. They got a glimpse of an answer this week when federal banking agencies discussed the topic during a webinar for community bankers about the new credit loss accounting standard.
Streamlining the new fair value disclosure requirement
A new Financial Accounting Standards Board (FASB) disclosure requirement makes several material changes to U.S. generally accepted accounting principles (GAAP). New requirements for determining the fair value disclosure of financial institutions’ loan portfolios are among the revisions.
CSBS offers CECL readiness tool
The Conference of State Bank Supervisors (CSBS) released a readiness tool for Accounting Standards Update (ASU) 2016-13, Financial Instruments—Credit Losses (Topic 326). The tool is a downloadable resource that institutions can use to their expected loss implementation planning.
The National Credit Union Administration, or NCUA, is responsible for oversight of both federal credit unions and FDIC-insured state-chartered credit unions.
The Federal Reserve, or FED, oversees bank holding companies, financial holding companies, S&L/thrift holding companies and state-chartered member banks of the Federal Reserve System.
The Federal Deposit Insurance Corporation, or FDIC, oversees FDIC-insured state-chartered non-member banks as well as FDIC-insured state-chartered thrifts.
The Office of the Comptroller of the Currency, or OCC, is largely viewed as holding its constituents to the strictest standards of the three bank governing bodies. It oversees national banks and federally chartered thrifts.
IASB’s IFRS 9
On July 24, 2014, the International Accounting Standards Board (IASB) issued its own standard for accounting for credit losses, IFRS 9 Financial Instruments. Under this model, financial institutions must account for expected credit losses when they are first recognized, as well as recognize expected losses over the life of the loan.