Again, this year, the MST survey tallied responses from a wide range of institutions. Participants represent institutions located in, or at least doing business in all 50 states, across mostly all asset sizes.
In this case-study focused paper, we first examine problems with a specific institution’s loss-rate approaches and then construct a defensible projection of lifetime credit loss without meaningful first-party losses or historical loan-level detail.
Although there is no guidance or statutory relationship between CECL and DFAST, their similarities in data requirements and forward-looking projection suggest benefits for financial institutions by coordinating the necessary data management and governance components of their CECL and DFAST initiatives.
steps to ensure effective implementation of this major change in estimating losses. implementation efforts. This whitepaper outlines five practical steps that banks can take to prepare for CECL:
1. Coordinate with other departments
2. Understand loan level data collection requirements
3. Identify new procedures and changes to current procedures
4. Make a decision on building vs. buying a solution
5. Communicate with auditors and regulators