Though the exact amount remains unknown, the new standard is expected to increase the allowance for loan and leases losses throughout the industry. CECL will require significant operational changes at all banks, including collecting and analyzing the type of data that supports the modeling of the life-of-loan loss expectation, as well as forecasting and quantifying losses in the future.
ABA President and CEO Rob Nichols said,
While we continue to have strong concerns with the costs related to CECL’s life of loan loss concept, we are committed to working with both regulators and auditors to ensure banks of all sizes can meet the implementation challenges of the new standard. We appreciate the significant time and consideration FASB has given to bankers’ views as they worked on this extremely complex and difficult issue.ABA staff have worked closely with FASB to advocate targeted improvements in the standard and to ensure it can be implemented by banks of all sizes.
Read the standard.