A new analysis out of the Federal Reserve suggests concerns regarding expected economic effects of a new rule on credit losses may be overstated.
Two board members of the Federal Reserve studied how a current expected credit losses approach to recognizing credit losses in financial statements would have affected the period leading up to the financial crisis of 2008. The CECL approach, required by the Financial Accounting Standards Board under Accounting Standards Codification Topic 326, is set to take effect Jan. 1, 2020, for calendar-year public companies, although FASB is considering a delay for smaller reporting companies and other non-public entities.
