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Banking regulators approve CECL relief measure

Tammy Whitehouse | December 19, 2018

Banking regulators issued some relief for financial institutions that are worried about the effects of adopting a new credit loss standard, but bankers are worried it won’t go far enough.

The Federal Reserve, the Federal Deposit Insurance Corporation, and the U.S. Treasury’s Office of the Comptroller of the Currency jointly issued a final regulatory capital rule that gives financial institutions three years to phase in the regulatory capital effects produced by implementing Accounting Standards Codification Topic 326. That’s the accounting rule taking effect in 2020 requiring banks to give investors earlier warning about signs of trouble in their lending portfolios by booking losses using a “current expected credit losses” (CECL) methodology.

CECL requires entities, most notably banks and other financial institutions, to use a more forward-looking approach to estimate losses and book...

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