October 16, 2013
CBAI is calling on Illinois community bankers to sign a petition and send a letter opposing a harmful Financial Accounting Standards Board (FASB) proposal that would implement a single approach for recognizing credit losses on loans, securities and trade receivables. The proposal would use an “expected loss” model, which would require banks to estimate expected credit losses and recognize the net present value of those losses at origination. It would replace the “incurred loss” model.
FASB’s proposal would require complex modeling and compel banks to recognize losses much earlier than necessary in the credit loss cycle, penalizing community banks for investing in loans and securities. The Office of the Comptroller of the Currency estimates that loan loss reserves on average will increase by 30% to 50% with adoption of the proposal.
The petition urges FASB to re-propose a simpler and more straightforward proposal that would not harm community banks. Community bankers can go online to sign the petition, send in a customizable comment letter to FASB, and access a summary and frequently asked questions on the proposal. Sign the Petition Today!