In the wake of FASB’s current expected credit loss (CECL) methodology, the banking agencies have finalized a proposed methodology for calculating allowances for credit losses (ACL).  The agencies have also expanded on prior guidance for implementing CECL, but have determined not to adjust the transition periods established for capital standards related to CECL.  The final framework requires additional board and management oversight of key CECL estimates and processes, avoiding templates that would provide certainty and granting no leeway to reduce CECL’s near-term impact on higher reserves due to sharply increased loan risk in the midst of the pandemic.

The full report is available to retainer clients. To find out how you can sign up for the service, click here.