WASHINGTON (4/19/13)--Credit Union National Association Deputy General Counsel Mary Dunn highlighted credit union concerns with a developing Financial Accounting Standards Board proposal before a national audience in a recent Reuters article.
FASB has proposed credit loss reporting changes that would utilize a single "expected loss" measurement for the recognition of credit losses; this would replace the multiple existing impairment models in U.S. generally accepted accounting principles that primarily use an "incurred loss" approach.
Dunn in the Reuters piece said this proposal, if approved, would force credit unions to double their allowance accounts. "The more you put in an account like that, the less there is out there for loans and new product development because it's sitting there parked," she said.
The Reuters report notes that the FASB proposal could significantly restrict lending by many forms of financial institution.
FASB is accepting comment on the credit loss proposal until May 31, and CUNA is developing a comment letter on the issue.
CUNA has noted the proposal could impact credit unions more severely than other institutions because of the statutory restrictions on their net worth. Credit unions, which are member-owned and are not publicly traded, should not be subject to FASB's proposed credit loss reporting rules, CUNA has said.