CECL working as intended amid Covid-19 crisis, says FASB

Effectively suspending new standard is “a regulatory capital idea, not an accounting idea” observers say


Suspending new accounting rules is the wrong way to tackle the credit impact of the coronavirus crisis, according to the Financial Accounting Standards Board.

Under the Current Expected Credit Loss (CECL) standard, which came into effect on January 1, banks face being forced to set aside billions of dollars in loss allowances against soured loans. The standard was already set to lead to higher-than-anticipated set-asides when banks announce their first-quarter earnings next month.

But with the

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