Agencies Propose Transition of New CECL Accounting Standard into Regulatory Capital Framework


On April 17, 2018, the federal banking agencies proposed a revision to their regulatory capital rules to address and provide an option to phase in the regulatory capital effects of the new accounting standard for credit losses, known as the “Current Expected Credit Losses” (“CECL“) methodology. The proposal addresses the regulatory capital treatment of credit loss allowances under the CECL methodology and would allow banking organizations to phase in the day-one regulatory capital effects of CECL adoption over three years. The proposal would revise the agencies’ regulatory capital rules and other rules to take into consideration differences between the new accounting standard and existing U.S. generally accepted accounting principles. Comments on this proposal will be accepted for 60 days after publication in the Federal Register. Press Release. Proposed Rule.