The Financial Accounting Standard Board’s new Current Expected Credit Loss standard poses significant operational challenges for the banking industry. CECL, which goes into effect January 2020 for some banks and later for others, will change the economics of lending and the unintended consequences are likely to result in changes to credit availability, product mix and cost of credit, particularly for consumers and small businesses. CECL will change the way your bank accounts for credit/loan losses. Instead of the current incurred loss approach, you will be required at the time of origination to forecast the future and assess potential losses over a loan’s lifetime. Not only will the standard potentially require a dramatic and immediate increase to your bank’s loan loss reserves, it will also be quite costly and challenging from a compliance perspective. Dramatic changes to bank accounting standards such as this should be studied and analyzed—before implementation—in order to fully understand the implications and impact it will have on the availability of credit in our communities.

Fortunately, some in the U.S. Senate and House understand that and have introduced legislation (S. 1564/ H.R. 3182) that would delay implementation of FASB’s CECL standard until regulators can properly assess the effect this new standard will have on financial institutions, their customers and the broader economy. Please take a moment to help us build support for this important legislation. Ask your lawmakers to co-sponsor S. 1564/H.R. 3182 to delay CECL until its full effects can be assessed and mitigated.