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Has any relief been provided related to implementation of the new accounting standard for Current Expected Credit Losses (CECL)?
Yes. Section 4014 of the CARES Act provides banks the option to temporarily delay implementing CECL until the earlier of December 31, 2020 or the date on which the national emergency declaration related to coronavirus is terminated. On March 27, 2020, the federal banking agencies announced an interim final rule that allows banking organizations that implement CECL before the end of 2020 the option to delay an estimate of CECL’s effect on regulatory capital, relative to the incurred loss methodology’s effect on regulatory capital, for two years. This delay is then followed by a three-year transition period. On March 31, 2020, the agencies issued a joint statement that clarifies the interaction between the interim final rule that provides a five-year transition period for the impact of the current expected credit loss methodology (CECL) on regulatory capital and the temporary CECL relief provided by the CARES Act. On April 22, 2020, the agencies published a technical correction, final rule that corrects errors in and clarifies the March interim final rule.
On August 26, 2020, the federal banking agencies adopted final changes to the capital rule that allow banking organizations that adopt the current expected credit losses (CECL) methodology of estimating allowances for credit losses during the 2020 calendar year to have the option to delay for up to two years an estimate of CECL’s effect on regulatory capital followed by a three-year transition period. The final rule is consistent with the interim final rule published in March 2020, with certain clarifications and minor adjustments related to the mechanics of the transition and the eligibility criteria for applying the transition. The final rule expands the pool of eligible institutions to include any institution adopting CECL in 2020, including those that early adopt.
Revised Transition of the Current Expected Credit Losses Methodology for Allowances FDIC FIL-84-2020 https://www.fdic.gov/news/financial-institution-letters/2020/fil20084.html
Final Rule - Regulatory Capital: Revised Transition of the Current Expected Credit Losses Methodology for Allowances https://www.fdic.gov/news/board/2020/2020-08-21-notational-fr-f.pdf
Joint Statement on the Interaction of Regulatory Capital Rule: Revised Transition of the CECL Methodology for Allowances with Section 4014 of the CARES Act https://www.fdic.gov/news/news/financial/2020/fil20032a.pdf