House lawmakers give update on CECL, pot banking
WASHINGTON — House lawmakers addressing a credit union conference offered updates on key policy issues in the financial services sector, including a controversial new accounting requirement for loan losses, and the legislative stalemate over cannabis banking.
Community bankers and credit unions have been sounding the alarm on the potential negative repercussions of the Financial Accounting Standards Board’s Current Expected Credit Losses accounting standard, which financial institutions must comply with by 2023.
Rep. Blaine Luetkemeyer, R-Mo., urged credit unions to ask their lawmakers to support legislation requiring the Securities and Exchange Commission and other federal agencies to study CECL before it takes effect.
“We have got to be pushing back on this. … This is going to be devastating I think to our economy as a whole,” Luetkemeyer said Wednesday at a conference here for the Credit Union National Association.
Meanwhile, Rep. Steve Stivers, R-Ohio, signaled some divisions within his own party on legislation to enable banks and credit unions to offer financial services to cannabis businesses in states that have legalized marijuana.
The House last year passed the Secure and Fair Enforcement Act, or SAFE Banking Act, which would bar federal regulators from penalizing banks and credit unions that serve state-compliant cannabis businesses. But Senate Banking Committee Chairman Mike Crapo, R-Idaho, outlined a number of concerns with that bill.
Crapo has said he wants to prevent banks from servicing businesses that produce cannabis with high THC potency. (THC is the main psychoactive compound in cannabis.)
But Stivers, speaking at the conference, said it would be inappropriate for banks to have to determine THC potency levels in deciding which cannabis businesses they can serve.
“One thing that I talked to [Crapo] about and said, ‘We can’t have this’ is: We can’t make the banks and credit unions into the THC police,” Stivers said. “One of the things he wants to do is create a THC limit. That doesn’t belong in a banking bill.”
Also speaking to CUNA was Rep. Katie Porter, D-Calif. She announced a bill she is introducing that would reduce the number of times that credit unions’ boards of directors are required to meet.
Currently, the Federal Credit Union Act requires that credit unions’ boards of directors meet monthly. Porter’s bill would reduce the number of credit union board meetings to six times a year.
“There is absolutely no reason that we ought to put more burden on our credit unions than we do on our large banks,” Porter said.