Accounting standards

The credit union regulator has implemented a host of measures to help the industry manage the pandemic, but there may be only so much it can do without congressional action.

Rodney Hood, chairman of the National Credit Union Administration, will testify before the Senate Banking Committee about how the regulator and the industry have responded to the coronavirus pandemic.

The millions of dollars earned from Paycheck Protection Program transactions will help cover rising provision costs tied to the new CECL accounting standard and coronavirus shocks to loan books.

Rodney Hood, chairman of the National Credit Union Administration, told the Financial Accounting Standards Board that complying with the Current Expected Credit Losses standard could adversely impact the industry's net worth.

Banks would have drowned if lawmakers hadn't delayed the new accounting standard during the coronavirus pandemic.

Banks had an opportunity to delay compliance with the new accounting standard, but many opted to move forward to get ahead of credit issues that could arise from the coronavirus outbreak.

The Los Angeles regional bank recorded the $1.5 billion noncash charge after its stock price ended March below its tangible book value.

Lawmakers delayed the new accounting standard as part of the stimulus package, but they shouldn't let bankers persuade them to eliminate it outright.

Measures that delay the Current Expected Credit Losses standard and reduce a community bank capital ratio are temporary, but the industry now sees an opening to argue that they should be permanent.

The regulator must speed up its capital reform efforts while taking immediate steps to reduce the examination burden.