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Nov. 21, 2018

Accounting board formalizes CECL delay
pushing effective date to 2022

New accounting rules on current expected credit losses (CECL) will not take effect until late 2021 for credit unions and other “non-public business entities” (non-PBEs) under a decision that was made formal late last week. The Financial Accounting Standards Board (FASB) released its Codification Improvements to Topic 326, Financial Instruments—Credit Losses (no. 2018-19), which formalized a decision by the board last month.

Under the change, the effective date for the CECL rule for non-PBEs will be for fiscal years beginning after Dec. 15, 2021 (the previous date was Dec. 15, 2020; credit unions would not need to begin reporting data on call reports until the beginning of 2022). The change aligns the implementation date for annual financial statements with the implementation date for interim financial statements (in addition to giving credit unions more time to make changes for getting ready for the new accounting standard).

CECL, adopted in 2016 by the FASB, is intended to improve financial reporting by requiring timelier recording of credit losses on loans and other financial instruments held by financial institutions and other organizations, according to the board. More specifically, the standard requires financial institutions to estimate expected losses over the remaining life of the loans, as opposed to incurred losses of the current standard.


FASB’s Codification Improvements to Topic 326, Financial Instruments—Credit Losses (no. 2018-19)


The Senate will consider the confirmation of a permanent director for the federal consumer financial protection agency as early as next week, as Senate Majority Leader Mitch McConnell (R-Ky.) has filed cloture on the nomination (i.e., the nomination is one of five on the Senate’s executive calendar; the nominations are being considered under unanimous consent). Kathleen (“Kathy”) Kraninger was nominated to the position in mid-June by President Donald Trump; she sat for a Senate Banking Committee hearing on her nomination the next month. The committee voted (and along party lines) in August to recommend her for confirmation, by a 13-12 vote.

If confirmed by the Senate (which is likely), Kraninger would succeed acting director John (“Mick”) Mulvaney in heading up the bureau – and would be the first permanent director since Richard Cordray resigned about a year ago (and ultimately ran for governor of Ohio, but lost in the recent election).

Kraninger has spent the last more than 20 years mostly working as a staff member for Congress or for federal agencies. She also spent some time in the Peace Corps, working in Ukraine, according to a biography of her posted by a group she addressed as a conference speaker in September 2017.

Since March of last year, she has served as associate director for general government for the Office of Management and Budget (OMB), which Mulvaney also oversees as director. In that role, according to her bio, she “oversees budget development and execution for a number of executive branch agencies including the Departments of Commerce, Justice, Homeland Security (DHS), Housing and Urban Development, Transportation (DOT), and Treasury.” (BCFP is not listed in her bio among the agencies.)

Senate Executive Calendar (updated daily)


The NCUA Board will meet 11 times (as per usual) in the new year, and skip an August meeting, according to a scheduled released by the agency Tuesday. The meetings in 2019 will all occur on Thursdays of each of the 11 months (and all starting at 10 a.m.), with seven of the meetings on the third Thursday of the months (January, April, May, June, July, September, November), three meetings on the second Thursday of the months (February, March and December) – and one on the fourth Thursday of the month (October). The dates are:

  • Jan. 17
  • Feb. 14
  • March 14
  • April 18
  • May 16
  • June 20
  • July 18
  • Sept. 19
  • Oct. 24
  • Nov. 21
  • Dec. 12


NCUA Board Sets 2019 Meeting Schedule


NCUA late last week issued a press release making it clear that the six federally insured credit union liquidations in the first three quarters of this year have resulted in a $744.9 million loss to the National Credit Union Share Insurance Fund. The total, according to the release, is the loss calculated at the time each credit union was liquidated. The loss figure can change depending on the performance of the remaining assets of the credit unions.

At last week’s NCUA Board meeting, agency CFO Rendell Jones told the board that the insurance fund has booked $744.9 million in losses to the share insurance due to the six credit union failures through Sept. 30. The credit unions were: St. Elizabeth’s Credit Union, First Jersey Credit Union, Louisville Metro Police Officers Credit Union, Greater Christ Baptist Church Credit Union, Melrose Credit Union, and LOMTO Federal Credit Union. Of the six, Melrose was largest, at $1.1 billion. “The NCUA continues to evaluate all courses of action that will maximize potential recoveries from the assets of the liquidated credit unions and minimize losses to the Share Insurance Fund. The fund has sufficient equity and reserves to cover anticipated losses,” the release stated.

In October, NCUA closed Radio, Television and Communication Federal Credit Union in Staten Island, N.Y., the seventh credit union failure of the year. Chartered in 1964, the credit union last reported having $3 million in assets and 416 members.

By contrast (and separate from the NCUA release), the FDIC reports no bank failures so far for 2018. In 2017, the agency reported eight bank failures, for total assets of $6.5 billion. If the bank failure total remains at zero through year’s end, it will be the first year that there have been no bank failures recorded since 2006 (which was the second year in a row of no bank failures). On a side note: the FDIC Tuesday reported that banks in the third quarter reported net income of $62 billion (largely as a result of lower taxes), and record return on average assets for the quarter of 1.41% (the highest recorded by the agency since it began its quarterly reports).

NCUA Press Release: Six Credit Union Failures Through Sept. 30


Risks to stability of the nation’s financial system remain moderate, as the structure is more resilient than it was 10 years ago at the start of the financial crisis; however, new vulnerabilities have emerged, a federal financial watchdog reported last week. In its 2017 Annual Report to Congress, the Treasury’s Office of Financial Research (OFR) said that market risk and cybersecurity vulnerabilities are concerns. “Market risk — the potential for sudden changes in asset prices that could disrupt economic growth — remains elevated, particularly in the stock markets and bond markets,” the report states.

The report notes three aspects of structural changes in markets and industry which pose threats:

  • lack of substitutability, or the inability to replace essential services if a provider fails or drops that line of business;
  • fragmentation of trading activities through multiple channels and products; and,
  • the chance that the transition to a new reference rate to replace the London Interbank Offered Rate, or LIBOR, could be difficult.

For cybersecurity vulnerabilities, the report states that a large-scale cyberattack or other cybersecurity incident could “disrupt the operations of one or more financial companies and markets and spread through financial networks and operational connections to the entire system, threatening financial stability and the broader economy.”

Office of Financial Research Reports on Risks to Financial Stability


Legislation establishing a new federal agency to watch over cybersecurity and infrastructure security was signed into law by President Donald Trump late last week. Under the legislation (the Cybersecurity and Infrastructure Security Agency (CISA) Act of 2018 (H.R. 3359)) an office within the Department of Homeland Security (DHS) was elevated to an operational agency within the department. The new agency – CISA – is charged with protecting national, critical infrastructure from physical and cyber threats, coordinating with both government and private organizations. More specifically (according to a DHS factsheet) the new agency will aim to: provide cyber protection (to safeguard ‘.gov’ networks that support the essential operations of partner departments and agencies); build infrastructure resilience (through training and technical assistance); and enhance public safety communications.


An average 2.5% increase in fees charged by Federal Reserve Banks for payment services to depository institutions (priced services) is set to take effect Jan. 2, the Federal Reserve Board said late last week. The Reserve Banks estimate that the price changes will result in a 4.0% average price increase for check-clearing customers; a 2.0% average price increase for Fedwire Funds customers; and a 6.0% average price increase for Fedwire  Securities customers, the Fed said. The fees will remain unchanged for the Reserve Banks’ FedACH Services and National Settlement Service. Lastly, the Reserve Banks estimate that the price changes will result in a 7.5% average price increase for FedLine Solutions customers. The 2019 fee schedule for each of the priced services is available on the Federal Reserve Banks’ financial services website at

Federal Reserve Board approves fee schedule for Federal Reserve Bank priced services

BRIEFLY: Keep FinCEN in the loop following wildfires; Bureau’s CU Advisory Council to meet; Happy Thanksgiving

Credit unions and other financial institutions affected by the California wildfires are encouraged to contact their functional regulators as well as the Financial Crimes Enforcement Network (FinCEN) “as soon as practicable” to discuss any delays in their ability to file required Bank Secrecy Act reports, according to an advisory Monday by FinCEN. Institutions seeking to contact FinCEN should call the FinCEN Resource Center at 1-800-949-2732 and select option 8 or e-mail at … The Credit Union Advisory Council (CUAC) of the BCFP will be one of three bureau councils meetings on Dec. 6 held simultaneously by teleconference, the agency said this week. On the agenda for the CUAC (and the other two councils: the Consumer Advisory Board (CAB) and the Community Bank Advisory Council (CBAC)): artificial intelligence in consumer financial services and consumer access to financial records. The calls are scheduled to run from 1-3:45 p.m. ET, the bureau said, and are open to the public (with registration and RSVP required by Dec. 5; see the link below) … To all NASCUS members, supporters, state system advocates and everyone else interested in being one or any of those: Have a Happy (and safe) Thanksgiving holiday!

FinCEN Encourages Communication from Financial Institutions Affected by the California Wildfires

Registration for Dec. 5 BCFP conference call(s)

Information Contact:
Patrick Keefe,