ABA Banking Journal - September/October 2016 - (Page 25)
FEATURE > LOAN LOSS ACCOUNTING
ditor's note: ABA has worked closely with the Financial Accounting
Standards Board during the seven-year-long process of developing
the new Current Expected Credit Loss model for loan loss
accounting. While ABA and FASB have often disagreed, ABA has
worked to maintain an open and productive relationship in order to
help community banks implement the new standard.
With the final CECL standard now released (see page 20), ABA VP Michael
Gullette spoke with Russell Golden, FASB's chairman since 2013. Golden
has served as a FASB board member since 2010 and previously spent six
years as a senior staff member at FASB.
Gullette highlights the collaborative relationship between FASB and ABA.
"Though we would have preferred a different model, we were never turned
down for a phone call, conference call, speaking engagement or a meeting,"
he says. "That is pretty incredible."
We know that the Financial
Stability Board, the banking
regulators, as well as some
banks, requested that the FASB amend
its loan impairment accounting to be
more forward-looking. The question is,
Banks do not underwrite to
perfection. When a bank
originates loans, it has an
expectation of credit losses. While a
thorough underwriting process occurs
to manage credit losses, historical
experience shows that not every
borrower will repay. Therefore, the
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Table of Contents for the Digital Edition of ABA Banking Journal - September/October 2016
CECL FROM THE INSIDE: A CONVERSATION WITH FASB’S RUSSELL GOLDEN
WHERE ‘HABITS OF ECONOMY’ WERE SHAPED
CARD-LINKED REWARDS GIVE BANKS A COMPETITIVE EDGE
ABA COMPLIANCE CENTER INBOX
FROM THE STATES
CORPORATE SOCIAL RESPONSIBILITY
INDEX OF ADVERTISERS
ABA Banking Journal - September/October 2016