ICBA to FASB: Hit Stop Button on Dangerous Accounting Plan
Washington, D.C. (PRWEB) February 06, 2016 -- A delegation of community bankers from the Independent Community Bankers of America® (ICBA) met today with the Financial Accounting Standards Board (FASB) on widespread concerns with FASB’s controversial proposed accounting reforms. The three community bankers—Greg Ohlendorf, president and CEO of First Community Bank and Trust in Beecher, Ill.; Lucas White, vice president and director of The Fountain Trust Co. in Covington, Ind.; and Tim Zimmerman, president and CEO of Standard Bank in Monroeville, Pa.—warned that the Current Expected Credit Loss (CECL) proposal could irreversibly damage the ability of community banks to continue meeting the needs of local customers and communities.
Today’s roundtable follows ICBA’s request for a meeting between community bankers and the full FASB board on the CECL model, which would force community banks to record a provision for credit losses the moment they make a loan. Regulators have said the plan would cause a projected 30 to 50 percent hike in loan-loss reserves, which would dramatically harm consumers and local economies by constricting access to credit.
“This dangerous proposal would reduce community bank lending, harm local economies, and cost thousands of jobs in communities nationwide,” Ohlendorf, White and Zimmerman said in a joint statement today before the FASB board. “ICBA and the nation’s community bankers are calling on FASB to pause the standard-setting process until these concerns have been fully explored and remedied. As 62 members of Congress wrote in a bipartisan letter to FASB just this week, FASB’s complex accounting proposal would radically change community bank accounting methods, sharply increasing the cost of lending and constricting the flow of credit to local communities.”
This week’s bipartisan letter from 62 members of Congress poses several questions to FASB, which Ohlendorf, White and Zimmerman also posed to the board in person, including whether the accounting standards-setting organization has weighed the impact of its plan on lower-income borrowers and small businesses and whether it has considered tiered implementation based on the size and risk profile of affected institutions. In the letter, the bipartisan group of lawmakers also asked whether FASB has considered an alternative model based on historical losses, an approach that ICBA has long advocated and one that nearly 5,000 community bankers have supported in an ICBA petition.
“ICBA will continue making the voice of the community banking industry heard on this flawed accounting proposal, which would harm all aspects of community bank lending in this country if it is not corrected,” ICBA President and CEO Camden R. Fine said today. “We continue advocating our alternative plan to base community bank loan-loss provisions on historical losses for similar assets, which would meet FASB's objective of reforming shortfalls while limiting the negative impact on local communities.”
About ICBA
The Independent Community Bankers of America®, the nation’s voice for more than 6,000 community banks of all sizes and charter types, is dedicated exclusively to representing the interests of the community banking industry and its membership through effective advocacy, best-in-class education and high-quality products and services. For more information, visit http://www.icba.org.
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Aleis Stokes, Independent Community Bankers of America, +1 (202) 821-4457, [email protected]
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