Accounting Change Would Increase Burden on Community Banks and Credit Unions

Federal bank regulators have weighed in on the Financial Accounting Standards Board’s (FASB) proposed changes relating to classifying and measuring financial instruments. In a joint comment letter, the Federal Reserve, FDIC, National Credit Union Administration, and OCC found that many aspects of the FASB's Exposure Draft do not "achieve the FASB’s simplification objective; in certain cases the Exposure Draft would reduce the overall usefulness of financial reporting."

Among these concerns are that the guidance’s application “could have the unintended consequence of requiring relatively simple traditional lending products . . . to be measured entirely at [fair value through net income].” They also said that the guidance would “significantly increase complexity and operational burden for all financial institutions, but particularly for community banks and credit unions, without commensurate benefit to financial statement users.”

Read the letter.