NCUA Calls on Exempting CUs from CECL, Provides Guidance on Strategies for Working with Borrowers Affected by COVID-19

In an April 30 letter, National Credit Union Administration (NCUA) Chairman Rodney E. Hood urged the Financial Accounting Standards Board to exempt credit unions from complying with the current expected credit losses (CECL) methodology.

Hood wrote that "compliance costs associated with implementing CECL overwhelmingly exceed the benefits."

In addition, he argued that implementing CECL will have a chilling effect on lending, especially loans to low-income borrowers, and will negatively impact the net worth position of credit unions.

He noted that most credit unions are small and would face data collection challenges required by CECL.

Read the letter.

In a letter to credit unions, NCUA described various strategies that credit unions can employ to work with borrowers who experience financial hardship because of the COVID-19 pandemic.

The letter offers suggestions ranging from providing borrowers new funds to temporarily or permanently modifying loans.

The letter also describes how credit unions should monitor and report loan modifications.

Read the letter.