Proposed Regulatory Relief of the Day-One Effect of Implementing CECL
April 16, 2018
The upcoming “Current Expected Credit Losses”, or CECL, accounting standard requires a cumulative-effect adjustment for the changes in the allowances for credit losses to be recognized in retained earnings on the balance sheet as of the beginning of the first reporting period in which the new standard is adopted. For regulatory purposes, there may be some relief coming to reduce the burden on capital of the day-one effect of implementing the new standard.
Last Friday, April 13, 2018, the Federal Reserve Board (FRB) announced that it approved a proposal to revise its regulatory capital rules to address and provide an option to phase-in the regulatory capital over three years. The FRB is coordinating this proposed rulemaking with the Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency. Comments on the proposal will be accepted for 60 days after publication in the Federal Register.
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