REGULATORY REPORT – FASB’s New Current Expected Credit Loss Model -

Sharpen your pencils and put on your green eyeshades – the Financial Accounting Standards Board is making major changes to the credit loss accounting model. The current “incurred loss” accounting model will be replaced by a current expected credit loss model (CECL), which will require institutions to estimate expected losses over the life of most credit exposures that are not subject to fair value accounting. Specifically, this change will affect the recognition and measurement of credit losses for loans, loan commitments, and held-to-maturity debt securities.