The OCC, Federal Reserve Board, FDIC and National Credit Union Administration (the "agencies") proposed (i) a policy statement on allowances for credit losses ("ACLs") and (ii) guidance on credit risk review systems. Comments on both proposals must be submitted by December 16, 2019.
The proposed ACLs policy statement is designed, according to the agencies, to reflect updates made by the U.S. generally accepted accounting principles. The updates were codified in the FASB ASC Topic 326 ("Financial Instruments - Credit Losses"). Specifically, the statement would provide guidance on:
Additionally, the statement would provide information on the examiner reviews of ACLs.
The proposed Credit Risk Review Systems guidance would, according to the agencies, update existing guidance by outlining the principles for developing and maintaining a credit risk review system. Specifically, the guidance aims to clarify (i) how to create a "system of independent, ongoing credit review" and (ii) "appropriate communication" between an institution's management and board of directors about the performance of its loan portfolio.
The Board of Governors of the Federal Reserve System, FDIC, National Credit Union Administration and the Office of the Comptroller of the Currency provided guidance on a new accounting standard introducing a methodology for estimating allowances for credit losses.
Banking regulators proposed revisions to the Consolidated Reports of Condition and Income in response to changes in accounting for credit losses under the Federal Financial Accounting Standards Board's Accounting Standards Update.
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