Saturday, July 20, 2024

Week of Dec. 17

In This Issue…

Reminder about Gov.-Elect Stitt’s plans for inaugural festivities
FSOC to meet Wednesday, discuss CECL implementation
FDIC: CECL is no walk in the park
• OBA education corner …

Reminder about Gov.-Elect Stitt’s plans for inaugural festivities

If you’ll remember, last week we noted that bankers have a chance to go together (or contribute directly) to our collective effort to raise at least $10,000 to show industry support for our new governor. This amount will help us sponsor a table at the Inaugural Ball to be held on January 14, 2019.

Each contributing bank – as well as every bank that sponsors its own table – will be recognized at this gala event! And – importantly – corporate contributions are permitted!

We plan to contribute as well, but the more individual banks that can be recognized, the better. So far we’ve been able to raise $2,250 and all we need is another $7,750 to make it happen.

Just seven or eight more banks that are willing to contribute $1,000 each are needed … or 16 banks willing to contribute $500 each … or 31 banks willing to contribute $250 each. Certainly, the OBA will contribute to this effort, but the most important element is recognition for each bank that contributes both at the Ball itself and beforehand to individually show as many banks participating as we can.

Will you help us? Please?

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FSOC to meet Wednesday, discuss CECL implementation

Wednesday, the Financial Stability Oversight Council will meet in executive session to discuss implementation of the Current Expected Credit Loss. The Alliance between ABA and state bankers associations have been active in seeking a delay in CECL’s implementation. We sent a letter to FSOC on Oct. 25 officially and collectively calling for a quantitative impact study to assess the full effects of the FASB’s CECL standard. We urged FSOC to delay the implementation until such a study can be carried out.

Click here to read our letter.

We are sending this information to all members of the Oklahoma delegation today. These are the points to emphasize with our two senators and your congressman if asked:

  • Banks have long been concerned about CECL’s cost and impact on our ability to serve our customers and communities, particularly in times of economic stress.
  • An accounting standard that distorts the economics of lending will divert resources away from critical lending – particularly on mortgages, student loans and small business loans.
  • Because FASB did not conduct a relevant cost benefit/analysis before issuing the standard, regulators have very little information about CECL’s potential economic effect.
  • FSOC has the unique ability to bring the agencies together to study complex regulatory issues like this, and to intervene when appropriate.
  • At a minimum, FSOC should ask FASB to delay implementation of CECL and initiate a comprehensive quantitative impact study to assess the standard’s impact on banks, lending, and the economy before deciding to move forward.

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FDIC: CECL is no walk in the park

You may recall that in April, the Federal Banking Agencies proposed a period of transition to implementing the proposed Current Expected Credit Losses implementation. The proposed new rule was intended to allow for an option to phase-in the new FASB rules to revise capital rules by identifying which credit loss allowances are eligible to be included.

You can read the proposal by clicking here.

Today, the FDIC Board announced it “appreciates” the fact CECL represents a significant change to bank accounting. In our view, it also adversely impacts a bank’s lending activities. After the agency announced the implementation phase-in period, ABA President Rob Nichols issued a statement on behalf of the nation’s banking industry:

“Banks have long been concerned about CECL’s cost and impact on our ability to serve our customers and communities, particularly in times of economic stress. That’s why ABA believes CECL must be delayed until a quantitative impact study can be conducted and the economic consequences of the accounting standard are fully understood.

“We are encouraged that a growing number of policymakers are recognizing the risks posed by CECL, and we will continue our appeal for a thorough review of the standard’s impact on banks, lending, and the broader economy before determining whether implementation should move forward.”

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OBA education corner …

This time next week will be Christmas! SANTA! We know him! But don’t let the holidays take your mind completely off banking issues and continuing education! Take note of the following:

  • Best-Ever Compliance Checklists for Consumer Loans, Jan. 3, webinar — The colorful and easy-to-use checklists are designed to chronologically lead lenders and processors through the various compliance requirements, and financial institutions that properly use these checklists will virtually eliminate compliance errors.
  • IRA Update and Review, Jan. 9, webinar —  The IRS Cost of Living Adjustments were released in October 2018. And, you never know what the 2018 December surprise legislation will bring us.
  • Basic Business Entities & Other Commercial Borrowers, Jan. 9, webinar — This webinar presents a survey of requirements, characteristics, advantages, disadvantages plus creation and documentation issues for the most frequently used types of business entities.
  • 2019 Compliance Updates, Jan. 29-Operations, Tulsa; Jan. 29-Lending, Tulsa; Jan. 30-Operations, Oklahoma City; Jan. 30-Lending, Oklahoma City — The 2019 Compliance Updates will provide a review of issues and concerns facing every bank’s compliance team. The sessions will focus on “hot” topics, trends and areas that may need more emphasis. Common compliance mistakes also will be covered.
  • 2019 OBA Intermediate School, Session I-Feb. 4-8; Session II-June 3-7, Oklahoma City — Presented in two sessions, this school is designed to prepare students to serve effectively and profitably the needs and desires of their banks and the banking public.
  • 2019 OBA Commercial Lending School, March 3-8, Oklahoma City — The OBA Commercial Lending School is an intensive, one-week functional school designed for bankers with a basic understanding of credit and financial analysis. The school will demonstrate how to apply this knowledge in profitable commercial lending situations.

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