CECL: Proven in the Field and Ready for Prime Time
- Date:October 18, 2021
- Author(s):
- Brian Riley
- Research Topic(s):
- Credit
- PAID CONTENT
Overview
Bankcard accounting requirements for recognizing credit losses at top banks became subject to more conservative rules following the Great Recession and Dodd-Frank. The process, which took effect in 4Q 2019, helped the industry prepare for unanticipated losses and was acid-tested during the COVID-19 outbreak. Although credit losses never materialized, top issuers could offset lost revenue from changing consumer purchase trends as they recovered their loan loss reserves in 2021. The new accounting standard, known as Current Expected Credit Loss (CECL), will soon apply to smaller banks and credit unions. Although the process accelerates losses and may seem severe, the policy changes better position banks from failures and, in the long term, protect financial institutions and investors.
Learn More About This Report & Javelin
Related content
March 27, 2024
High-Yield Savings Accounts: An Efficient Way to Fund Credit Card Loans
Credit card lending requires funding, and banks with credit card programs find themselves at an interesting point: The prime rate is at its highest level in decades, and in anticip...
February 22, 2024
Credit Card Lending Needs a Slowdown; Work with Cardholders to Shield Upcoming Risk
Consumer debt is climbing, and for the wrong reason. Consumptive spending is evident on credit cards, and household budgets are under stress, diminishing the ability of consumers t...
February 21, 2024
Capital One and Discover: The Potential to Build a Global Payments Ecosystem with Scale
The Capital One acquisition of Discover, if it gains regulatory approval, will create a global force in payments for acceptance, issuance, and processing. To clear the regulatory h...
Make informed decisions in a digital financial world