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
November 07, 2023
2024 Trends & Predictions: Credit Payments
These are challenging times for the issuers of credit cards, the most common form of unsecured debt in the United States. With more than $1 trillion in revolving debt and $4 trilli...
October 17, 2023
Late Fees: A Regulatory Hot Button, Not a Junk Fee
The Biden administration has announced an effort to rid consumers of so-called “junk fees,” and in the context of credit cards, attention is focused on late fees assessed on delinq...
September 05, 2023
The State of the U.S. Credit Card Industry
Overall, the U.S. credit card industry is on sound footing, although downstream economic issues could threaten to disrupt the norm, particularly at the lower end of the market, whe...
Make informed decisions in a digital financial world