The Office of the Comptroller of the Currency, the Federal Reserve Board, and the FDIC (collectively, the "agencies") adopted a final rule to provide banking organizations the option to "phase in over a three-year period the day-one" regulatory capital effects of the "Current Expected Credit Losses" ("CECL") methodology. In 2016, the Financial Accounting Standards Board released a new expected credit loss accounting standard which introduced the CECL for estimating allowances for credit losses.
The final rule addressed changes to credit loss accounting under U.S. generally accepted accounting principles, which includes banking organizations' implementation of the CECL. The final rule modifies the agencies' regulatory capital rule, stress-testing rules and regulatory disclosure requirements to reflect CECL.
The final rule will become effective on April 1, 2019. The agencies also noted that banking organizations may choose to adopt the final rule prior to that date.
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