Recent FASB Updates Related to CECL

Implementing CECL has brought about a host of accounting and other technical questions. The Financial Accounting Standards Board (FASB) works with the industry through a series of meetings to identify these questions, evaluate industry feedback, and periodically issue clarifying statements. We will continuously publish summarized points of interest from these meetings as they arise.

Basel III Capital Requirements and CECL

With the upcoming implementation of IFRS 9 in 2018, the discussion of Basel III capital requirements is gaining importance. The relationship between capital and provisions for loan-loss has been a topic of discussion as the world moves towards mandating loss provisioning by looking out over the life of a financial asset. How will this new credit-loss approach for provisioning affect regulatory capital?

Who Will Pay for Ballooning Student Loan Debt?

As the amount of student loan debt continues to balloon, there is growing national attention on this subject, with attempts to better educate potential borrowers. However, there is clearly a need to further improve and assist prospective college students and their families to make informed financial decisions about the true cost of higher education.  With student loan repayment terms extending up to 25 years (and 30 years for consolidated loans), the long-term effect of this debt on students and the future of our nation is concerning.

FHFA Releases “An Update on the Common Securitization Platform”

On September 15, 2015 the Federal Housing Finance Agency released an update on the Common Securitization Platform (CSP).  The report can be found at FHFA’s Common Securitization Platform website. Some of the highlights of the FHFA update are: Common Securitization Solutions, LLC (CSS) was established in October 2013 as an independent, jointly-owned business entity by Fannie Mae and Freddie Mac. (pg. 6) From 2012 through mid-2015, the Enterprises had invested $146 million in CSS (pg. 2)  In July 2015, CSS, Freddie Mac and Fannie Mae convened a Single Security/CSP Industry Advisory Group (pg. 19) All CSS employees are currently employees of either Fannie Mae or Freddie Mac.  CSS plans to convert its associates to CSS employees in the first half of 2016 (pg.2)