Conversations about the Federal Accounting Standards Board’s recent proposal to replace its current Allowance for Loan and Lease Loss model with one that includes “expected credit loss” measurement actually began in 2008. 

In the intervening years, many credit unions found their credit loss forecasts to be inaccurate and saw loan loss reserves playing “catch-up” as actual loan loss experience tended to be a lagging metric.  Moreover, when the tides turned on delinquencies and losses, the historical loan loss experience models suggested that credit unions continue to add to their reserves when in fact the reserves where already more than sufficient.


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