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CECL compliance poses challenges for CUs.

The Financial Accounting Standards Board’s Current Expected Credit Losses accounting standard is one of the most significant accounting changes that credit unions have been faced with in recent years. Beginning fiscal year Dec. 15, 2020, these new rules will be effective for U.S. credit unions of all sizes, requiring them to reserve for future losses over the life of the loan at the time of origination. Essentially, this is an attempt on the part of FASB to limit the impact of potential losses from a future financial crisis.

At the center of this change is how credit unions can realistically predict credit losses over the life of a loan and from the moment of origination.

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