Today, March 19, 2020, FDIC Chairman Jelena McWilliams sent a letter to the Financial Accounting Standard Board (“FASB”), the body that is responsible for establishing U.S. generally accepted accounting practices (“U.S. GAAP”). The Chairman’s letter requests that FASB take three specific actions to ease the impact of certain U.S. GAAP standards in light of the economic conditions created by the COVID-19 pandemic. Specifically, the letter requests that FASB (i) announce that loan modifications offered to borrowers affected by COVID-19 will not be classified as troubled debt restructuring (“TDR”), (ii) provide that banks that are already subject to the current expected credit loss methodology (“CECL”) may postpone CECL implementation, and (ii) delay the ongoing phase-in of CECL.
The three requests are described in more detail below.