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Interagency issuances on credit losses and risk review

The Federal Reserve, FDIC, NCUA, and OCC have approved an Interagency Policy Statement on Allowances for Credit Losses. The statement will promote consistency in the interpretation and application of the Financial Accounting Standards Board's credit losses accounting standard, which introduces the current expected credit losses (CECL) methodology. The statement describes the measurement of expected credit losses using the CECL methodology and updates concepts and practices detailed in existing supervisory guidance that remain applicable.

The agencies also finalized Interagency Guidance on Credit Risk Review Systems. The guidance presents principles for establishing a system of independent, ongoing credit risk review in accordance with safety and soundness standards.

The policy statement and guidance documents will be effective upon publication, which is expected shortly.

PUBLICATION UPDATE: Published and effective on June 1, 2020:

  • Policy Statement on Allowances for Credit Losses - 85 FR 32991
  • Guidance on Credit Risk Review Systems - 85 FR 33278

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