So it included a provision in the fiscal 2020 appropriations bill requiring the U.S. Treasury Department to submit a report to Congress in 2020 on potential negative impacts from CECL.

Rep. Bill Huizenga (R.-Mich.) asked FASB Chairman Russell G. Golden at hearings in the House Financial Services Committee in January 2020 whether he thought the FASB should wait for the results of the study before implementing CECL. Golden said “no” and added that CECL “improves the information to our capital markets.” Rep. Ann Wagner (R.-Mo.) said the new standard could sap $50 billion to $100 billion in loan loss reserves from banks of all sizes.

The new standard is intended to result in greater transparency of expected losses at an earlier date during the life of a loan compared to the current “incurred loss” methodology, which delays recognition until a bank determines a loss is probable. CECL is required to be implemented by public companies that aren’t included as smaller reporting companies in fiscal years beginning after December 15, 2019. Other entities are permitted to wait until their first fiscal year beginning after December 15, 2022.

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