The Federal Deposit Insurance Corp. chief has fired up what could be the opening barrage in the war over accounting supremacy.
Specifically, FDIC Chairman Jelena McWilliams urged the Financial Accounting Standards Board to suspend or defer the adoption by banks of the new Current Expected Credit Losses methodology for recording losses.
When or if CECL becomes effective, it would require a bank to estimate and book the losses it might incur over the life of a loan. The bank would not be allowed to estimate and book the interest it would receive on the loan even though that is a much more certain calculation than estimating losses.
Consider the absurdity of federal agencies, such as the Federal Reserve, the FDIC and the Comptroller of the Currency, having to go to FASB hat-in-hand to protect the financial integrity of the U.S. banking system.
All hands are on deck in Washington as policymakers are trying to determine how long the pandemic will last; how many lives will be lost or debilitated as a result; and how devastating the economic damage might be.
And yet, the federal agencies established by Congress to implement protections over the banking system and economy must go on bended knee to a self-appointed group of accountants (FASB), who are not subject to government oversight or regulation, not even the Administrative Procedures Act and Freedom of Information Act.