17723Federal Register / Vol. 85, No. 62 / Tuesday, March 31, 2020 / Rules and Regulations
DEPARTMENT OF TREASURY
Office of the Comptroller of the
Currency
12 CFR Part 3
[Docket ID OCC–2020–0010]
RIN 1557–AE82
FEDERAL RESERVE SYSTEM
12 CFR Part 217
[Regulation Q; Docket No. R–1708]
RIN 7100–AF82
FEDERAL DEPOSIT INSURANCE
CORPORATION
12 CFR Part 324
RIN 3064–AF42
Regulatory Capital Rule: Revised
Transition of the Current Expected
Credit Losses Methodology for
Allowances
AGENCY: Office of the Comptroller of the
Currency, Treasury; the Board of
Governors of the Federal Reserve
System; and the Federal Deposit
Insurance Corporation.
ACTION: Interim final rule, request for
comment.
SUMMARY: The Office of the Comptroller
of the Currency, the Board of Governors
of the Federal Reserve System, and the
Federal Deposit Insurance Corporation
(collectively, the agencies) are inviting
comment on an interim final rule that
delays the estimated impact on
regulatory capital stemming from the
implementation of Accounting
Standards Update No. 2016–13,
Financial Instruments—Credit Losses,
Topic 326, Measurement of Credit
Losses on Financial Instruments (CECL).
The interim final rule provides banking
organizations that implement CECL
before the end of 2020 the option to
delay for two years an estimate of
CECL’s effect on regulatory capital,
relative to the incurred loss
methodology’s effect on regulatory
capital, followed by a three-year
transition period. The agencies are
providing this relief to allow such
banking organizations to better focus on
supporting lending to creditworthy
households and businesses in light of
recent strains on the U.S. economy as a
result of the coronavirus disease 2019
(COVID–19), while also maintaining the
quality of regulatory capital.
DATES: Effective date: The interim final
rule is effective March 31, 2020.
Comment date: Comments on the
interim final rule must be received no
later than May 15, 2020.
ADDRESSES: Interested parties are
encouraged to submit written comments
jointly to all of the agencies.
Commenters are encouraged to use the
title ‘‘Regulatory Capital Rule: Revised
Transition of the Current Expected
Credit Losses Methodology for
Allowances’’ to facilitate the
organization and distribution of
comments among the agencies.
Commenters are also encouraged to
identify the number of the specific
question for comment to which they are
responding. Comments should be
directed to:
OCC: You may submit comments to
the OCC by any of the methods set forth
below. Commenters are encouraged to
submit comments through the Federal
eRulemaking Portal or email, if possible.
Please use the title ‘‘Regulatory Capital
Rule: Revised Transition of the Current
Expected Credit Losses Methodology for
Allowances’’ to facilitate the
organization and distribution of the
comments. You may submit comments
by any of the following methods:
Federal eRulemaking Portal—
‘‘Regulations.gov Classic or
Regulations.gov Beta’’
Regulations.gov Classic: Go to https://
www.regulations.gov/. Enter ‘‘Docket ID
OCC–2020–0010’’ in the Search Box and
click ‘‘Search.’’ Click on ‘‘Comment
Now’’ to submit public comments. For
help with submitting effective
comments please click on ‘‘View
Commenter’s Checklist.’’ Click on the
‘‘Help’’ tab on the Regulations.gov home
page to get information on using
Regulations.gov, including instructions
for submitting public comments.
Regulations.gov Beta: Go to https://
beta.regulations.gov/ or click ‘‘Visit
New Regulations.gov Site’’ from the
Regulations.gov Classic homepage.
Enter ‘‘Docket ID OCC–2020–0010’’ in
the Search Box and click ‘‘Search.’’
Public comments can be submitted via
the ‘‘Comment’’ box below the
displayed document information or by
clicking on the document title and then
clicking the ‘‘Comment’’ box on the top-
left side of the screen. For help with
submitting effective comments please
click on ‘‘Commenter’s Checklist.’’ For
assistance with the Regulations.gov Beta
site, please call (877) 378–5457 (toll
free) or (703) 454–9859 Monday–Friday,
9 a.m.–5 p.m. ET or email regulations@
erulemakinghelpdesk.com.
• E-mail: regs.comments@
occ.treas.gov.
• Mail: Chief Counsel’s Office, Office
of the Comptroller of the Currency, 400
7th Street SW, Suite 3E–218,
Washington, DC 20219.
Instructions: You must include
‘‘OCC’’ as the agency name and ‘‘Docket
ID OCC–2020–0010’’ in your comment.
In general, the OCC will enter all
comments received into the docket and
publish the comments on the
Regulations.gov website without
change, including any business or
personal information that you provide
such as name and address information,
email addresses, or phone numbers.
Comments received, including
attachments and other supporting
materials, are part of the public record
and subject to public disclosure. Do not
include any information in your
comment or supporting materials that
you consider confidential or
inappropriate for public disclosure.
You may review comments and other
related materials that pertain to this
rulemaking action by any of the
following methods:
• Viewing Comments Electronically—
Regulations.gov Classic or
Regulations.gov Beta:
Regulations.gov Classic: Go to https://
www.regulations.gov/. Enter ‘‘Docket ID
OCC–2020–0010’’ in the Search box and
click ‘‘Search.’’ Click on ‘‘Open Docket
Folder’’ on the right side of the screen.
Comments and supporting materials can
be viewed and filtered by clicking on
‘‘View all documents and comments in
this docket’’ and then using the filtering
tools on the left side of the screen. Click
on the ‘‘Help’’ tab on the
Regulations.gov home page to get
information on using Regulations.gov.
The docket may be viewed after the
close of the comment period in the same
manner as during the comment period.
Regulations.gov Beta: Go to https://
beta.regulations.gov/ or click ‘‘Visit
New Regulations.gov Site’’ from the
Regulations.gov Classic homepage.
Enter ‘‘Docket ID OCC–2020–0010’’ in
the Search Box and click ‘‘Search.’’
Click on the ‘‘Comments’’ tab.
Comments can be viewed and filtered
by clicking on the ‘‘Sort By’’ drop-down
on the right side of the screen or the
‘‘Refine Results’’ options on the left side
of the screen. Supporting materials can
be viewed by clicking on the
‘‘Documents’’ tab and filtered by
clicking on the ‘‘Sort By’’ drop-down on
the right side of the screen or the
‘‘Refine Results’’ options on the left side
of the screen. For assistance with the
Regulations.gov Beta site, please call
(877) 378–5457 (toll free) or (703) 454–
9859 Monday–Friday, 9 a.m.–5 p.m. ET
or email regulations@
erulemakinghelpdesk.com.
VerDate Sep<11>2014 16:11 Mar 30, 2020 Jkt 250001 PO 00000 Frm 00003 Fmt 4700 Sfmt 4700 E:\FR\FM\31MRR1.SGM 31MRR1
jbell on DSKJLSW7X2PROD with RULES
DEPARTMENT OF TREASURY
Office of the Comptroller of the
Currency
12 CFR Part 3
[Docket ID OCC–2020–0010]
RIN 1557–AE82
FEDERAL RESERVE SYSTEM
12 CFR Part 217
[Regulation Q; Docket No. R–1708]
RIN 7100–AF82
FEDERAL DEPOSIT INSURANCE
CORPORATION
12 CFR Part 324
RIN 3064–AF42
Regulatory Capital Rule: Revised
Transition of the Current Expected
Credit Losses Methodology for
Allowances
AGENCY: Office of the Comptroller of the
Currency, Treasury; the Board of
Governors of the Federal Reserve
System; and the Federal Deposit
Insurance Corporation.
ACTION: Interim final rule, request for
comment.
SUMMARY: The Office of the Comptroller
of the Currency, the Board of Governors
of the Federal Reserve System, and the
Federal Deposit Insurance Corporation
(collectively, the agencies) are inviting
comment on an interim final rule that
delays the estimated impact on
regulatory capital stemming from the
implementation of Accounting
Standards Update No. 2016–13,
Financial Instruments—Credit Losses,
Topic 326, Measurement of Credit
Losses on Financial Instruments (CECL).
The interim final rule provides banking
organizations that implement CECL
before the end of 2020 the option to
delay for two years an estimate of
CECL’s effect on regulatory capital,
relative to the incurred loss
methodology’s effect on regulatory
capital, followed by a three-year
transition period. The agencies are
providing this relief to allow such
banking organizations to better focus on
supporting lending to creditworthy
households and businesses in light of
recent strains on the U.S. economy as a
result of the coronavirus disease 2019
(COVID–19), while also maintaining the
quality of regulatory capital.
DATES: Effective date: The interim final
rule is effective March 31, 2020.
Comment date: Comments on the
interim final rule must be received no
later than May 15, 2020.
ADDRESSES: Interested parties are
encouraged to submit written comments
jointly to all of the agencies.
Commenters are encouraged to use the
title ‘‘Regulatory Capital Rule: Revised
Transition of the Current Expected
Credit Losses Methodology for
Allowances’’ to facilitate the
organization and distribution of
comments among the agencies.
Commenters are also encouraged to
identify the number of the specific
question for comment to which they are
responding. Comments should be
directed to:
OCC: You may submit comments to
the OCC by any of the methods set forth
below. Commenters are encouraged to
submit comments through the Federal
eRulemaking Portal or email, if possible.
Please use the title ‘‘Regulatory Capital
Rule: Revised Transition of the Current
Expected Credit Losses Methodology for
Allowances’’ to facilitate the
organization and distribution of the
comments. You may submit comments
by any of the following methods:
Federal eRulemaking Portal—
‘‘Regulations.gov Classic or
Regulations.gov Beta’’
Regulations.gov Classic: Go to https://
www.regulations.gov/. Enter ‘‘Docket ID
OCC–2020–0010’’ in the Search Box and
click ‘‘Search.’’ Click on ‘‘Comment
Now’’ to submit public comments. For
help with submitting effective
comments please click on ‘‘View
Commenter’s Checklist.’’ Click on the
‘‘Help’’ tab on the Regulations.gov home
page to get information on using
Regulations.gov, including instructions
for submitting public comments.
Regulations.gov Beta: Go to https://
beta.regulations.gov/ or click ‘‘Visit
New Regulations.gov Site’’ from the
Regulations.gov Classic homepage.
Enter ‘‘Docket ID OCC–2020–0010’’ in
the Search Box and click ‘‘Search.’’
Public comments can be submitted via
the ‘‘Comment’’ box below the
displayed document information or by
clicking on the document title and then
clicking the ‘‘Comment’’ box on the top-
left side of the screen. For help with
submitting effective comments please
click on ‘‘Commenter’s Checklist.’’ For
assistance with the Regulations.gov Beta
site, please call (877) 378–5457 (toll
free) or (703) 454–9859 Monday–Friday,
9 a.m.–5 p.m. ET or email regulations@
erulemakinghelpdesk.com.
• E-mail: regs.comments@
occ.treas.gov.
• Mail: Chief Counsel’s Office, Office
of the Comptroller of the Currency, 400
7th Street SW, Suite 3E–218,
Washington, DC 20219.
Instructions: You must include
‘‘OCC’’ as the agency name and ‘‘Docket
ID OCC–2020–0010’’ in your comment.
In general, the OCC will enter all
comments received into the docket and
publish the comments on the
Regulations.gov website without
change, including any business or
personal information that you provide
such as name and address information,
email addresses, or phone numbers.
Comments received, including
attachments and other supporting
materials, are part of the public record
and subject to public disclosure. Do not
include any information in your
comment or supporting materials that
you consider confidential or
inappropriate for public disclosure.
You may review comments and other
related materials that pertain to this
rulemaking action by any of the
following methods:
• Viewing Comments Electronically—
Regulations.gov Classic or
Regulations.gov Beta:
Regulations.gov Classic: Go to https://
www.regulations.gov/. Enter ‘‘Docket ID
OCC–2020–0010’’ in the Search box and
click ‘‘Search.’’ Click on ‘‘Open Docket
Folder’’ on the right side of the screen.
Comments and supporting materials can
be viewed and filtered by clicking on
‘‘View all documents and comments in
this docket’’ and then using the filtering
tools on the left side of the screen. Click
on the ‘‘Help’’ tab on the
Regulations.gov home page to get
information on using Regulations.gov.
The docket may be viewed after the
close of the comment period in the same
manner as during the comment period.
Regulations.gov Beta: Go to https://
beta.regulations.gov/ or click ‘‘Visit
New Regulations.gov Site’’ from the
Regulations.gov Classic homepage.
Enter ‘‘Docket ID OCC–2020–0010’’ in
the Search Box and click ‘‘Search.’’
Click on the ‘‘Comments’’ tab.
Comments can be viewed and filtered
by clicking on the ‘‘Sort By’’ drop-down
on the right side of the screen or the
‘‘Refine Results’’ options on the left side
of the screen. Supporting materials can
be viewed by clicking on the
‘‘Documents’’ tab and filtered by
clicking on the ‘‘Sort By’’ drop-down on
the right side of the screen or the
‘‘Refine Results’’ options on the left side
of the screen. For assistance with the
Regulations.gov Beta site, please call
(877) 378–5457 (toll free) or (703) 454–
9859 Monday–Friday, 9 a.m.–5 p.m. ET
or email regulations@
erulemakinghelpdesk.com.
VerDate Sep<11>2014 16:11 Mar 30, 2020 Jkt 250001 PO 00000 Frm 00003 Fmt 4700 Sfmt 4700 E:\FR\FM\31MRR1.SGM 31MRR1
jbell on DSKJLSW7X2PROD with RULES
17724 Federal Register / Vol. 85, No. 62 / Tuesday, March 31, 2020 / Rules and Regulations
1 ASU 2016–13 covers measurement of credit
losses on financial instruments and includes three
subtopics within Topic 326: (i) Subtopic 326–10
Financial Instruments—Credit Losses—Overall; (ii)
Subtopic 326–20: Financial Instruments—Credit
Losses—Measured at Amortized Cost; and (iii)
Subtopic 326–30: Financial Instruments—Credit
Losses—Available-for-Sale Debt Securities.
2 Banking organizations subject to the capital rule
include national banks, state member banks, state
nonmember banks, savings associations, and top-
tier bank holding companies and savings and loan
holding companies domiciled in the United States
not subject to the Board’s Small Bank Holding
Company Policy Statement (12 CFR part 225,
appendix C), but exclude certain savings and loan
holding companies that are substantially engaged in
insurance underwriting or commercial activities or
that are estate trusts, and bank holding companies
and savings and loan holding companies that are
employee stock ownership plans.
3 84 FR 4222 (February 14, 2019).
4 12 CFR part 3 (OCC); 12 CFR part 217 (Board);
12 CFR part 324 (FDIC).
5 See 12 U.S.C. 1831n; See also current versions
of the following: Instructions for Preparation of
Consolidated Financial Statements for Holding
Companies, Reporting Form FR Y–9C; Instructions
The docket may be viewed after the
close of the comment period in the same
manner as during the comment period.
Board: You may submit comments,
identified by Docket No. R–1708 and
RIN 7100–AF82, by any of the following
methods:
• Agency Website: http://
www.federalreserve.gov. Follow the
instructions for submitting comments at
https://www.federalreserve.gov/apps/
foia/proposedregs.aspx.
• Email: regs.comments@
federalreserve.gov. Include docket
number and RIN in the subject line of
the message.
• FAX: (202) 452–3819 or (202) 452–
3102.
• Mail: Ann E. Misback, Secretary,
Board of Governors of the Federal
Reserve System, 20th Street and
Constitution Avenue NW, Washington,
DC 20551.
All public comments are available
from the Board’s website at http://
www.federalreserve.gov/generalinfo/
foia/ProposedRegs.cfm as submitted,
unless modified for technical reasons or
to remove sensitive personally
identifiable information at the
commenter’s request. Public comments
may also be viewed electronically or in
paper form in Room 146, 1709 New
York Avenue NW, Washington, DC
20006, between 9:00 a.m. and 5:00 p.m.
on weekdays.
FDIC: You may submit comments,
identified by RIN 3064–AF42, by any of
the following methods:
• Agency Website: https://
www.fdic.gov/regulations/laws/federal/.
Follow the instructions for submitting
comments on the Agency website.
• Email: comments@fdic.gov. Include
the RIN 3064–AF42 in the subject line
of the message.
• Mail: Robert E. Feldman, Executive
Secretary, Attention: Comments/Legal
ESS, Federal Deposit Insurance
Corporation, 550 17th Street NW,
Washington, DC 20429.
• Hand Delivery/Courier: Comments
may be hand-delivered to the guard
station at the rear of the 550 17th Street
NW, building (located on F Street) on
business days between 7:00 a.m. and
5:00 p.m.
Instructions: Comments submitted
must include ‘‘FDIC’’ and ‘‘RIN 3064–
AF42.’’ Comments received will be
posted without change to https://
www.fdic.gov/regulations/laws/federal/,
including any personal information
provided.
FOR FURTHER INFORMATION CONTACT:
OCC: Margot Schwadron, Director, or
Benjamin Pegg, Risk Expert, Capital and
Regulatory Policy, (202) 649–6370; or
Kevin Korzeniewski, Counsel, or Marta
Stewart-Bates, Senior Attorney, Chief
Counsel’s Office, (202) 649–5490, for
persons who are deaf or hearing
impaired, TTY, (202) 649–5597, Office
of the Comptroller of the Currency, 400
7th Street SW, Washington, DC 20219.
Board: Constance M. Horsley, Deputy
Associate Director, (202) 452–5239; Juan
C. Climent, Manager, (202) 872–7526;
Andrew Willis, Lead Financial
Institution Policy Analyst, (202) 912–
4323; or Michael Ofori-Kuragu, Senior
Financial Institution Policy Analyst II,
(202) 475–6623, Division of Supervision
and Regulation; or Benjamin W.
McDonough, Assistant General Counsel,
(202) 452–2036; David W. Alexander,
Senior Counsel, (202) 452–2877; or
Jonah Kind, Senior Attorney, (202) 452–
2045, Legal Division, Board of
Governors of the Federal Reserve
System, 20th and C Streets NW,
Washington, DC 20551. For the hearing
impaired only, Telecommunication
Device for the Deaf (TDD), (202) 263–
4869.
FDIC: Bobby R. Bean, Associate
Director, bbean@fdic.gov; Benedetto
Bosco, Chief, Capital Policy Section,
bbosco@fdic.gov; Noah Cuttler, Senior
Policy Analyst, ncuttler@fdic.gov;
Andrew Carayiannis, Senior Policy
Analyst, acarayiannis@fdic.gov;
regulatorycapital@fdic.gov; Capital
Markets Branch, Division of Risk
Management Supervision, (202) 898–
6888; or Michael Phillips, Counsel,
mphillips@fdic.gov; Catherine Wood,
Counsel, cawood@fdic.gov; Francis Kuo,
Counsel, fkuo@fdic.gov; Supervision
and Legislation Branch, Legal Division,
Federal Deposit Insurance Corporation,
550 17th Street NW, Washington, DC
20429. For the hearing impaired only,
Telecommunication Device for the Deaf
(TDD), (800) 925–4618.
SUPPLEMENTARY INFORMATION:
Table of Contents
I. Background
II. The Interim Final Rule
A. Approximating the Impact of CECL
B. Mechanics of the Five-Year Transition
Option
C. Other Key Revisions
III. Impact Assessment
IV. Administrative Law Matters
A. Administrative Procedure Act
B. Congressional Review Act
C. Paperwork Reduction Act
D. Regulatory Flexibility Act
E. Riegle Community Development and
Regulatory Improvement Act of 1994
F. Plain Language
G. Unfunded Mandates Reform Act
I. Background
In 2016, the Financial Accounting
Standards Board issued Accounting
Standards Update No. 2016–13,
Financial Instruments—Credit Losses,
Topic 326, Measurement of Credit
Losses on Financial Instruments.1 The
update resulted in significant changes to
credit loss accounting under U.S.
generally accepted accounting
principles (U.S. GAAP). The revisions to
credit loss accounting under U.S. GAAP
included the introduction of the current
expected credit losses methodology
(CECL), which replaces the incurred
loss methodology for financial assets
measured at amortized cost. For these
assets, CECL requires banking
organizations 2 to recognize lifetime
expected credit losses and to
incorporate reasonable and supportable
forecasts in developing an estimate of
lifetime expected credit losses, while
also maintaining the current
requirement that banking organizations
consider past events and current
conditions.
On February 14, 2019, the Office of
the Comptroller of the Currency (OCC),
the Board of Governors of the Federal
Reserve System (Board), and the Federal
Deposit Insurance Corporation (FDIC)
(collectively, the agencies) issued a final
rule that revised certain regulations to
account for the aforementioned changes
to credit loss accounting under U.S.
GAAP, including CECL (the 2019 CECL
rule).3 The 2019 CECL rule revised the
agencies’ regulatory capital rule (capital
rule),4 stress testing rules, and
regulatory disclosure requirements to
reflect CECL, and made conforming
amendments to other regulations that
reference credit loss allowances. The
2019 CECL rule applies to banking
organizations that file regulatory reports
that are uniform and consistent with
U.S. GAAP,5 including banking
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1 ASU 2016–13 covers measurement of credit
losses on financial instruments and includes three
subtopics within Topic 326: (i) Subtopic 326–10
Financial Instruments—Credit Losses—Overall; (ii)
Subtopic 326–20: Financial Instruments—Credit
Losses—Measured at Amortized Cost; and (iii)
Subtopic 326–30: Financial Instruments—Credit
Losses—Available-for-Sale Debt Securities.
2 Banking organizations subject to the capital rule
include national banks, state member banks, state
nonmember banks, savings associations, and top-
tier bank holding companies and savings and loan
holding companies domiciled in the United States
not subject to the Board’s Small Bank Holding
Company Policy Statement (12 CFR part 225,
appendix C), but exclude certain savings and loan
holding companies that are substantially engaged in
insurance underwriting or commercial activities or
that are estate trusts, and bank holding companies
and savings and loan holding companies that are
employee stock ownership plans.
3 84 FR 4222 (February 14, 2019).
4 12 CFR part 3 (OCC); 12 CFR part 217 (Board);
12 CFR part 324 (FDIC).
5 See 12 U.S.C. 1831n; See also current versions
of the following: Instructions for Preparation of
Consolidated Financial Statements for Holding
Companies, Reporting Form FR Y–9C; Instructions
The docket may be viewed after the
close of the comment period in the same
manner as during the comment period.
Board: You may submit comments,
identified by Docket No. R–1708 and
RIN 7100–AF82, by any of the following
methods:
• Agency Website: http://
www.federalreserve.gov. Follow the
instructions for submitting comments at
https://www.federalreserve.gov/apps/
foia/proposedregs.aspx.
• Email: regs.comments@
federalreserve.gov. Include docket
number and RIN in the subject line of
the message.
• FAX: (202) 452–3819 or (202) 452–
3102.
• Mail: Ann E. Misback, Secretary,
Board of Governors of the Federal
Reserve System, 20th Street and
Constitution Avenue NW, Washington,
DC 20551.
All public comments are available
from the Board’s website at http://
www.federalreserve.gov/generalinfo/
foia/ProposedRegs.cfm as submitted,
unless modified for technical reasons or
to remove sensitive personally
identifiable information at the
commenter’s request. Public comments
may also be viewed electronically or in
paper form in Room 146, 1709 New
York Avenue NW, Washington, DC
20006, between 9:00 a.m. and 5:00 p.m.
on weekdays.
FDIC: You may submit comments,
identified by RIN 3064–AF42, by any of
the following methods:
• Agency Website: https://
www.fdic.gov/regulations/laws/federal/.
Follow the instructions for submitting
comments on the Agency website.
• Email: comments@fdic.gov. Include
the RIN 3064–AF42 in the subject line
of the message.
• Mail: Robert E. Feldman, Executive
Secretary, Attention: Comments/Legal
ESS, Federal Deposit Insurance
Corporation, 550 17th Street NW,
Washington, DC 20429.
• Hand Delivery/Courier: Comments
may be hand-delivered to the guard
station at the rear of the 550 17th Street
NW, building (located on F Street) on
business days between 7:00 a.m. and
5:00 p.m.
Instructions: Comments submitted
must include ‘‘FDIC’’ and ‘‘RIN 3064–
AF42.’’ Comments received will be
posted without change to https://
www.fdic.gov/regulations/laws/federal/,
including any personal information
provided.
FOR FURTHER INFORMATION CONTACT:
OCC: Margot Schwadron, Director, or
Benjamin Pegg, Risk Expert, Capital and
Regulatory Policy, (202) 649–6370; or
Kevin Korzeniewski, Counsel, or Marta
Stewart-Bates, Senior Attorney, Chief
Counsel’s Office, (202) 649–5490, for
persons who are deaf or hearing
impaired, TTY, (202) 649–5597, Office
of the Comptroller of the Currency, 400
7th Street SW, Washington, DC 20219.
Board: Constance M. Horsley, Deputy
Associate Director, (202) 452–5239; Juan
C. Climent, Manager, (202) 872–7526;
Andrew Willis, Lead Financial
Institution Policy Analyst, (202) 912–
4323; or Michael Ofori-Kuragu, Senior
Financial Institution Policy Analyst II,
(202) 475–6623, Division of Supervision
and Regulation; or Benjamin W.
McDonough, Assistant General Counsel,
(202) 452–2036; David W. Alexander,
Senior Counsel, (202) 452–2877; or
Jonah Kind, Senior Attorney, (202) 452–
2045, Legal Division, Board of
Governors of the Federal Reserve
System, 20th and C Streets NW,
Washington, DC 20551. For the hearing
impaired only, Telecommunication
Device for the Deaf (TDD), (202) 263–
4869.
FDIC: Bobby R. Bean, Associate
Director, bbean@fdic.gov; Benedetto
Bosco, Chief, Capital Policy Section,
bbosco@fdic.gov; Noah Cuttler, Senior
Policy Analyst, ncuttler@fdic.gov;
Andrew Carayiannis, Senior Policy
Analyst, acarayiannis@fdic.gov;
regulatorycapital@fdic.gov; Capital
Markets Branch, Division of Risk
Management Supervision, (202) 898–
6888; or Michael Phillips, Counsel,
mphillips@fdic.gov; Catherine Wood,
Counsel, cawood@fdic.gov; Francis Kuo,
Counsel, fkuo@fdic.gov; Supervision
and Legislation Branch, Legal Division,
Federal Deposit Insurance Corporation,
550 17th Street NW, Washington, DC
20429. For the hearing impaired only,
Telecommunication Device for the Deaf
(TDD), (800) 925–4618.
SUPPLEMENTARY INFORMATION:
Table of Contents
I. Background
II. The Interim Final Rule
A. Approximating the Impact of CECL
B. Mechanics of the Five-Year Transition
Option
C. Other Key Revisions
III. Impact Assessment
IV. Administrative Law Matters
A. Administrative Procedure Act
B. Congressional Review Act
C. Paperwork Reduction Act
D. Regulatory Flexibility Act
E. Riegle Community Development and
Regulatory Improvement Act of 1994
F. Plain Language
G. Unfunded Mandates Reform Act
I. Background
In 2016, the Financial Accounting
Standards Board issued Accounting
Standards Update No. 2016–13,
Financial Instruments—Credit Losses,
Topic 326, Measurement of Credit
Losses on Financial Instruments.1 The
update resulted in significant changes to
credit loss accounting under U.S.
generally accepted accounting
principles (U.S. GAAP). The revisions to
credit loss accounting under U.S. GAAP
included the introduction of the current
expected credit losses methodology
(CECL), which replaces the incurred
loss methodology for financial assets
measured at amortized cost. For these
assets, CECL requires banking
organizations 2 to recognize lifetime
expected credit losses and to
incorporate reasonable and supportable
forecasts in developing an estimate of
lifetime expected credit losses, while
also maintaining the current
requirement that banking organizations
consider past events and current
conditions.
On February 14, 2019, the Office of
the Comptroller of the Currency (OCC),
the Board of Governors of the Federal
Reserve System (Board), and the Federal
Deposit Insurance Corporation (FDIC)
(collectively, the agencies) issued a final
rule that revised certain regulations to
account for the aforementioned changes
to credit loss accounting under U.S.
GAAP, including CECL (the 2019 CECL
rule).3 The 2019 CECL rule revised the
agencies’ regulatory capital rule (capital
rule),4 stress testing rules, and
regulatory disclosure requirements to
reflect CECL, and made conforming
amendments to other regulations that
reference credit loss allowances. The
2019 CECL rule applies to banking
organizations that file regulatory reports
that are uniform and consistent with
U.S. GAAP,5 including banking
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