House lawmakers offer CECL, pot banking updates at GAC
WASHINGTON — House lawmakers addressing the Credit Union National Associatin's Governmental Affairs Conference on Wednesday offered updates on key policy issues in the financial services sector, including a controversial new accounting requirement for loan losses, and the legislative stalemate over cannabis banking.
Community bankers and credit unions have been sounding the alarm on the potential negative repercussions of the Financial Accounting Standards Board’s Current Expected Credit Losses accounting standard, which financial institutions must comply with by 2023. Last week the National Credit Union Administration board said it expects to consider a rule allowing credit unions to phase in CECL's day-one impact over three years, similar to a regulation banking regulators adopted in November 2018.
Rep. Blaine Luetkemeyer, R-Mo., urged credit unions to ask their lawmakers to support legislation requiring the Securities and Exchange Commission and other federal agencies to study CECL before it takes effect.
“We have got to be pushing back on this. … This is going to be devastating I think to our economy as a whole,” Luetkemeyer said during remarks at GAC on Wednesday.
Meanwhile, Rep. Steve Stivers, R-Ohio, signaled some divisions within his own party on legislation to enable banks and credit unions to offer financial services to cannabis businesses in states that have legalized marijuana.
The House passed the Secure and Fair Enforcement Act, or SAFE Banking Act, last year, which would bar federal regulators from penalizing banks and credit unions that serve state-compliant cannabis businesses. But Senate Banking Committee Chairman Mike Crapo, R-Idaho, outlined a number of concerns with that bill.
Crapo has said he wants to prevent financial institutions from servicing businesses that produce cannabis with high THC potency. (THC is the main psychoactive compound in cannabis.)
But Stivers, speaking at the conference, said it would be inappropriate for banks and CUs to have to determine THC potency levels in deciding which cannabis businesses they can serve.
“One thing that I talked to [Crapo] about and said, ‘We can’t have this’ is: We can’t make the banks and credit unions into the THC police,” Stivers said. “One of the things he wants to do is create a THC limit. That doesn’t belong in a banking bill.”
Rep. Katie Porter, D-Calif., also addressed the GAC crowd, including an announcement introducing a bill that would limit required annual meetings for credit union boards of directors.
“There is absolutely no reason that we ought to put more burden on our credit unions than we do on our large banks,” Porter said.