Regulatory AlertsSR 20-9: Joint Statement on Interaction of the Regulatory Capital Rule Revised Transition of the CECL Methodology for Allowances with Section 4014 of the CARES Act
The Federal Reserve Board and other federal banking agencies issued a joint statement to clarify the interaction between the CECL interim final rule and Section 4014 of the CARES Act for regulatory capital purposes. This guidance applies to all Federal Reserve-supervised institutions required to adopt the Current Expected Credit Losses methodology in 2020 under U.S. GAAP, regardless of asset size. The agencies direct Reserve Banks to distribute the statement to supervised institutions and supervisory staff to ensure consistent implementation of these capital requirements.
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SR 20-9: Joint Statement on Interaction of the Regulatory Capital Rule: Revised Transition of the CECL Methodology for Allowances with Section 4014 of the Coronavirus Aid, Relief, and Economic Security Act
BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM WASHINGTON, D.C. 20551
DIVISION OF SUPERVISION AND REGULATION
SR 20-9
March 31, 2020
TO THE OFFICER IN CHARGE OF SUPERVISION AT EACH FEDERAL RESERVE BANK
SUBJECT:
Joint Statement on Interaction of the Regulatory Capital Rule: Revised Transition of the CECL Methodology for Allowances with Section 4014 of the Coronavirus Aid, Relief, and Economic Security Act
Applicability: The Joint Statement is relevant to Federal Reserve-supervised institutions that are required to adopt CECL in 2020 in accordance with U.S. GAAP, regardless of asset size.
The Federal Reserve Board and the other federal banking agencies are issuing this joint statement to clarify the interaction between the Revised Transition of the Current Expected Credit Losses Methodology for Allowances interim final rule (CECL IFR) 1 and the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) 2 for purposes of regulatory capital requirements.
Reserve Banks are asked to distribute this letter to the Federal Reserve-supervised institutions in their districts, as well as to their supervisory and examination staff. Questions may be sent via the Board’s public website. 3
signed by Michael S. Gibson Director Division of Supervision and Regulation
Attachments:
Joint Statement on Interaction of the Regulatory Capital Rule: Revised Transition of the CECL Methodology for Allowances with Section 4014 of the Coronavirus Aid, Relief, and Economic Security Act .
Notes:
Interagency Press Release: https://www.federalreserve.gov/newsevents/pressreleases/bcreg20200327a.htm
Return to text.
Coronavirus Aid, Relief, and Economic Security Act, Pub. L. No. 116-136, section 4014, 134 Stat. 281 (March 27, 2020). Return to text.
See
http://www.federalreserve.gov/apps/contactus/feedback.aspx . Return to text.
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Last Update: March 31, 2020