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Bank regulators pass CECL capital phase-in rule

U.S. federal financial regulators adopted a final rule that allows banks to phase in the initial capital impact from a new loan loss accounting standard, according to a Dec. 21 release.

The Federal Deposit Insurance Corp. adopted the rule earlier in the week, and as expected, on Dec. 21 the Office of the Comptroller of the Currency and the Federal Reserve Board of Governors also formally approved it. The rule gives banks the option of phasing in the capital hit that the current expected credit loss standard, or CECL, could cause at adoption. The rule is effective April 1, 2019. Banks that choose to early adopt CECL can implement the rule starting in the first quarter of 2019.

The final rule also revises the U.S. federal banking agencies' regulatory capital rule, stress-testing rules and regulatory disclosure requirements to reflect CECL.