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FDIC adopts final rule to address credit loss accounting changes under GAAP

The Federal Deposit Insurance Corp. adopted a final rule to address changes to credit loss accounting under the U.S. generally accepted accounting principles, effective April 1, 2019.

This includes banks' implementation of the current expected credit losses methodology, or CECL. The final rule provides banks the option to phase in, over a three-year period, the day-one adverse effects on regulatory capital that could arise from adoption of the new accounting standard.

The final rule also revises the U.S. federal banking agencies' regulatory capital rule, stress-testing rules and regulatory disclosure requirements to reflect current expected credit losses, including conforming amendments to other regulations that reference credit loss allowances.

The rule was created in conjunction with the Office of the Comptroller of the Currency and the Federal Reserve Board, which will formally approve it in separate votes.