CECL, Loss Models and the Unintended Consequences of COVID-19

About this Episode

The current expected credit losses standard, or CECL, had been hotly debated in banking and accounting circles long before COVID-19 surfaced earlier this year. While the resulting market and economic disruptions caused by the pandemic delayed a full rollout of CECL, many financial institutions that had begun the hard work of incorporating the standard into their models are living through a real-life stress test of CECL’s approach to accounting for credit losses.

In this episode of the Financial Executive Podcast we speak with Amnon Levy, managing director and head of Moody’s Analytics Portfolio and Balance Sheet Research group regarding what the current financial crisis reveals about financial credit models and the unintended consequences of CECL.

Links:

Incorporating Emerging Risks within Credit Models: Lessons from Sociological Reactions to COVID-19

Nonbank players are ready for CECL — are banks?

Earnings Volatility, Share Price Performance, and Credit Portfolio Management Under CECL and IFRS 9