Current Expected Credit Losses (“CECL”) – A Conversation with FASB Board Member, R. Harold Schroeder

By: Sharon J. Lorman
Robert E. Kafafian
Richard B. Trauger, Jr.

Guest: R. Harold Schroeder, FASB Board Member

Podcast Show Notes:

Our This Month In Banking (TMIB) podcast features discussion with colleagues and other industry thought leaders on interesting banking news that happened this month. TMIB will be available on the last Wednesday of every month here, and on Apple and Droid podcast apps for your listening enjoyment. Join us on your commute or at your desk.
In June 2016, FASB issued its pronouncement on the Current Expected Credit Loss standard for loan loss accounting [formally known as ASU 2016-13 Financial Instruments – Credit Losses (Topic 326)] which will go into effect starting in 2020 for SEC registrants and in 2021 for banks that are not SEC registrants. The new standard replaces the current “incurred loss” accounting model with an “expected loss” model. TMIB was fortunate to gain the perspective of Mr. R. Harold (“Hal”) Schroeder, FASB Board member and an architect of CECL, to speak about the standard and its impact on community banks. Discussion topics include, but are not limited to, alignment between the CECL method of accounting with the underlying economics of risk of lending, enhanced disclosures and the biggest challenge in implementing CECL, especially related to community financial institutions. Is your bank getting ready?
Join us for this enlightening conversation!

Biography of R. Harold Schroeder
This month R. Harold (“Hal”) Schroeder, Financial Accounting Standards Board (“FASB”) board member was our guest for the podcast. Mr. Schroeder was appointed to the Financial Accounting Standards Board (FASB) by the Financial Accounting Foundation (FAF) effective as of February 28, 2011, reappointed to a second term in 2015. His second and final term concludes on June 30, 2021. His appointment was part of the FASB’s expansion from five to seven members.
Mr. Schroeder is a CPA who brings over 30 years of diverse experience in investing and financial reporting to the FASB. Most notably, he brings a strong investor perspective to the FASB, with more than 15 years of experience working with all facets of the investment community. During his career, he has viewed the preparation of financial statements and the application of accounting standards from varying perspectives including auditor, preparer and investor.
Prior to joining the Board, Mr. Schroeder was a partner at Carlson Capital, L.P., a Dallas-based money manager with assets under management of over $6 billion. He joined Carlson Capital’s relative value arbitrage team in 2000 and was a member of the firm’s management and investment committees. As a senior portfolio manager, he focused on the financial services industry, including both public and private companies.
Mr. Schroeder also spent five years as a senior equity analyst with Schroder & Company, Inc. (subsequently acquired by Citigroup Inc.) and KBW, Inc. (formerly Keefe, Bruyette & Woods Inc.), both based in New York City. From 1993 to 1995, he was Chief Financial Officer for NewYork-based Nafinsa Securities, Inc., and various other subsidiaries, of Nacional Financiera, SNC, the primary development bank for the Mexican government. Prior to that, he spent thirteen years with Ernst & Young, including the firm’s National office as well as client-serving roles in New Orleans and New York, where he was a partner in the financial services division.
From 2008 until his appointment to the Board, Mr. Schroeder was a member of FASB’s Emerging Issues Task Force (EITF). From 2008 to 2010 he also was a member of the Standing Advisory Group for the Public Company Accounting Oversight Board, the organization created by the Sarbanes-Oxley Act of 2002 to oversee the audits of public companies in order to protect the interests of investors and the public interest by promoting informative, accurate, and independent audit reports.
Mr. Schroeder earned his Master of Business Administration from Tulane University and a Bachelor of Science degree in accounting from the University of New Orleans.
Why a New Credit Losses Standard?
CECL – Background and FAQ’s for Bankers
CECL – What You Need to Know Now
CECL Implementation Challenge: The Life of Loan Concept

Watch for episode 21 of This Month in Banking to be released on Wednesday, September 27, 2017 and a new episode on the last Wednesday of every month.

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