In the wake of bipartisan criticism from Congress over sweeping new accounting rules for the banking industry, the Financial Accounting Standards Board (FASB) is hosting a roundtable discussion today on its controversial current expected credit loss (CECL) rules.

Many financial institutions – and several members of Congress – have called on FASB to delay implementing the new standard, citing its impact on credit availability and affordability as well as the added burden on financial institutions. One lawmaker is proposing to pause CECL implementation while studying its unintended consequences.

Criticism over the new standard, which was the focus of a December hearing by a House Financial Services subcommittee, likely foreshadows that FASB and banking regulators will come under increasing pressure to ease CECL implementation for financial institutions, especially community banks.

Rep. Patrick McHenry, R-N.C., the top Republican on the Financial Services Committee, included the CECL issue in a letter last week to committee Chairwoman Maxine Waters, D-Calif., recommending a follow-up hearing and continued oversight.

The new standard will upend how financial institutions account for loan or credit losses – representing potentially the most sweeping accounting change on the banking industry in 40 years.

Rep. Blaine Luetkemeyer, R-Mo., said that while FASB’s aim was investor protection, the CECL standard would impact every financial institution in the country, not just those that are listed on the capital markets. Luetkemeyer was then-chairman of the Financial Services subcommittee that held the hearing last December.

A key voice on accounting issues in Congress, Rep. Brad Sherman, D-Calif., said during the hearing that FASB should not adopt standards “against Main Street in favor of Wall Street.” He called on FASB to pause implementation while further studying the issue.

Federal Reserve Vice Chairman for Supervision Randal Quarles stated at a separate Financial Services Committee hearing in November that the immediate and long-term effects of the new rules aren’t fully understood and that the Fed plans further study.

Reacting to the 2008 financial crisis, FASB enacted the CECL standard in 2016, changing the methodology for estimating credit losses. The nation’s banking regulators issued a joint statement that year, pledging to provide supervisory support and guidance throughout the implementation process.

FASB in 2018 adjusted the implementation date, giving banks an additional year to comply.

The rules will undoubtedly have a real economic impact on businesses and Main Street economies. Specifically, the new CECL rules require banks to increase their capital reserve requirements. Ultimately, this affects how much capital will be available to lend and how much those loans will cost. Increasing the requirements might improve bank profitability but could limit the capital availability and increase credit cost to consumers.

Lending is robust in the current strong economy. However, whether policymakers get this balance right will become apparent only at the next economic downturn. Decisions are now being made that will determine whether accounting rules will amplify or ameliorate the next credit crunch.