For years, Rep. Blaine Luetkemeyer (R-Mo.) Lobbied nearly every regulator and expert witness who came through the House Financial Services Committee over his signature issue – an accounting standard opposed by banks called losses. current expected credit, or CECL.

He scored a major victory last month, when he introduced a provision in the $ 2 trillion economic stimulus package that allows banks to delay compliance with this rule – which requires banks to take expected losses. a loan when issued, instead of when losses occur and set aside principal accordingly – until December 31 or the end of the national coronavirus emergency, whichever comes first. Regulators have also rallied around Luetkemeyer’s point of view, issuing an interim opinion to reign at the end of last month which delays the capital effects of the rule until 2022.

Now that the fight is over, he is shifting his efforts to a new front: pushing the Securities and Exchange Commission to step up its oversight of the Financial Accounting Standards Board, the body that originally published the CECL.

Luetkemeyer argued that the accounting standard would be costly for small banks to implement and could limit lending at all levels, especially in times of economic crisis, as banks try to keep enough capital on their balance sheets.

“We now have a real case study on this,” Luetkemeyer said. “Once we get past the crisis phase of the pandemic, we will come back to DC with a new awareness of the problem. ”

One problem Luetkemeyer and the banks have with the FASB is the unusual structure of the standard-setter. The FASB sets accounting standards, which are largely the limits of its power. The SEC formally has authority for accounting standards on publicly traded companies, but delegates to the FASB.

This means that the FASB does not respond to Congress in the same way as prudential regulators, like the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corp. This reporting structure poses problems for critics like Luetkemeyer, who would like to put more pressure on the FASB to get rid of rules like the CECL.

“You have this quasi-independent standards body, which is different from other regulators but sort of overseen by one of those regulators,” said Ian Katz, director and financial policy analyst at Capital Alpha Partners. “It causes a lot of confusion, even in Congress. ”

Leutkemeyer said he and a bipartisan group of lawmakers spoke with SEC Chairman Jay Clayton in late March about stepping up FASB oversight, which he said Clayton was reluctant to do.

While the FASB operates essentially independently, the SEC could pressure the agency by threatening to withdraw its standardization powers, or legislation emanating from Congress could give the agency more leeway to exercise oversight.

“He was always hesitant to go after the agency,” Luetkemeyer said. “But a lot of people are asking him to intervene.”

Assistants from other House financial services committee lawmakers who were on the March call have confirmed its contents. The SEC and FASB declined to comment.

Luetkemeyer also advocates that the FASB be subject to the Administrative Procedures Act, which would encourage the body to research the economic impact of its rules – a major sticking point between some lawmakers and the FASB on the issue of CECL.

At a House Financial Services Committee hearing in January, before the coronavirus pandemic hit the United States, lawmakers, especially Leutekmeyer, criticized FASB chairman Russell Golden for failing to realize economic impact study of the CECL, which, according to the FASB, is not in its wheelhouse.

While Luetkemeyer is one of the fiercest opponents on the hill of the CECL, analysts say we are likely to see more and more talk of FASB oversight from Congress and regulators, d ‘especially since critics say the economic turmoil caused by the coronavirus pandemic highlights problems with the accounting standard.

Isaac Boltansky, director of policy research at Compass Point Research & Trading LLC, said the implementation of the new accounting standard highlights some of the challenges with oversight of the standards body.

“At the highest level, the CECL saga surprised many in the industry as it demonstrated that the FASB is more protected from external pressures than expected,” he said. “The new accounting standard has been criticized by industry, lawmakers and investors, but the FASB has crossed the target line on CECL largely relentlessly.”