[1] CECL replaced the previous Allowance for Loan and Lease Losses (ALLL) accounting standard.
It relied on losses that were incurred but not realized, i.e., when it was known with some expectation that future cash flows would not be collected.
This could result in a decrease in availability of lending to non-prime borrowers, stunting economic recovery following a downturn.
[4] Another criticism regarding CECL is that in order to estimate expected credit losses, banks are required to forecast the state of the economy.
Per the American Banker, all thorough analyses of the effect of the new rules have shown, to differing degrees, that allowances will continue to be procyclical after CECL comes into force during 2020.