MBA voices support for proposed cut to community banks’ leverage ratio
Late
last
month,
federal
banking
regulators
proposed
lowering
the
Community
Bank
Leverage
Ratio
(CBLR)
for
qualifying
community
banks
and
bank
holding
companies
from
9%
to
8%
while
extending
the
timeframe
for
certain
banks
to
remain
in
the
program.
The
Office
of
the
Comptroller
of
the
Currency
(OCC),
the
Federal
Reserve
and
the
Federal
Deposit
Insurance
Corp.
(FDIC)
said
the
changes
align
the
CBLR
framework
with
the
threshold
established
in
the
2018
Economic
Growth,
Regulatory
Relief
and
Consumer
Protection
Act.
The
proposal,
outlined
in
the
Federal
Register,
would
also
extend
from
two
to
four
quarters
the
period
that
banks
can
remain
in
the
CBLR
framework
without
meeting
all
qualifying
criteria.
Comments
on
the
proposed
rule
are
due
Jan.
30,
2026.
In
its
latest
advocacy
update,
released
on
Monday,
the
Mortgage
Bankers
Association
noted
that
it
has
long
supported
the
CBLR,
arguing
that
it
provides
regulatory
relief
for
banks
that
opt
in
by
removing
the
need
to
calculate
and
report
risk-based
capital
ratios.
MBA
wrote
in
a
comment
letter
in
October
that
the
ratio
should
be
lowered
to
8%,
and
that
banks
should
have
a
longer
grace
period
to
regain
compliance
or
exit
the
framework.
Adopted
in
2019,
the
CBLR
allows
banks
that
opt
in
to
avoid
calculating
and
reporting
more
complex
risk-based
capital
ratios.
The
agencies
said
in
the
Federal
Register
announcement
that
the
proposed
adjustments
“provide
community
banks
with
enhanced
options
to
manage
their
regulatory
obligations
while
maintaining
their
ability
to
serve
their
communities.”
