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ICBA: FDIC Capital Relief Falls Short

ICBA: FDIC Capital Relief Falls Short

Nov. 21, 2018

The FDIC issued a proposal to exempt community banks from risk-based capital requirements that ICBA said will needlessly leave out many institutions. The agency’s proposed community bank leverage ratio of 9 percent unnecessarily leaves out more than 600 community banks that would be eligible if it were set at 8 percent, as authorized by Congress, ICBA said.

The S. 2155 regulatory relief law signed this year requires the banking agencies to develop a community bank leverage ratio of between 8 and 10 percent. Banks with less than $10 billion in assets that meet the leverage ratio will be considered well capitalized and exempt from all risk-based capital requirements, including the Basel III capital rules.

In a news release featured in Politico Pro, ICBA advocated an 8 percent threshold. That would be well over the 5 percent leverage ratio requirement currently required of all well-capitalized banks and significantly higher than next year’s requirement of 7 percent common equity over total risk-based assets, which includes the capital buffer.

ICBA will continue working with policymakers on the issue. The comment period will end 60 days following publication in the Federal Register.

Read ICBA Release
Read the Proposed Rule
Read FDIC Staff Memo

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