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.