The Federal Deposit Insurance Corporation published a proposal to modify the Community Bank Leverage Ratio (CBLR) framework, aiming to increase use of the simplified capital option by qualifying community banking organizations. The proposal would reduce the CBLR requirement from 9 percent to 8 percent and expand the current two-quarter grace period to four quarters for banks that fall out of compliance, providing more time to return to compliance or transition back to risk-based capital requirements. The FDIC noted that around 40 percent of banks with less than USD 10 billion in assets currently opt into the CBLR framework, below expectations from the earlier legislative and rulemaking process, and said the proposal would include a limit on how long a bank could use the longer grace period to help prevent abuse. The FDIC indicated it is seeking comments; the statement also referenced coordination with Federal Reserve and Office of the Comptroller of the Currency staff on the proposal.
Federal Deposit Insurance Corporation 2025-11-25
Federal Deposit Insurance Corporation proposes lowering the Community Bank Leverage Ratio to 8 percent and extending the grace period to four quarters
The Federal Deposit Insurance Corporation proposed changes to the Community Bank Leverage Ratio framework, reducing the requirement from 9% to 8% and extending the grace period for non-compliance from two to four quarters. The proposal aims to increase adoption among community banks and includes measures to prevent prolonged use of the grace period, with coordination from the Federal Reserve and the Office of the Comptroller of the Currency.