Agencies modify community bank leverage ratio framework

This story appeared in Bank Digest.

The Federal Deposit Insurance Corporation, Federal Reserve Board, and Office of the Comptroller of the Currency have issued two interim final rules to provide temporary relief to community banking organizations. According to the agencies' joint release, they are acting to implement Section 4012 of the Coronavirus Aid, Relief, and Economic Security (CARES) Act (H.R. 748), which requires the agencies to temporarily lower the community bank leverage ratio to 8 percent.

The two rules will modify the community bank leverage ratio framework so that: (1) beginning in the second quarter 2020 and until the end of the year, a banking organization that has a leverage ratio of 8 percent or greater and meets certain other criteria may elect to use the community bank leverage ratio framework; and (2) community banking organizations will have until Jan. 1, 2022, before the community bank leverage ratio requirement is re-established at greater than 9 percent.

The changes will be effective as of the publication of the rules in the Federal Register, and the agencies will accept comments on the interim final rules for 45 days after publication.

• Regulatory Capital Rule: Temporary Changes to the Community Bank Leverage Ratio Framework
• Regulatory Capital Rule: Transition for the Community Bank Leverage Ratio Framework