CBLR proposal set to publish with comments due early April

A proposal to create a simpler capital framework for certain depository institutions and depository institution holding companies under $10 billion in assets is slated for publication in the Federal Register Friday, when a 60-day public comment period begins.

Under the proposal, issued jointly by the Federal Deposit Insurance Corp. (FDIC), Federal Reserve Board, and Office of the Comptroller of the Currency (OCC), most depository institutions and depository institution holding companies that have less than $10 billion in total consolidated assets, that meet risk-based qualifying criteria, and that have a newly defined community bank leverage ratio (CBLR) of greater than 9% would be eligible to opt into a CBLR framework.

Banking organizations electing to use the CBLR and that maintain it at more than 9% would not be subject to other risk-based and leverage capital requirements. They also would be considered to have met the well capitalized ratio requirements under the prompt corrective action framework.

The proposed rule would implement provisions of the 2018 Economic Growth, Regulatory Relief, and Consumer Protection Act (EGRRCPA, S. 2155). The FDIC has also proposed to apply the CBLR framework to deposit insurance assessments; the agency says all CBLR banks would be assessed using the small-bank pricing methodology.

Notice of proposed rulemaking

RR: Proposal to apply CBLR framework to deposit insurance assessments noted in new FDIC letter (Feb. 5, 2019)