Board of Governors of the Federal Reserve System

The community bank leverage ratio (CBLR) is an important component of the Board's capital framework. By providing a straightforward methodology to measure capital adequacy for qualifying community banking organizations, the CBLR represents a meaningful simplification of capital requirements for the smallest banking organizations, while maintaining sufficient levels of regulatory capital in the banking system. Many community banking organizations that are eligible to use the CBLR, however, have not chosen to opt in to the CBLR framework.

I support the proposal to request comment on the CBLR changes. My understanding is that the proposal is not expected to lead to material reductions in the amount of capital in community banking organizations. In the comment process, I would be especially interested in comments on the appropriate level of capital for community banks and whether the assumption that there will not be material capital reductions is correct. While the vast majority of community banks have traditional risk profiles, I'd be interested in understanding whether there are mechanisms to ensure that eligible banks with nontraditional, higher-risk profiles have capital requirements commensurate with their risk or should be excluded from eligibility. It would also be helpful to have information about the risk profiles of firms that do and do not opt in to CBLR.