Crapo Continues Push on Basel III Relief at Hearing

May 15, 2019
Senate Banking Committee Chairman Mike Crapo (R-Idaho) called on federal regulators to revisit the Community Bank Leverage Ratio implementing exemptions from risk-based capital requirements.

Leading off a hearing featuring testimony from top regulators, Crapo noted that he and committee member Jerry Moran (R-Kan.) recently encouraged the agencies to set the CBLR at 8 percent, which would include roughly 600 highly capitalized community banks that would otherwise be ineligible for relief. Their letter also urged regulators to ensure the proposed Prompt Corrective Action framework does not deter community banks from using the CBLR.

To implement a provision of the S. 2155 regulatory relief law, the agencies are proposing a 9 percent leverage ratio that banks with less than $10 billion in assets must meet to be exempt from risk-based capital rules, including Basel III. ICBA has repeatedly called on the agencies to lower the CBLR to 8 percent, including in last month’s comment letter on the proposal.

In prepared testimony, FDIC Chairman Jelena McWilliams said her agency is reviewing comments on the proposal, while Comptroller of the Currency Joseph Otting said the 9 percent ratio would include roughly 84 percent of insured banks under $10 billion in assets.

The hearing touched on various other current banking issues, including examiners’ use of guidance, Community Reinvestment Act and Bank Secrecy Act modernization, megabank leveraged loans, the BB&T-SunTrust merger, and more.

The regulators are slated to be back on Capitol Hill today for a House Financial Services Committee hearing focusing on megabank oversight.