ICBA Urges More Meaningful Capital Simplification


Washington, D.C. (April 10, 2019)—The Independent Community Bankers of America® (ICBA) called on federal banking regulators to exempt more community banks from risk-based capital requirements, as authorized by Congress in the Economic Growth, Regulatory Relief, and Consumer Protection Act.

The agencies are proposing a 9 percent leverage ratio that banks with less than $10 billion in assets must meet to be exempt from the risk-based capital rules, which include the Basel III capital standards. ICBA today called on the agencies to lower the community bank leverage ratio to 8 percent, which would include roughly 600 highly capitalized community banks that would otherwise be ineligible to opt in to the new standard. Senate Banking Committee Chairman Mike Crapo (R-Idaho) and member Jerry Moran (R-Kan.) also advocated this change in a recent letter to the agencies.

“As an ardent proponent of strong minimum capital levels for all banks, ICBA supports an 8 percent community bank leverage ratio, which is well above existing requirements for well-capitalized banks,” ICBA President and CEO Rebeca Romero Rainey said today. “ICBA and the nation’s community banks have long called for meaningful relief from the overly complex Basel III capital standards. Federal regulators should use the opportunity provided by Congress to complete this objective.”

ICBA also said the agencies should pay close attention to the impact of the Current Expected Credit Loss accounting standard on community bank capital levels, especially for banks that choose to adopt the CBLR. ICBA continues urging regulators to include loan-loss reserves as part of Tier 1 capital, particularly once CECL is fully implemented. In its comment letter, ICBA recommended raising eligibility limits on high-quality community bank assets, such as mortgage-servicing assets; removing the current prompt-corrective-action framework from the proposed CBLR framework; and simplifying the CBLR and Basel III rules to avoid excessively complex and burdensome standards.

ICBA looks forward to continuing to work with policymakers on this issue.

About ICBA

The Independent Community Bankers of America® creates and promotes an environment where community banks flourish. With more than 52,000 locations nationwide, community banks constitute 99 percent of all banks, employ more than 760,000 Americans and are the only physical banking presence in one in five U.S. counties. Holding more than $4.9 trillion in assets, $3.9 trillion in deposits, and $3.4 trillion in loans to consumers, small businesses and the agricultural community, community banks channel local deposits into the Main Streets and neighborhoods they serve, spurring job creation, fostering innovation and fueling their customers’ dreams in communities throughout America. For more information, visit ICBA’s website at www.icba.org

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