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ABA: The American Bankers Association
Comment Letter

Letter to the OCC, Board and FDIC on the Proposed Regulatory Capital Rule re: Revisions to the Community Bank Leverage Ratio Framework

  • From Tyler Mondres
  • Published January 30, 2026

Re: Comment on Docket ID OCC-2025-0141, Regulatory Capital Rule: Revisions to the Community Bank Leverage Ratio Framework
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Dear Sir or Madam,

The American Bankers Association (ABA) thanks the federal banking agencies (collectively, the agencies) for the opportunity to comment on the proposed rule to revise the Community Bank Leverage Ratio framework (the Proposal). We greatly appreciate the agencies’ thoughtful efforts to recalibrate the Community Bank Leverage Ratio (CBLR) in a way that strengthens its role as a meaningful option for community banks, while maintaining safety and soundness.

We strongly support the agencies' proposal to amend the CBLR framework by lowering the requirement from 9% to 8% and extending the grace period from two quarters to four quarters. These changes are consistent with section 201 of the Economic Growth, Regulatory Relief, and Consumer Protection Act and reflect the agencies’ experience with the framework since its implementation. The proposal responds to concerns raised by community banking organizations regarding the current calibration and grace period, which have limited the framework’s effectiveness in reducing regulatory burden.

The original goal of the CBLR was straightforward: provide qualifying banks an optional, transparent leverage threshold to demonstrate capital adequacy without engaging in the time and expense of complex Basel III risk-based calculations. Yet adoption has remained low. Only about 40% of eligible banks opted in by early 2025, and just 26% of institutions with assets greater than $1 billion participated. Vice Chair Bowman aptly observed that the CBLR "underachieved in providing regulatory relief" and that lowering the threshold to 8% would unlock needed regulatory flexibility.

Lowering the CBLR requirement to 8% will expand eligibility to approximately 95% of community banking organizations. This adjustment will encourage greater participation and provide a more practical buffer for institutions that opt into the CBLR. The agencies’ analysis indicates that the recalibration could increase balance sheet capacity for participating institutions by approximately $64 billion, supporting additional lending to households, small businesses, and agricultural borrowers. These outcomes advance the statutory objective of simplifying capital requirements for qualifying community banking organizations while maintaining prudential standards.

Extending the grace period to four quarters will reduce the likelihood that temporary fluctuations in capital will require institutions to revert to the risk-based capital framework.

Download the letter to read the full text.

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Tyler Mondres

Tyler Mondres

Senior Director, Research

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