Since the end of the financial crisis more than a decade ago, lawmakers and regulators have worked to balance the needs of a growing, vibrant financial services sector with the regulations necessary to ensure a safe and sound one. In some ways, much has been achieved. The nation’s largest banking organizations are now subject to substantially higher capital and liquidity requirements. They are also regularly “stress tested” to understand the effects on capital should economic conditions deteriorate significantly.
At the same time, efforts are continuing to alleviate the regulatory burden faced by smaller banking organizations. Beginning this year, those that meet certain qualifications can opt into a simplified regulatory capital framework. The framework—dubbed the community bank leverage ratio (CBLR)—went into effect Jan. 1. The Federal Deposit Insurance Corp. estimates that more than three-quarters of all community banks will qualify to opt in.
Read More about Regulatory Relief for Community Banks: A Simpler Way to Calculate Capital