US bank regulators are set to propose cutting the Community Bank Leverage Ratio to 8% from 9%, a change that would deliver capital relief to community lenders and encourage more credit growth.
The Federal Reserve, Federal Deposit Insurance Corporation, and Office of the Comptroller of the Currency would jointly issue the proposal for public comment before adoption. The 8% level is the lowest permitted by statute.
The plan has been under White House review and would apply through the optional CBLR framework that qualifying small banks can use instead of risk-based capital.
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Fed Vice Chair for Supervision Michelle Bowman has argued that the current setup underdelivers for small lenders. She noted in August that while the US had more than 4,000 community banks as of the first quarter of 2025, only 1,662 had opted into the CBLR.
“Reducing the CBLR requirement from 9% to 8% could not only allow more community banks to adopt the framework, but also increase balance sheet capacity for all CBLR firms, facilitating additional support for local economies through lending,” she said.
The Independent Community Bankers of America called the shift “a more practical and appropriately calibrated” approach for relationship-based lenders. ICBA President Rebeca Romero Rainey also urged Congress to let banks up to $15 billion in assets use the CBLR, up from the current $10 billion threshold, to broaden the reach of the relief.
The move comes after a rough session for regional bank stocks. Zions Bancorporation fell about 11% to $48.08 and Western Alliance Bancorp dropped about 9.9% to $71.05, with many peers sliding between 6% and 8% by the close.
The proposal would add to this year’s regulatory revisions. Industry groups have pushed back on separate ideas that would ease large-bank rules, while Fed Governor Michael Barr recently warned against weakening capital standards for the biggest institutions.
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