ABA, State Bankers Associations Support Legislation to Address CBLR Level

The American Bankers Association and 51 state bankers associations expressed support today for H.R. 6145, which would direct the federal banking agencies to fix the community bank leverage ratio at a level between 8% and 8.5%, between Jan. 1, 2022, and Dec. 31, 2024.

In a letter to Rep. Tracey Mann (R-Kan.), the groups said that community banks’ leverage ratios are under significant strain due to the banking industry’s role in the pandemic response and the origination of more than 4.2 million loans worth $318.5 billion under the Small Business Administration’s Paycheck Protection Program.

The CARES Act provided temporary relief as community banks’ pandemic balance sheet growth was largely unrelated to increased risk, the groups wrote. That relief expires at the end of the year and without additional relief, “community banks will be unnecessarily hampered in serving their communities because of higher capital demands not triggered by any increased risk.”