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Trump administration eases rules for small banks to boost lending
The Office of the Comptroller of the Currency expects the change could free up as much as $64 billion for community bank lending, with 95% of such banks eligible.
The Trump administration is rolling back regulatory burden for community banks by updating the Office of the Comptroller of the Currency’s Community Bank Leverage Ratio framework, aiming to encourage more lending in the US economy, according to Yahoo Finance.
Yahoo Finance reports the update is designed to free up as much as $64 billion for community lending, and that 95% of community banks are expected to qualify for the change. The article also notes there are more than 4,200 FDIC-insured banking institutions nationwide, with over 4,000 holding $10 billion in assets or less.
While the guidance is for banks with up to $10 billion in assets, the OCC and FDIC expanded the definition of a community bank to include depository institutions with up to $30 billion for certain regulatory functions. Since 2010, the US has lost 3,600 community banks, a decline of over 45%, and Yahoo Finance cites declines in community banks’ shares of bank assets, outstanding loans, and commercial real estate lending.
The rule lowers the CBLR requirement from 9% to 8% and extends the compliance grace period from two quarters to four quarters. Yahoo Finance says the change is optional for eligible community banks that have less than $10 billion in assets, a leverage ratio above 8%, and are not subsidiaries of larger global banks.