US regulators poised to offer capital relief to community banks, Bloomberg News reports

(Reuters) -US regulators are set to release a plan to encourage small banks to lend more by easing a set of capital requirements, Bloomberg News reported on Wednesday, citing people familiar with the matter. The proposal would relax what is known as the community bank leverage ratio to 8% — the lowest amount allowed by law, from the current 9%, according to the report. Lenders can choose to comply with that standard rather than using risk-based measures tied to their portfolios. The measure, which has been under review at the White House, would be proposed by the Federal Reserve, the Federal Deposit Insurance Corp and the Office of the Comptroller of the Currency and subject to public input before it can be adopted, the report stated. The reprieve has long been sought by trade groups, it added. The Federal Reserve's Vice Chair for Supervision, Michelle Bowman, said in August the current approach on CBLR is "well-intentioned", but underachieves in providing relief to lenders, according to the report. Although there were more than 4,000 community banks as of the first quarter of 2025, only 1,662 lenders had opted into it, she had said. (Reporting by Anuj T in Bengaluru; Editing by Shailesh Kuber)

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