What “The Fed Wants to Loosen Regulations Even More for Community Banks” Really Means

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  • Randal Quarles, the Federal Reserve’s vice chair of supervision, said more changes are coming that will allow community banks relief from the post-financial crisis capital requirements.
  • The Fed said two weeks ago that it will place banks into four categories for leverage requirements but stressed that size was only one factor it would use in determining how much of a buffer banks would need.

The Federal Reserve isn’t finished easing up rules for the nation’s smallest financial institutions, according to remarks Wednesday from the central bank’s top regulator.

Just two weeks after the Fed announced changes to the way banks are classified and the types of capital cushions they’ll need, Randal Quarles, vice chair of supervision, said more changes are coming that will allow community banks relief from the post-financial crisis capital requirements

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“Our work to improve regulatory efficiency is not done, and we expect to make additional progress in the months ahead on a number of issues,” Quarles said in remarks to be delivered to the House Financial Services Committee. He said the next proposal would be aimed at a leverage ratio proposal for community banks.

“We expect that this proposal would meaningfully reduce the compliance burden for community banking organizations, while preserving overall levels of capital at small banks and our ability to take prompt action when problems arise,” he added.

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In the most recent changes, the Fed put banks into four categories for leverage requirements but stressed that size was only one factor it would use in determining how much of a buffer banks would need. Beyond assets, the central bank said it would consider nonbank assets, short-term wholesale funding and off-balance-sheet exposure.

www.cnbc.com/2018/11/14/the-fed-wants-to-loosen-regulations-even-more-for-community-banks.html

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