OCC CBLR compliance guide updated for community bank rule changes
The OCC says its revised guide explains CBLR changes that took effect July 1 and could ease requirements for 95% of community banks.
By Rafael Ortiz · Fintech Correspondent
· 3 min read
The Office of the Comptroller of the Currency issued an updated OCC CBLR compliance guide for community banks after revisions to the optional capital framework took effect July 1. The agency said the changes could reduce regulatory demands for 95% of community banks and release $64 billion that could be used to support more lending to Main Street businesses.
The OCC announced the revised guide on Thursday, July 30, saying it is intended to help community banks understand the updated community bank leverage ratio framework. The framework is optional and is designed to give eligible community banks a simpler way to assess capital adequacy, according to the agency.
Comptroller of the Currency Jonathan V. Gould said in the OCC release that President Donald J. Trump and Treasury Secretary Scott Bessent were leading what he called a “community bank comeback” by “unleashing Parallel Prosperity for Main Street and Wall Street.” Gould said the OCC supported that effort by cutting regulations it viewed as burdensome for community banks and a constraint on U.S. economic growth.
What is the community bank leverage ratio framework?
The community bank leverage ratio framework, known as CBLR, is an optional capital adequacy standard for community banks. The OCC has said the revised rule lets community banks use a simpler measure of capital adequacy and reduces regulatory burden.
The OCC said in April that federal bank regulatory agencies had jointly finalized a rule modifying the CBLR framework. At the time, the OCC said the final rule was adopted without changes from a proposal issued in November and would become effective on July 1.
Capital adequacy rules are meant to ensure banks have enough capital relative to their activities and risks. A simpler framework can reduce compliance work for eligible institutions, although the OCC’s release framed the change as a supervisory and regulatory adjustment rather than a change in banks’ lending obligations.
The agency has tied the CBLR change to a broader effort to tailor oversight of community banks. PYMNTS reported in May that the OCC was promoting steps to ease rules for community banks, saying most of those institutions are well managed, well capitalized, operate safely and avoid risk.
Those steps include modifying the CBLR framework, adjusting examinations to reflect a bank’s size, complexity and risk profile, and placing more attention on material financial risks. The OCC also said examiners would use a newly updated resource intended to simplify information technology and cybersecurity examinations for community banks.
Gould said in a May OCC release that community banks serve as anchors for local economies by providing banking services and small-business lending that supports job creation. He said the agency had taken several actions to tailor supervision and introduce reforms for community banks so they could continue contributing to local and national economic development.
The updated compliance guide gives banks a reference point for applying the revised CBLR framework after its effective date. The OCC did not say in its release that use of the framework is mandatory, and it described the CBLR as optional.
This story draws on original reporting from PYMNTS.
