U.S. banking watchdogs said to propose capital relief plan for small banks

[Department of Treasury]
Douglas Rissing

The U.S. Federal Reserve, the Federal Deposit Insurance Corp. and the Office of the Comptroller of the Currency are set to propose a capital relief plan aimed at easing the regulatory burden on community banks and encouraging them to lend more, according to a media report on Wednesday.

The measure would lower the so-called community bank leverage ratio to 8%, the lowest it can go by law, from the current 9%, Bloomberg reported, citing people familiar with the matter.

Lenders have the option to follow that standard -- which the White House has reviewed -- instead of relying on portfolio-specific, risk-based metrics. The proposal will undergo a public comment period before it can be finalized, the people said, Bloomberg [https://www.bloomberg.com/news/articles/2025-10-15/us-regulators-poised-to-offer-capital-relief-to-community-banks] reported.

The news comes as Fed Vice Chair for Supervision Michelle Bowman has been pushing to recalibrate and ease parts of the post-2008 capital regime, such as reducing the enhanced supplementary leverage ratio. JPMorgan Chase (JPM [https://seekingalpha.com/symbol/JPM]), Goldman Sachs (GS [https://seekingalpha.com/symbol/GS]), among other Wall Street giants have long condemned strict capital requirements, arguing such rules are overly burdensome.

By contrast, Fed Governor Michael Barr thinks regulators' proposals to dial back capital standards and loosen oversight for the largest banks "threaten to erode" [https://seekingalpha.com/news/4502700-feds-barr-condemns-proposals-for-looser-capital-rules] protections for smaller lenders

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