Community Bank Leverage Improvement and Flexibility for Transparency Act; Community Bank LIFT Act
Summary
H.R. 5276, also known as the Community Bank Leverage Improvement and Flexibility for Transparency Act or the Community Bank LIFT Act, aims to amend the Economic Growth, Regulatory Relief, and Consumer Protection Act. The bill focuses on adjusting the Community Bank Leverage Ratio (CBLR). It seeks to increase the asset threshold for community banks eligible for the CBLR framework and adjust the leverage ratio requirements.
Expected Effects
The bill, if enacted, would raise the asset threshold for community banks to qualify for the CBLR from $10 billion to $15 billion. It also lowers the leverage ratio from a range of 8-10% to a range of 6-8%. The Federal Reserve System, the Comptroller of the Currency, and the Federal Deposit Insurance Corporation would be required to review and potentially modify the CBLR framework.
Potential Benefits
- Reduced Regulatory Burden: Simplifies compliance for qualifying community banks.
- Increased Lending Capacity: Lower leverage ratio potentially frees up capital for lending.
- Greater Flexibility: Provides community banks with more flexibility in managing their capital.
- Encourages Community Bank Participation: Aims to encourage more community banks to opt into the CBLR framework, especially smaller institutions.
- Transparency: Aims to improve transparency through the review and reporting requirements.
Potential Disadvantages
- Potential Increased Risk: Lower leverage ratio could lead to increased risk-taking by community banks.
- Complexity in Implementation: Modifications to the CBLR framework could introduce new complexities.
- Regulatory Uncertainty: The review and potential modifications may create uncertainty for community banks.
- Delayed Rulemaking: The rulemaking process by the federal agencies could take up to a year, causing delays.
- Limited Scope: The bill primarily focuses on community banks and may not address broader issues in the financial system.
Constitutional Alignment
The bill aligns with the constitutional principle of Congress's power to regulate commerce, as outlined in Article I, Section 8, Clause 3. It also relates to Congress's power to coin money and regulate the value thereof (Article I, Section 8, Clause 5) through its impact on banking regulations. The required reports to congressional committees support legislative oversight, a core function of Congress.
Impact Assessment: Things You Care About ⓘ
This action has been evaluated across 19 key areas that matter to you. Scores range from 1 (highly disadvantageous) to 5 (highly beneficial).