By Pete Schroeder WASHINGTON (Reuters) -A U.S. bank regulator approved new final rules aimed at easing leverage requirements for banks, requiring firms to set ​aside less capital as a cushion against losses of low-risk assets. The Federal Deposit Insurance ‌Corporation approved the new final rules for the "enhanced supplementary leverage ratio," and other bank regulators are expected to ‌similarly approve the new rules, which were first proposed in June. An FDIC staff memo estimated the new rules would ...

Core Viewpoint - The Federal Reserve is expected to increase its focus on community banks, with Vice Chair Michelle Bowman emphasizing their importance, although specific plans have yet to be announced [1][2]. Group 1: Community Banks' Current Challenges - Community banks are under significant pressure, competing with fintech companies for deposits and facing challenges from private credit that attracts borrowers away from local banks [3]. - The community bank industry highlighted their differences from failed lenders during the 2023 regional banking crisis and opposed contributing to the government's deposit insurance fund [3]. Group 2: Regulatory Framework and Proposals - Industry groups are advocating for the community bank leverage ratio, an alternative to risk-based capital measures, with only 1,662 out of over 4,000 community banks opting into it as of Q1 2025 [4]. - The head of the Conference of State Bank Supervisors called for a re-examination of compliance regulatory frameworks, suggesting that static, asset-based thresholds should be adjusted to align with economic growth [5]. Group 3: Engagement and Outreach - Bowman's approach to community bank reforms emphasizes outreach to understand significant threats to their business and the impact of regulations on their operations [6]. - While seeking feedback from community banks, proposals to ease regulations for large Wall Street banks are already in progress, including a rollback of the enhanced supplementary leverage ratio and an overhaul of stress tests [6]. Group 4: Capital Standards and Risks - Bowman is leading the development of a new risk-based capital proposal related to the Basel III endgame, having previously criticized a plan that would have increased capital requirements for large banks by 19% [7]. - Fed Governor Michael Barr warned that rolling back capital standards for large lenders could jeopardize protections for smaller banks, emphasizing that the 2008 financial crisis was driven by excessive risk-taking from the largest firms, not community banks [8].