As required by new law, federal banking agencies have finalized their proposal creating a community bank leverage ratio (CBLR) to replace the current risk-based ratios applicable to qualifying banking organizations with assets of less than $10 billion. These banks and BHCs need not elect the CBLR, but most are likely to do so since weightings under the “generally-applicable” standards comparable to the standardized risk-based approach now applicable to these institutions cease to apply. This allows considerable scope for holdings of higher-risk assets that are more profitable under current economic conditions.
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