Rep. Mann Introduces Community Bank Relief Act

Press Release

Yesterday, U.S. Representative Tracey Mann (R-KS) introduced H.R. 6145, the Community Bank Relief Act in the U.S. House of Representatives. The bill would extend regulatory flexibility for community banks throughout the country by directing regulators to maintain an 8.5% Community Bank Leverage Ratio (CBLR) through 2024.

The CBLR was created by Congress in 2018 with bipartisan support to simplify capital requirements and reduce compliance burdens faced by smaller banks. The CBLR minimum threshold was originally set at 9%, however, the CARES Act dropped the threshold to 8% for 2020 and 8.5% for 2021. This temporary relief is warranted. Large-scale government stimulus has created unprecedented balance-sheet growth at community banks and put pressure on the CBLR that is unrelated to increased risk. The CBLR is set to revert to 9% beginning in 2022, and with balance sheets still inflated due to several additional rounds of government stimulus, community banks are relying on an extension of the increased capital requirement.

"Prior to serving in public office, I worked in commercial real estate and served on the board of directors and loan committee for a community bank. I know firsthand how important banks and other financial institutions are to a thriving rural economy," said Rep. Mann. "This temporary regulatory relief has allowed community banks to serve as lifelines for Main Street businesses during the pandemic by originating more than $148 billion in Payroll Protection Program loans. My legislation will extend regulatory relief and ensure that community banks can continue to serve their customers while balance sheets and loan demand can return to normal levels."

"Community banks in Kansas and across the nation have played a vitally important role in supporting their customers and communities during the past 18 months of a historic pandemic and the economic fallout that followed," said Doug Wareham, President & CEO of the Kansas Bankers Association. "Those same banks should not be unnecessarily burdened by the unprecedented federal stimulus payments and financial relief, including Paycheck Protection Program funds, that have ballooned many community banks' balance sheets. The 24-month temporary and targeted capital relief provided by the Community Bank Relief Act will help ensure that banks can serve their local depositors as bank balance sheets and loan demand returns to normal. We applaud Congressman Mann for recognizing the need for a pragmatic solution to this dilemma."

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