[House Report 119-367]
[From the U.S. Government Publishing Office]
119th Congress } { Report
HOUSE OF REPRESENTATIVES
1st Session } { 119-367
======================================================================
COMMUNITY BANK LEVERAGE IMPROVEMENT AND FLEXIBILITY FOR TRANSPARENCY
ACT
_______
November 4, 2025.--Committed to the Committee of the Whole House on the
State of the Union and ordered to be printed
_______
Mr. Hill of Arkansas, from the Committee on Financial Services,
submitted the following
R E P O R T
together with
MINORITY VIEWS
[To accompany H.R. 5276]
The Committee on Financial Services, to whom was referred
the bill (H.R. 5276) to amend the Economic Growth, Regulatory
Relief, and Consumer Protection Act to adjust the Community
Bank Leverage Ratio, and for other purposes, having considered
the same, reports favorably thereon with an amendment and
recommends that the bill as amended do pass.
CONTENTS
Page
Purpose and Summary.............................................. 2
Background and Need for Legislation.............................. 3
Committee Consideration.......................................... 3
Related Hearings................................................. 4
Committee Votes.................................................. 4
Committee Oversight Findings..................................... 6
Performance Goals and Objectives................................. 6
Committee Cost Estimate.......................................... 6
New Budget Authority and CBO Cost Estimate....................... 6
Unfunded Mandates Statement...................................... 6
Earmark Statement................................................ 6
Federal Advisory Committee Act Statement......................... 7
Applicability to the Legislative Branch.......................... 7
Duplication of Federal Programs.................................. 7
Section-by-Section Analysis of the Legislation................... 7
Changes in Existing Law Made by the Bill, as Reported............ 8
Minority Views................................................... 10
The amendment is as follows:
Strike all after the enacting clause and insert the
following:
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Community Bank Leverage Improvement
and Flexibility for Transparency Act'' or the ``Community Bank LIFT
Act''.
SEC. 2. COMMUNITY BANK LEVERAGE RATIO.
(a) In General.--Section 201 of the Economic Growth, Regulatory
Relief, and Consumer Protection Act (12 U.S.C. 5371 note) is amended--
(1) in subsection (a)(3)(A), by striking ``$10,000,000,000''
and inserting ``$15,000,000,000''; and
(2) in subsection (b)(1), by striking ``not less than 8
percent and not more than 10 percent'' and inserting ``not less
than 6 percent and not more than 8 percent''.
(b) Rulemaking Deadline.--Not later than the end of the 180-day
period beginning on the date of enactment of this Act, and after
reviewing the report issued pursuant to section 3(b), the Board of
Governors of the Federal Reserve System, the Comptroller of the
Currency, and the Federal Deposit Insurance Corporation shall propose
and, not later than 1 year after the date of the enactment of this Act,
such agencies shall finalize rules to carry out the amendments made by
subsection (a) and the recommended modifications contained in such
report.
SEC. 3. REVIEW OF THE COMMUNITY BANK LEVERAGE RATIO.
(a) In General.--The Board of Governors of the Federal Reserve
System, the Comptroller of the Currency, and the Federal Deposit
Insurance Corporation shall commence a review of the Community Bank
Leverage Ratio (``CBLR'') developed under section 201 of the Economic
Growth, Regulatory Relief, and Consumer Protection Act (12 U.S.C. 5371
note), and rules issued thereunder, which shall include a consideration
of how to modify and calibrate the CBLR to encourage more qualifying
community banks to opt-in to the CBLR framework, with an additional
focus on--
(1) those qualifying community banks with fewer assets; and
(2) providing regulatory compliance burden relief so that the
CBLR is simple to apply.
(b) Report.--Not later than the end of the 150-day period beginning
on the date of enactment of this Act, the Board of Governors of the
Federal Reserve System, the Comptroller of the Currency, and the
Federal Deposit Insurance Corporation shall issue a report to the
Committee on Financial Services of the House of Representatives and the
Committee on Banking, Housing, and Urban Affairs of the Senate
containing--
(1) all findings and determinations made in carrying out the
review under subsection (a); and
(2) specific recommendations on modifications, if any, to--
(A) the calculation of the numerator and denominator
of the CBLR;
(B) the treatment of specific asset classes or
exposures to better reflect the risk profiles of
community banks;
(C) the definition of and qualifying criteria for a
qualifying community bank;
(D) enhancements to the procedures for opting into or
out of the CBLR framework, including streamlined
reporting and transition mechanisms;
(E) the grace period to facilitate the transition to
and from a modified CBLR regime; and
(F) any statutory changes that may be needed to
address such recommendations.
(c) Qualifying Community Bank Defined.--In this section, the term
``qualifying community bank'' has the meaning given that term in
section 201(a)(3)(A) of the Economic Growth, Regulatory Relief, and
Consumer Protection Act (12 U.S.C. 5371 note).
Purpose and Summary
H.R. 5276, the Community Bank LIFT Act, was introduced on
September 10, 2025, by Republican Representative Young Kim (CA-
40). This bill amends the Economic Growth, Regulatory Relief,
and Consumer Protection Act (S. 2155) to lower the statutory
range for the community bank leverage ratio (CBLR) from 8-10
percent to 6-8 percent. The Federal banking agencies would be
required to conduct a review of the CBLR and how it can be
modified to encourage more community banks to opt into the
framework and submit a report to Congress that contains
specific recommendations to do so. The agencies would also be
required to propose a rule to implement these recommendations
within 180 days and finalize within one year of enactment.
Background and Need for Legislation
Congress, when passing S. 2155, recognized that many small
community banks, with their generally low-risk business models,
were overburdened by the complex and costly compliance
frameworks necessary to comply with risk-weighted capital
requirements. As a result, S. 2155 included the CBLR, an
optional leverage ratio framework that eligible banks can adopt
to simplify their capital adequacy requirements while
maintaining their safety and soundness. The CBLR is calculated
as the ratio between a qualifying bank's Tier One Capital
(numerator) and its total on- and off-balance sheet assets
(denominator).
To qualify for the CBLR, a bank must have the following:
Total on- and off-balance sheet assets of
less than $10 billion;
Off-balance sheet assets that constitute 25
percent or less of its total on- and off-balance sheet
assets combined; and
A CBLR of greater than 9 percent.
S. 2155 directed the Federal banking agencies to promulgate
regulations that established a CBLR between 8 and 10 percent.
After this required rulemaking, the federal banking agencies
landed on a CBLR of 9 percent, reasoning that ``a 9 percent
calibration . . . will not result in a reduction in the
aggregate level of regulatory capital currently held by [CBLR]
electing [qualifying] banking organizations.'' However, the
CBLR's complexities have caused implementation difficulties for
community banks. Additionally, required holdings of capital
under the CBLR can often be greater than that under more
complicated risk-based and leveraged-based ratios. Federal
Reserve Board Vice Chair for Supervision Michelle Bowman has
indicated support for modifying the CBLR framework to make it
more attractive and will encourage more banks to adopt it. This
bill similarly directs the Federal banking agencies to consider
modifications to the CBLR to incentivize community bank
participation in the CBLR.
Committee Consideration
119TH CONGRESS
On September 10, 2025, Representative Kim introduced H.R.
5276, the Community Bank LIFT Act. The bill was referred solely
to the Committee on Financial Services.
The bill was attached to the September 9, 2025, hearing
titled ``Promoting the Health of the Banking Sector: Reforming
Resolution and Broadening Funding Access for Long-Term
Resilience.''
On September 16, 2025, the Committee on Financial Services
met in open session to consider, among others, H.R. 5276. The
Committee ordered H.R. 5276, as amended, to be favorably
reported to the House of Representatives.
Related Hearings
Pursuant to clause 3(c)(6) of rule XIII of the Rules of the
House of Representatives, the following hearing was used to
develop H.R. 5276:
The Subcommittee on Financial Institutions held a September
9, 2025, hearing titled ``Promoting the Health of the Banking
Sector: Reforming Resolution and Broadening Funding Access for
Long-Term Resilience.'' A draft version of the bill was
attached to the hearing. The subcommittee heard testimony from
the following witnesses: Mr. Dory Wiley, President and CEO,
Commerce Street Holdings; Mr. James B. Barresi, Partner, Squire
Patton Boggs; Mr. Hugh Carney, Executive Vice President of
Financial Institution Policy and Regulatory Affairs, American
Bankers Association; Dr. Norbert Michel, Vice President and
Director, Cato Institute Center for Monetary and Financial
Alternatives; and Mr. Robert James, President and CEO, Carver
Financial Corporation, on behalf of the National Bankers
Association.
Committee Votes
Clause 3(b) of rule XIII of the Rules of the House of
Representatives requires the Committee Report to include record
votes on the motion to report legislation and amendments
thereto.
On September 16, 2025, the Committee ordered H.R. 5276, as
amended, to be reported favorably to the House by a recorded
vote of 33 yeas and 19 nays, a quorum being present. (Record
Vote No. FC-202).
Before the question to report was called, Representative
Kim offered an amendment in the nature of a substitute,
designated KIMCA_060, which made minor edits and technical
changes. This amendment was adopted by a voice vote.
Committee Oversight Findings
Pursuant to clause 3(c) of rule XIII of the Rules of the
House of Representatives, the findings and recommendations of
the Committee, based on oversight activities under clause
2(b)(1) of rule X of the Rules of the House of Representatives
are incorporated in the descriptive portions of this report.
Performance Goals and Objectives
Pursuant to clause 3(c)(4) of rule XIII of the Rules of the
House of Representatives, the goal of H.R. 5276 is to direct
the Federal banking agencies to consider modifications to the
CBLR to incentivize community bank participation in the CBLR.
Committee Cost Estimate
Clause 3(d)(1) of rule XIII of the Rules of the House of
Representatives requires an estimate and a comparison of the
costs that would be incurred in carrying out H.R. 5276. The
Committee has requested but not received a cost estimate from
the Director of the Congressional Budget Office. However,
pursuant to clause 3(d)(1) of rule XIII of the Rules of the
House of Representatives, the Committee will adopt as its own
the cost estimate by the Director of the Congressional Budget
Office once it has been prepared.
New Budget Authority and CBO Cost Estimate
With respect to the requirements of clause 3(c)(2) of rule
XIII of the Rules of the House of Representatives and section
308(a) of the Congressional Budget Act of 1974 and with respect
to requirements of clause 3(c)(3) of rule XIII of the Rules of
the House of Representatives and section 402 of the
Congressional Budget Act of 1974, the Committee will adopt as
its own the cost estimate for the bill prepared by the Director
of the Congressional Budget Office. However, a cost estimate
was not made available to the Committee in time for the filing
of this report. The Chairman of the Committee shall cause such
estimate to be printed in the Congressional Record upon its
receipt by the Committee.
Unfunded Mandates Statement
The Committee has requested but not received from the
Director of the Congressional Budget Office an estimate of the
Federal mandates pursuant to section 423 of the Unfunded
Mandates Reform Act. The Chairman of the Committee shall cause
such estimate to be printed in the Congressional Record upon
its receipt by the Committee.
Earmark Statement
In compliance with clause 9 of rule XXI of the Rules of the
House of Representatives, this bill, as reported, contains no
congressional earmarks, limited tax benefits, or limited tariff
benefits as defined in clause 9(e), 9(f), or 9(g) of rule XXI.
Federal Advisory Committee Act Statement
No advisory committees within the meaning of section 5(b)
of the Federal Advisory Committee Act were created by this
legislation.
Applicability to the Legislative Branch
The Committee finds that the legislation does not relate to
the terms and conditions of employment or access to public
services or accommodations within the meaning of section
102(b)(3) of the Congressional Accountability Act.
Duplication of Federal Programs
Pursuant to clause 3(c)(5) of rule XIII of the Rules of the
House of Representatives, the Committee states that no
provision of the bill establishes or reauthorizes a program of
the Federal Government known to be duplicative of another
Federal program, including any program that was included in a
report to Congress pursuant to section 21 of the Public Law
111-139 or the most recent Catalog of Federal Domestic
Assistance.
Section-by-Section Analysis of the Legislation
Section 1. Short title
Section 1 provides the short title is the ``Community Bank
Leverage Improvement and Flexibility for Transparency Act'' or
the ``Community Bank LIFT Act''.
Section 2. Community Bank Leverage Ratio
Section 2 amends the Economic Growth, Regulatory Relief,
and Consumer Protection Act by increasing the asset threshold
for eligible institutions from $10 billion to $15 billion. This
section decreases the range for the CBLR from 8 to 10 percent
to 6 to 8 percent. This section requires the FRB, FDIC, and OCC
to propose rules to carry out amendments made under the Act
within 180 days, and to finalize such rules within one year of
enactment.
Section 3. Review of the Community Bank Leverage Ratio
Section 3 directs the FRB, OCC, and FDIC to conduct a
review of the CBLR, which includes a consideration of how to
modify and calibrate the CBLR to encourage more qualifying
community banks to opt-in to the CBLR framework. The review
includes an additional focus on community banks with fewer
assets and providing regulatory compliance burden relief to
ease the application of the CBLR. This section requires the
FRB, OCC, and FDIC to issue a report to the Committee on
Financial Services of the House of Representatives and the
Committee on Banking, Housing, and Urban Affairs of the Senate
containing all findings of the review conducted under the Act
within 150 days of enactment of the Act. The report shall
include (1) specific recommendations on modifications to the
calculation of the numerator and denominator of the CBLR, (2)
the treatment of specific asset classes to better reflect the
risk profiles of community banks, (3) the definition and
criteria for a qualifying community bank, (4) enhancements to
the procedures for opting into or out of the CBLR, (5) the
grace period to facilitate the transition to and from a
modified CBLR regime, and (6) any statutory changes that may be
needed.
Changes in Existing Law Made by the Bill, as Reported
In compliance with clause 3(e) of rule XIII of the Rules of
the House of Representatives, changes in existing law made by
the bill, as reported, are shown as follows (existing law
proposed to be omitted is enclosed in black brackets, new
matter is printed in italics, and existing law in which no
change is proposed is shown in roman):
ECONOMIC GROWTH, REGULATORY RELIEF, AND CONSUMER PROTECTION ACT
* * * * * * *
TITLE II--REGULATORY RELIEF AND PROTECTING CONSUMER ACCESS TO CREDIT
SEC. 201. CAPITAL SIMPLIFICATION FOR QUALIFYING COMMUNITY BANKS.
(a) Definitions.--In this section:
(1) Community bank leverage ratio.--The term
``Community Bank Leverage Ratio'' means the ratio of
the tangible equity capital of a qualifying community
bank, as reported on the qualifying community bank's
applicable regulatory filing with the qualifying
community bank's appropriate Federal banking agency, to
the average total consolidated assets of the qualifying
community bank, as reported on the qualifying community
bank's applicable regulatory filing with the qualifying
community bank's appropriate Federal banking agency.
(2) Generally applicable leverage capital
requirements; generally applicable risk-based capital
requirements.--The terms ``generally applicable
leverage capital requirements'' and ``generally
applicable risk-based capital requirements'' have the
meanings given those terms in section 171(a) of the
Financial Stability Act of 2010 (12 U.S.C. 5371(a)).
(3) Qualifying community bank.--
(A) Asset threshold.--The term ``qualifying
community bank'' means a depository institution
or depository institution holding company with
total consolidated assets of less than
[$10,000,000,000] $15,000,000,000.
(B) Risk profile.--The appropriate Federal
banking agencies may determine that a
depository institution or depository
institution holding company (or a class of
depository institutions or depository
institution holding companies) described in
subparagraph (A) is not a qualifying community
bank based on the depository institution's or
depository institution holding company's risk
profile, which shall be based on consideration
of--
(i) off-balance sheet exposures;
(ii) trading assets and liabilities;
(iii) total notional derivatives
exposures; and
(iv) such other factors as the
appropriate Federal banking agencies
determine appropriate.
(b) Community Bank Leverage Ratio.--The appropriate Federal
banking agencies shall, through notice and comment rule making
under section 553 of title 5, United States Code--
(1) develop a Community Bank Leverage Ratio of [not
less than 8 percent and not more than 10 percent] not
less than 6 percent and not more than 8 percent for
qualifying community banks; and
(2) establish procedures for treatment of a
qualifying community bank that has a Community Bank
Leverage Ratio that falls below the percentage
developed under paragraph (1) after exceeding the
percentage developed under paragraph (1).
(c) Capital Compliance.--
(1) In general.--Any qualifying community bank that
exceeds the Community Bank Leverage Ratio developed
under subsection (b)(1) shall be considered to have
met--
(A) the generally applicable leverage capital
requirements and the generally applicable risk-
based capital requirements;
(B) in the case of a qualifying community
bank that is a depository institution, the
capital ratio requirements that are required in
order to be considered well capitalized under
section 38 of the Federal Deposit Insurance Act
(12 U.S.C. 1831o) and any regulation
implementing that section; and
(C) any other capital or leverage
requirements to which the qualifying community
bank is subject.
(2) Existing authorities.--Nothing in paragraph (1)
shall limit the authority of the appropriate Federal
banking agencies as in effect on the date of enactment
of this Act.
(d) Consultation.--The appropriate Federal banking agencies
shall--
(1) consult with the applicable State bank
supervisors in carrying out this section; and
(2) notify the applicable State bank supervisor of
any qualifying community bank that it supervises that
exceeds, or does not exceed after previously exceeding,
the Community Bank Leverage ratio developed under
subsection (b)(1).
* * * * * * *
MINORITY VIEWS
H.R. 527 amends the Economic Growth, Regulatory Relief, and
Consumer Protection Act of 2018 (EGRRCPA) passed by Congress
during Trump's first term to lower the statutory range for the
community bank leverage ratio (CBLR) from 8-10% to 6-8% (note
that a lower ratio permits higher leverage). The bill would
also increase the asset threshold for banks eligible for the
CBLR from a current cap of $10 billion in total assets to $15
billion, and includes a study examining further changes to
increase participation. Trump's regulators previously set the
CBLR at 9%, not 8%, and the ratio could decline further if
Trump's regulators exempt instruments like Treasury securities
from the calculation. Most community banks (83%) have over 9%
CBLR, but are not utilizing the CBLR framework for other
reasons.
In response to concerns that small banks faced unnecessary
burdensome compliance requirements related to capital, Congress
created the CBLR in Section 201 of the EGRRCPA.\1\ A bank with
less than $10 billion in assets that meets certain risk-profile
criteria has the option to meet a CBLR requirement instead of
the existing, more complex risk-weighted capital requirements.
Because most small banks currently hold enough capital to meet
the CBLR option, this was thought to be a way to allow many
small banks to simplify their capital-related requirements.\2\
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\1\P.L. 115-174.
\2\CRS, Community Bank Leverage Ratio (CBLR): Background and
Analysis of Bank Data (May 11, 2020).
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In his first term, Trump's regulators set CBLR at 9%
(Congress temporarily reduced CBLR to 8% during the pandemic
before returning to 9%) and estimates have shown that roughly
83% of community banks exceeded a 9% leverage ratio. In 2023,
roughly 1,700 community banks were utilizing CBLR, though
another 2,000 banks also exceeded a 9% leverage ratio and were
either disqualified for other reasons (e.g. off-balance sheet
exposures) or chose not to opt-in.\3\ The bill's study could
help identify what, if any, barriers exist, and what
modifications could help well-capitalized community banks take
advantage of the CBLR framework. However, that may be an area
more prudent to focus on, instead of also reducing the CBLR to
a range of 6-8% given that most community banks already have
more than 9%.
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\3\S&P Global, Over 1,700 banks adopt community bank leverage ratio
reporting standard in Q3 (Nov. 2023).
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Most community banks historically have been better
capitalized compared to their larger peers, in part because at
a smaller size, they don't have the benefits of scale or
business line diversification. By significantly reducing the
CBLR without study and analysis (something stakeholders
demanded when Biden's regulators proposed bank capital
reforms), this change could unnecessarily undermine the safety
and soundness of thousands of community banks.\4\
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\4\See Jeremy Kress and Matthew Turk, Too Many to Fail: Against
Community Bank Deregulation (2020); and Testimony of Graham Steele
before FI hearing, Regulatory Overreach: The Price Tag on American
Prosperity (Apr. 29, 2025).
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There may be merit to increasing CBLR's asset threshold to
a higher level to cover more banks since it has been 7 years
since Congress first set the threshold. However, the bill
increases the threshold from $10 billion to $15 billion,
apparently utilizing the nominal GDP growth of roughly 48%
between May 2018 when Congress first set the threshold and
today. It may be more prudent to utilize inflation-adjusted
numbers; for example, real GDP increased by roughly 17.5% over
the same time period, implying a more modest threshold increase
to $11.75 billion.\5\
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\5\BEA, Gross Domestic Product (accessed Sep. 14, 2025).
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Advocacy groups like Americans for Financial Reform and
Public Citizen oppose H.R. 5276.
For these reasons, we oppose H.R. 5276.
Sincerely,
Maxine Waters,
Ranking Member.
Nydia M. Velazquez,
Al Green,
Joyce Beatty,
Rashida Tlaib,
Sylvia R. Garcia,
Members of Congress.