The Comptroller of the Currency signaled that regulators might phase-in provisions of the Basel III capital proposal that impact mortgages held by small banks.
“We do recognize that some aspects of provisions pertaining to mortgages could impose a serious burden on community banks and thrifts,” Comptroller Thomas Curry said Tuesday.
Speaking to the Florida Bankers Association, Curry dismissed requests to simply exempt community banks from the new capital regime. He stressed that significant changes to the capital structure are needed.
“We need to keep in mind that 400 community banks and thrifts have failed since 2008 and ultimately they failed because they didn’t have enough capital for the risks they took,” the comptroller said.
In terms of mortgages, he indicated that regulators are working to minimize the risk while crafting a rule to reduce the burden to lenders.
“We do recognize that some aspects of the provisions pertaining to mortgages could impose a serious burden on community banks and thrifts, particularly when applied to existing mortgages or if phased in too quickly,” Curry said.