called bifurcated approach. the advance proposal suggested three possible ways to structure a capital standard for non - complex banking organizations. the first option would combine a risk - based ratio with a leverage ratio. this option would retain much of the current approach while tailoring capital charges to the size, structure, and risk profile of less - complex banking organizations. the second option would use only a leverage ratio. taking an approach not unlike the primary capital standard we used throughout the 1980s, it would drop any semblance of a risk - weighted measure and base a bank's capital requirements only on the ratio of its capital to total assets. the third alternative is simply a modified leverage ratio that would add the exposures arising from loan commitments and other offbalance - sheet transactions to total bank assets. reflecting its early stage of development, the proposal presents more questions than answers and does not flesh out any of the three alternatives it presents. one important question relates to how noncomplex institutions would be defined. the proposal suggests basing the decision on a bank's asset size, the nature of its activities, and its risk profile - - for example, assets less than $ 5 billion, moderate amounts of off - balance - sheet transactions that are mostly loan commitments, and a focus on traditional banking activities. in effect, the size threshold would be the determining factor for most banks, permitting all but a few hundred of the nearly 9, 000 federally insured commercial and savings banks to calculate their capital requirements using a simple approach. almost all thrifts as well would likely qualify for the simpler approach. this seems to be the proper time to consider a simpler approach for community banks as we undertake major revisions to the basel accord. however, to be consistent with the spirit of basel, the agencies proposed that a simpler system should also be more conservative, requiring at least a slightly higher minimum capital charge. such a higher minimum would still, however, be below the actual ( or economic ) capital now maintained by virtually all community banks. the higher capital ratios now maintained at smaller banks reflect certain economic realities. these banks generally carry greater risk than larger banks because of their greater concentrations in exposures and funding sources, byproducts of their limited geographic scope and scale. in addition, because of their more limited access to capital markets, community banks have fewer options for augmenting capital when it is needed. the higher capital ratios at community banks, compensating for these greater risks, result as much from bank

jerome h powell : opening remarks - “ community listening session " opening remarks by mr jerome h powell, chair of the board of governors of the federal reserve system, at a “ community listening session ", a fed listens event at the federal reserve bank of kansas city, kansas city, missouri, 9 october 2019. * * * good morning. i am happy to be here in kansas city for the 13th of 14 fed listens events. i look forward to hearing the perspectives of the community and business leaders participating today. the reserve banks and the board have been holding fed listens events around the country as part of a comprehensive and public review of our monetary policy strategy, tools, and communications practices. almost all of the fed listens meetings, like this one, have been open to the press and live - streamed on the internet. both the breadth and transparency of the review are unprecedented for us. one reason we are conducting this review is that it is always a good practice for any organization to occasionally take a step back and ask if it could be doing its job more effectively. but we must pose that question not just to ourselves. because congress has granted the federal reserve significant protections from short - term political pressures, we have an obligation to clearly explain what we are doing and why. and we have an obligation to actively engage the people we serve so that they and their elected representatives can hold us accountable. we have invited you here because we want to better understand how monetary policy affects your lives and the lives of the people your organizations represent. we want to hear your perspective on maximum employment and price stability — the monetary policy goals congress has assigned us. now is a good time to conduct the review. unemployment is at a half - century low, and inflation is running close to, but a bit below, our 2 percent objective. while not everyone fully shares economic opportunities and the economy faces some risks, overall, it is — as i like to say — in a good place. our job is to keep it there as long as possible. while we believe our strategy and tools have been and remain effective, the u. s. economy, like other advanced economies around the world, is facing some longer - term challenges — from low growth, low inflation, and low interest rates. while slow growth is obviously not good, you may be asking, “ what ’ s wrong with low inflation and low interest rates? ” low can be good, but when inflation — and, consequently, interest rates — are