WASHINGTON - Federal Reserve Board Governor Laurence H. Meyer acknowledged Thursday that a federal proposal to simplify capital standards for most banks drew more complaints than regulators had expected, and hinted that small institutions could be permitted to keep operating under the current system.

"Community banks appear to have little interest in the advance proposal for noncomplex banks," Mr. Meyer said in a speech at a gathering of Ohio bankers. "The gains in simplicity were apparently not viewed as offsetting the costs of changing from the current set of rules to a purportedly simpler system. The intent of the proposal, by the way, was to reduce regulatory burden on smaller banks while ensuring that their capital remains at prudent levels."

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