U.S. banking regulators are ready to force changes to lending practices and establish tougher capital demands for firms that have dangerously lowered their standards in commercial real estate, Bloomberg News reported on Friday. After observing problems in rapidly growing loan portfolios, the regulators warned the industry on Friday that those with insufficient safeguards may be told to come up with plans for cleaning up their practices or to raise additional capital to mitigate the risk. Next year, supervisors from the Federal Reserve, Office of the Comptroller of the Currency and Federal Deposit Insurance Corp. will be paying “special attention” to these risks, they said. Banks that have seen substantial growth in their commercial real estate lending or whose expansion strategies call for it will get the most scrutiny. The regulators’ concerns stem from banks lowering their standards as competition has heated up to originate the loans.
