Former Treasury Secretary Lawrence Summers said the Federal Reserve and other agencies are right to be probing financial risks tied to commercial properties, saying this was a more important effort in the near term than its initiative to boost capital standards among big banks, Bloomberg News reported. “Regulators are right to be concerned about commercial real estate,” Summers said. “The chronic problem in banking is a failure to pay attention to the market value of assets,” and that’s a “particularly pronounced problem with commercial real estate, where there isn’t always a liquid market for properties,” he said. The Fed vice chair for supervision, Michael Barr, said earlier Friday regulators are “closely focused” on risks in commercial real estate loans, and have stepped up downgrades of supervisory ratings on lenders. Barr also is overseeing a push to force the biggest U.S. lenders to increase the amount of capital they set aside, and last year unveiled a plan for an almost 20% boost. Read more.
ABI will be presenting a program that will address CRE exposure: the 2024 Distressed Real Estate Symposium, to be held April 30-May 2 in Ojai, Calif. Click here to register!