U.S. Bank Regulator Toughens Commercial Real Estate Oversight
Credit risks have increased in U.S. commercial real estate as lenders more aggressively compete in a low-rate environment, according to the Office of the Comptroller of the Currency’s semiannual risk report. The report indicates that the Federal Reserve has held down interest rates for more than seven years to help the economy recover from the 2008 financial crisis, which is putting a damper on bank profits and increasing competition among lenders. However, that competitive pressure is increasing risk. Comptroller of the Currency Thomas Curry said, “It’s at this stage of the cycle that we also see strong loan growth combined with easing underwriting to result in increased credit risk.” The regulator also flagged risks in commercial and industrial loans and indicated that it is monitoring financial technology and marketplace lending.