Banks' Commercial Real Estate Lending Under Fire
The three main US banking regulators, the Federal Reserve, FDIC and OCC, say they plan to clean up sketchy lending practices—which are running rampant, just like before the 2008 crisis.
Real estate values have surged since 2010, and competing banks have dropped lending standards to get their piece of the loan action, Bloomberg reports.
The OCC called out low-standard lending last week—Comptroller Thomas Curry says banks are chucking sound underwriting, risk management and loan-loss provisioning in their bid for cash and expansion.
The regulators say banks will either have to clean up their loans or hold on to more cash to lower risk. Banks with the biggest expansion in real estate lending will see the most attention, regulators said. [Bloomberg]