Pay attention to mortgage and real estate risks, banks urged
WASHINGTON, DC – Federal Reserve Board member Susan Schmidt Bies has urged banking organisations to pay particular attention to recently released regulatory guidance, as it presents the agencies' current risk management concerns in commercial real estate (CRE) lending and non-traditional mortgage product lending.
Schmidt Bies told the Financial Services Institute in Washington, DC, in mid-February that CRE concentrations now stand at record levels at many banks. "For certain groups of banks – such as those between $1 billion and $10 billion – average CRE concentrations are above 300%," she said.
The current levels of CRE concentrations are even higher than the 200% level of the late 1980s and early 1990s when the CRE concentration played a role in banking crises of that era.
On non-traditional mortgage
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