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Lawmakers to regulators Minimize CRE impact
WASHINGTON (2/19/10)--Reps. Paul Kanjorski (D-Pa.) and Ken Calvert (R-Calif.) have contacted federal credit union, bank and thrift regulators asking them to work together to minimize the impact of the growing instability in the commercial real estate (CRE) market. In their letter, Kanjorski and Calvert refer to a Feb. 11 report by the Congressional Oversight Panel (COP) entitled "Commercial Real Estate Losses and the Risk to Financial Stability." The report noted that nearly $1.4 trillion in CRE loans will reach the end of their terms between now and 2014. Close to half of those, according to the COP report, are currently underwater as property values have continued to decline. Because of tough CRE market conditions in the current economy, regulators must “act proactively to address these issues before they get worse. We must work to protect our small businesses operating throughout the country as well as the nine million jobs that depend on the commercial real estate industry,” Kanjorski said in the letter. “The commercial real estate market does not need a bailout, but it is begging for a coordinated response by its financial regulators to restore stability," Calvert added. The letter to financial regulators closely follows one sent by Kanjorski and Calvert and 77 of their House colleagues to U.S. Treasury Secretary Timothy Geithner and Federal Reserve Chairman Ben Bernanke regarding troubles in the commercial real estate sector, considered to be $6.7 trillion in size. The COP was established in conjunction with the Treasury’s $700 billion Troubled Asset Relief Program—known as TARP. The congressional panel was charged with review of the current state of financial markets and the regulatory system. COP can conduct hearings, review official data, and write reports on actions taken by Treasury and financial institutions and their effect on the economy.


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