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Powell: Fed is “Very Focused” on CRE Loan Situation
The Federal Reserve is “very focused on the commercial real estate situation,” Chair Jerome Powell told a Congressional committee Wednesday. Powell also told the House Committee on Financial Services that nearly all Federal Open Market Committee members expect that it will be “appropriate to raise interest rates somewhat further by the end of the year,” following this month’s pause on further rate increases.
The discussion of the Fed’s monitoring of CRE came in response to a question from Rep. Young Kim (R-CA), pointing out that smaller banks hold the majority of the $1.5 trillion in outstanding CRE loans and asking whether the Fed is looking at ways to provide more time for these loans to refinance.
Fed supervisors “are very engaged with those banks, and particularly banks that have a higher concentration” of CRE loans, said Powell. “But there’s a playbook for working your way out of these loans. And it’s particularly in the office sector, where work-from-home is still a pretty material factor.”
Photo: Powell testifying before Congress in 2020.
- ◦Financing
