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SEC Seeks More Clarity on CRE Loan Exposure
The Securities and Exchange Commission is questioning some community and regional banks about their exposure to commercial real estate in their loan portfolios, the Wall Street Journal reported Thursday. Potential losses on the loans could spur them to further cut lending.
The agency has released four recent letter exchanges in which it questioned smaller financial firms about their CRE exposure in loan portfolios. The lenders include Alerus Financial and the holding companies behind Mid Penn Bank, Ohio Valley Bank and MainStreet Bank.
Kenneth Chin, a partner at law firm Kramer Levin Naftalis & Frankel, told the WSJ the letters signal the SEC’s growing interest in whether investors can adequately assess a bank’s financial soundness based on disclosure of their loan portfolios. “The SEC is worried that some of the banks may not be disclosing as much of their risk or exposure as they should to their investors,” said Chin.
- ◦Financing
- ◦Policy/Gov't
