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The Federal Reserve is stepping up supervisory work with community and regional banks that have significant commercial real estate concentrations, Fed Governor Lisa Cook said.
Details: Speaking in Washington, Cook said CRE loans make up roughly 5% of total assets at large banks and around 30% of assets at smaller banks. Nevertheless, Cook cited the overall resilience of the banking sector, the solid state of bank profitability, and the stability of deposit flows.
Background: The FDIC in December issued an advisory to reemphasize the importance of strong capital, appropriate credit loss allowance levels, and robust credit risk-management practices for institutions with commercial real estate concentrations.