Tag: Financial Stability Oversight Council (FSOC)

Fed Cuts Rates Again as CRE Eyes Relief; Coalition Supports FSOC Reform

Posted on by abigail_grenadier

The Federal Reserve on Wednesday approved a second consecutive quarter-point rate cut, lowering the federal funds rate to 3.75-4 percent. Chair Jerome Powell cautioned that another reduction in December is uncertain, suggesting the pace of easing could soon slow.

Fed’s Decision

  • The 10-2 vote saw Governor Stephen Miran favor a deeper half-point cut, while Kansas City Fed President Jeffrey Schmid opposed any reduction. (CNBC, Oct. 29)
  • Policymakers cited rising downside risks to employment amid persistent inflation near 3 percent.
  • Chair Powell noted “strongly differing views” on whether further easing is warranted, signaling a potential pause in December. “A further reduction in the policy rate at the December meeting is not a foregone conclusion. Far from it,” he said. (Watch Press Conference)
  • The chair also acknowledged the limited availability of economic data as the ongoing government shutdown has suspended federal data collection and reports.

Housing and CRE Outlook

  • At this week’s Fall Roundtable Meeting, House Financial Services Chair Rep. French Hill (R-AR) noted that persistent inflation continues to weigh on markets, though gradual rate cuts are beginning to ease conditions for housing and credit.
  • Continued monetary easing and the Fed’s balance sheet pivot may still bring modest relief to mortgage costs heading into 2026. (HousingWire, Oct. 29)
  • Economists note that improved credit conditions could stimulate purchase demand and support CRE transaction activity, though affordability challenges persist.

RER Advocacy

  • RER and coalition partners submitted a comment letter to the U.S. House of Representatives this week in support of H.R. 3682, the Financial Stability Oversight Council (FSOC) Improvement Act of 2025. (Letter, Oct. 28)
  • The bill, approved 47-4 by the House Financial Services Committee in Sept, would require FSOC to consult with a company and its primary regulator before designating a nonbank as a Systemically Important Financial Institution (SIFI), which would be subject to heightened prudential regulation and supervision by the Federal Reserve Board. (House Financial Services Committee Vote No. FC-198, Sept. 16)
  • The letter emphasized the importance of an activities-based approach to systemic risk, transparent cost-benefit analysis, and clear procedural guardrails to ensure predictability in financial oversight.
  • This follows a similar letter RER signed in July supporting efforts to restore due-process standards and coordination between FSOC and primary regulators. The letter urged FSOC to rescind its 2023 interpretive guidance and reinstate the Council’s 2019 framework for designating nonbank financial companies. (Letter, July 14)

Basel III Endgame

  • The Fed is circulating a revised Basel III Endgame proposal that would increase capital charges for large banks by 3-7 percent instead of the originally proposed 19 percent. (Bloomberg, Oct. 22)
  • RER strongly opposed the Fed’s original proposal, pointing out the significant economic costs it would incur without clear benefits to the economy, recommending that it be withdrawn and only reissued after further study. (Roundtable Weekly, June 27)

RER will continue to track developments on monetary policies and support measures that preserve liquidity and lending capacity as rate relief remains gradual.

Coalition Pushes Back on FSOC Nonbank Rules Amid Broader Scrutiny of Financial Oversight

Posted on by abigail_grenadier

The Real Estate Roundtable (RER) and a coalition of national trade associations submitted a joint letter on July 14 to Treasury Secretary Scott Bessent, urging the Financial Stability Oversight Council (FSOC) to rescind its 2023 interpretive guidance and reinstate the Council’s 2019 framework for designating nonbank financial companies.

Coalition Letter

  • The 2023 guidance significantly alters FSOC’s designation process, removing procedural safeguards such as cost-benefit analysis and coordination with a company’s primary regulator. (Letter, July 14)
  • The letter warns that FSOC’s shift away from an activities-based approach creates regulatory uncertainty that could chill capital formation, disrupt access to credit, and hinder innovation in risk management. (Pensions & Investments, July 14)
  • The letter signed by RER, the U.S. Chamber of Commerce, Mortgage Bankers Association, American Investment Council, and others, calls on FSOC to withdraw the 2023 guidance, refocus on systemic activities rather than specific firms, and restore due process protections.

Congressional Hearing

  • Lawmakers expressed concern that the 2023 guidance could revive pre-Dodd-Frank regulatory “blind spots” by enabling opaque designations that sidestep traditional supervisory processes. (PoliticoPro, July 16)
  • Committee Vice Chair Rep. Bill Huizenga (R-MI), also raised concerns, and introduced the prospect of curbing FSOC’s authority (American Banker, July 15)
  • At the hearing, lawmakers critically examined the expansive regulatory bureaucracy created by the law and its structural impact on CRE lending. Federal Reserve and FDIC data show that small and midsize banks (assets under $250B) now account for a majority of all CRE lending, particularly construction and land development loans. Exempted from some of Dodd-Frank’s most burdensome provisions, smaller lenders are stepping in to fill the gap left by larger banks scaling back amid accelerating debt maturities. (GlobeSt. July 16)
  • Some members also highlighted the need to restore bipartisan consensus around the Council’s systemic risk role, especially as market complexity grows.

The Fed

The Federal Reserve in Washington, DC
  • The Fed’s independence was also in the spotlight this week as President Trump floated—but ultimately backed off removing Fed Chair Jerome Powell, citing frustration over interest rate policy and the central bank’s headquarters renovation. (PoliticoPro, July 17)
  • Tensions over the Fed’s future rattled markets, with bond yields spiking and CRE leaders cautioning against politicizing monetary policy. (GlobeSt., July 17 | Axios, July 17)
  • JPMorgan Chase CEO Jamie Dimon warned that “playing around with the Fed” could carry serious consequences for U.S. financial credibility. (WSJ, July 15)

The Fed’s next policy meeting is scheduled for July 29–30. Policymakers are expected to keep interest rates steady at 4.25% to 4.5%—marking the fifth consecutive meeting without a change since the central bank paused rate cuts in December. (Reuters, July 17 | Axios, July 18)