The White House proposed tighter regulations yesterday for regional banks with between $100 billion to $250 billion in assets—after bank regulators testified this week before congressional committees that they are considering similar measures. (White House Fact Sheet and Reuters, March 30 | AP and American Banker, March 28)

Regulatory Changes

• Fed Vice Chair for Supervision Michael Barr, Federal Deposit Insurance Corp. Chairman Martin Gruenberg and Treasury Undersecretary for Domestic Finance Nellie Liang, above, testified on the need to strengthen capital standards for mid-sized banks in the wake of this month’s bank failures. (BGov, March 28)
  
  
• The Biden administration stated that federal regulators could expand long-term debt requirements and reinstate banking rules that were rolled back in the previous administration. (White House Fact Sheet and CNBC, March 30)
  
  
• Reuters reported that according to a senior White House official, "These are all actions that can be taken under existing law and as a result, there's no need for congressional action in order to authorize the agencies to take any of these steps."
  
  
• The Fed’s Michael Barr is conducting a review of federal oversight of SVB, with a report expected by May 1 that will recommend regulatory and supervisory actions. Fed Chair Jerome Powell has stated he will support the report’s regulatory recommendations. (Barr congressional testimony, March 30 and The Hill, March 28)
  
  
• Bank Policy Institute head Greg Baer issued a statement emphasizing how imposing more regulation on all banks would drive costs higher in the economy. "It would be unfortunate if the response to bad management and delinquent supervision at SVB were additional regulation on all banks. The Fed has barely begun its promised review. This has a strong feeling of ready, fire, aim," he stated. (Reuters, March 30)

Roundtable Recommendations

• The Roundtable recently cited market uncertainty from regional bank turmoil—along with a steady increase in looming debt maturities, rising interest rates, and remote work’s negative influence on office space demand—as coalescing factors that have put pressure on liquidity and decreased refinancing options for CRE assets. (Roundtable letter to regulators, March 17)
  
  
• The March 17 letter from Real Estate Roundtable President and CEO Jeffrey DeBoer to federal banking regulators recommended the reestablishing a troubled debt restructuring (TDR) program for commercial real estate that would give financial institutions increased flexibility to refinance loans with borrowers and lenders.
  
  
• The Roundtable urged regulatory bank Agencies to avoid any pro-cyclical policies, such as requiring financial institutions to increase capital and liquidity levels to reflect current mark to market models. “These policies would have the unintended consequence of further diminishing liquidity and creating additional downward pressure on asset values,” the letter states.

Agency Actions

• The Roundtable letter also notes that regulators have taken significant action four times since 2009 to assist commercial real estate loan modifications during periods of economic instability. DeBoer added, “Now is the time to take action again. Our request is for immediate action, given increasing credit and liquidity constraints. Time will allow markets still struggling with post pandemic uncertainties to stabilize.” (Roundtable letter to regulators, March 17)
  

This month’s Roundtable letter urged federal regulators to “take action immediately to provide increased latitude for financing institutions to work constructively with borrowers. Such action will avert what we believe would be an unnecessary crisis.”

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