Feds to Seek CRE Change Under Basel

U.S. officials are planning to suggest a change in the capital treatment for certain types of commercial real estate loans under the proposed Basel II international banking risk standards.Although many U.S. supervisors have generally been treating CRE loans as more risky than commercial and industrial loans, new data analysis suggests that some commercial mortgages carry risk equivalent to that of C&I loans, Federal Reserve Board Vice Chairman Roger W. Ferguson Jr. said in a July 10 speech. "Consequently, the [advance notice of proposed rulemaking] to be released next month will propose that all CRE loans in the United States for in-place properties be on the low asset correlation function, as all C&I loans are," he told the Institute of International Bankers in New York. The Federal Reserve can be found online at http://www.federalreserve.gov.