Recent regulatory guidance is not meant to force banks and thrifts to "cut back" on their commercial real estate lending, according to Comptroller of the Currency John Dugan.The proposed guidance is designed to ensure that institutions with high concentrations of CRE loans have the risk management and capital necessary to address the increased risk, Mr. Dugan told the New York Bankers Association. "We' re not talking about expertise or capital levels that are out of reach or impractical for community and midsize banks -- because many of you already have both," the comptroller said. The comment period on the proposed CRE guidance ends April 13, but the Conference of State Bank Supervisors has already submitted a highly critical comment letter arguing that the guidance imposes an "unnecessary burden" on institutions. "Regulatory guidance should not chase banks from a business line where they understand the market and risks," the CSBS says.

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