{"id":1004751331,"date":"2025-03-20T03:41:54","date_gmt":"2025-03-20T11:41:54","guid":{"rendered":"https:\/\/www.commercialsearch.com\/news\/?p=1004751331"},"modified":"2025-03-20T03:50:30","modified_gmt":"2025-03-20T11:50:30","slug":"capital-ideas-what-will-pragmatic-regulation-mean-for-banks","status":"publish","type":"post","link":"https:\/\/www.commercialsearch.com\/news\/capital-ideas-what-will-pragmatic-regulation-mean-for-banks\/","title":{"rendered":"Capital Ideas: What Will ‘Pragmatic’ Regulation Mean for Banks?"},"content":{"rendered":"
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Therese Fitzgerald<\/figcaption><\/figure><\/div>\n\n\n

Commercial real estate finance executives are hoping for a more business-friendly regulatory environment under President Trump. The president’s nomination of Michelle Bowman to be the Federal Reserve\u2019s new vice chair of supervision is another sign they are likely to get it. \u00a0<\/p>\n\n\n\n

A Federal Reserve governor since 2018, Bowman is a former Kansas state bank commissioner and a former community banker. If confirmed, Bowman said in a statement, she will “promote a safe and sound banking system through a pragmatic approach to supervision and regulation.”<\/p>\n\n\n\n

Pragmatism is just what the industry has been looking for as it emerges from the regulation-heavy Biden years while facing stricter banking rules set to take effect soon. Bowman’s resume and recent statements are encouraging for the Commercial Real Estate Finance Council.<\/p>\n\n\n\n

\u201cShe\u2019s been very clear on what her priorities are\u2014one of which is very, very tailored regulation,\u201d Sairah Burki, CREFC managing director & head of Regulatory Affairs and Sustainability, told me. \u201cShe is very aware of the unique problems that smaller banks face.\u201d Further, Burki noted, she understands the risks of specific assets and thinks that capital requirements for banks should reflect the risk.<\/p>\n\n\n\n

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READ ALSO:<\/strong> What Deregulation Could Mean for CRE Bank Lending<\/a><\/p>\n\n\n\n

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Bowman would replace Michael Barr, who resigned from his role as the Fed’s supervisory chief in January but will continue as a governor. During his tenure, Barr was charged with ushering through the contentious Basel 3 Endgame proposal and re-proposal, which will increase capital requirements for large banks by 16 percent\u2014down from a 20 percent increase in the original proposal\u2014and impose other measures on banks as well. <\/p>\n\n\n\n

The final rules, which are a joint effort of the Fed, the Federal Deposit Insurance Corp. and the Office of the Comptroller of the Currency, are expected to begin a three-year phase-in period on July 1.<\/p>\n\n\n

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Federal Reserve Governor Michelle Bowman<\/figcaption><\/figure><\/div>\n\n\n

Bowman has been a critic of the Basel 3 Endgame proposal. In a speech last year, she said its “narrow approach to rulemaking” failed to recognize all the direct and indirect consequences of the rules.<\/p>\n\n\n\n

Some banks are getting ahead of the stricter rules by taking less risky positions in commercial real estate, thereby reducing their exposure to higher capital charges. As such, more banks are choosing to be warehouse lenders, participants in syndications or providers of “back leverage” to debt funds.<\/p>\n\n\n\n

But, with Trump back in office, there has been talk of another revision of the Basel 3 Endgame and the possibility that the current regulatory framework will be left in place. <\/p>\n\n\n\n

Burki said Bowman and other Trump nominees at the the FDIC and OCC have all indicated that they “want to make sure that folks aren’t unduly penalized for risk that is not there” and that they are open to conversations with industry representatives. <\/p>\n\n\n\n

Regarding Basel 3 Endgame, a key concern for CREFC is the “hefty” capital charge for banks holding securitizations. “What the industry is probably relieved about is, moving forward, if there is a re-proposal, and we’re pretty confident there is going to be a re-proposal, we’re going to have an opportunity to really talk with these regulators.”<\/p>\n\n\n\n

CREFC is also looking forward to meeting with officials at the Security Exchange Commission, which, under Acting Chief Mark Uyeda, has already made changes to its regulatory approach, like ending the legal battle over its climate disclosure rules.<\/p>\n\n\n\n

“There had been a few different rules that they put in place under the (Gary) Gensler SEC regime that we sort of didn’t think went through the appropriate rulemaking, and so we definitely look forward to working with some of the new leadership on getting clarity on some of those rules,” Burki said. <\/p>\n\n\n\n

A voice of her own<\/h2>\n\n\n\n

While Bowman is expected to bring a lighter touch to the Fed’s regulatory policies, when it comes to monetary policy, she has shown she can be more hawkish than her fellow governors. Last September, when the Fed governors voted to cut the Federal Funds rates by half a point after 11 rate hikes, hers was the lone “no vote” and the first since 2005.<\/p>\n\n\n\n

In a statement, Bowman said the half-point cut (versus a quarter-point cut) could have been perceived as a \u201cpremature declaration of victory on our price stability mandate.\u201d Inflation at the time was 2.5 percent\u201450 basis points higher than the targeted 2 percent.  <\/p>\n\n\n\n

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<\/p>\n","protected":false},"excerpt":{"rendered":"

President Trump nominated another regulator this week who’s expected to apply a lighter touch to rulemaking. <\/p>\n","protected":false},"author":756,"featured_media":1004706954,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[21780,21825,21684],"tags":[51896],"class_list":["post-1004751331","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business-specialties","category-finance","category-viewpoint","tag-crefc"],"acf":[],"yoast_head":"\nCapital Ideas: What Will 'Pragmatic' Regulation Mean for Banks? - Commercial Property Executive<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.commercialsearch.com\/news\/capital-ideas-what-will-pragmatic-regulation-mean-for-banks\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Capital Ideas: What Will 'Pragmatic' Regulation Mean for Banks?\" \/>\n<meta property=\"og:description\" content=\"President Trump nominated another regulator this week who's expected to apply a lighter touch to rulemaking.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.commercialsearch.com\/news\/capital-ideas-what-will-pragmatic-regulation-mean-for-banks\/\" \/>\n<meta property=\"og:site_name\" content=\"Commercial Property Executive\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/CPExecutive\" \/>\n<meta property=\"article:published_time\" content=\"2025-03-20T11:41:54+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2025-03-20T11:50:30+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2024\/03\/new-headshot-copy.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"804\" \/>\n\t<meta property=\"og:image:height\" content=\"620\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"Therese Fitzgerald\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:creator\" content=\"@cpexecutive\" \/>\n<meta name=\"twitter:site\" content=\"@cpexecutive\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.commercialsearch.com\/news\/capital-ideas-what-will-pragmatic-regulation-mean-for-banks\/\",\"url\":\"https:\/\/www.commercialsearch.com\/news\/capital-ideas-what-will-pragmatic-regulation-mean-for-banks\/\",\"name\":\"Capital Ideas: What Will 'Pragmatic' Regulation Mean for Banks? 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