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A Fresh New Hell for CMBS

WASHINGTON, DC—The Basel Committee on Banking Supervision is asking for comments on whether banks that are involved with securitization should set aside capital for "step in" risk.

The Federal Reserve Bank helps sets the US rules for Basel requirements. The Federal Reserve Bank helps sets the US rules for Basel requirements.

WASHINGTON, DC—Last week, The Global Financial Markets Association, the CRE Finance Council, CREFC Europe and the Real Estate Roundtable, responded in writing to a consultative document the Basel Committee on Banking Supervision published on December 17, 2015, called “Identification and Measurement of Step-in Risk.”

Step-in risk deals with banks that sponsor, originate loans or provide servicing for securitizations. Once those loans are off the balance sheet  — they have been securitized and sold in other words – the regulators assume that there is the possibility that the bank might have to “step in” and provide capital to save the securitization if  the deal starts to falter.

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Erika Morphy

Erika Morphy

Erika Morphy has been writing about commercial real estate at GlobeSt.com for more than ten years, covering the capital markets, the Mid-Atlantic region and national topics. She's a nerd so favorite examples of the former include accounting standards, Basel III and what Congress is brewing.

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