Real Estate Roundtable Opens up About Basel II Concerns

WASHINGTON, DC-The powers that be–in this case, the US Federal Reserve Board, the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corp. and the Office of Thrift Supervision–have put the word out regarding proposed rulemaking affecting Risk-Based Capital Guidelines in the US. The Real Estate Roundtable has been doing its part to keep the agencies informed on various real estate industry consequences of the rulemaking, which would make way for the execution of Switzerland-based Basel Committee on Banking Supervision’s New Basel Capital Accord. Basel II, as the rulemaking is more commonly known, calls for the update of international regulations controlling capital adequacy for financial institutions.

Heeding the agencies’ request for comment, RER aligned with the Commercial Mortgage Securities Association to craft a letter to the agencies conveying their joint apprehension that some aspects of the rule would increase the cost of owning commercial mortgage-backed securities, and providing property acquisitions, development and construction loans. “Our basic concern is that we believe that the capital charges for CMBS should reflect the risk and liquidity of pool securities relative to the single-asset exposures, just as corporate debt does,” RER president and COO Jeffrey D. DeBoer tells GlobeSt.com. “We’re engaged in discussions with the Federal Reserve to try to make sure that any final rules in this area are not biased against commercial mortgage-backed securitizations.”