The banking agencies have sounded a loud alarm about CRE lending, putting banks large and small on notice due to their fears about heightened risk in a sector long known as a trouble spot for the banking industry. Little in the statement is expressly new, with the specific examination expectations drawn from prior CRE guidance. However, the scope of penalties associated now with violating supervisory expectations has grown considerably, suggesting that any bank with a large CRE book should carefully review it now and consider holding higher capital and/or reserves against it.
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