by Calculated Risk on 4/10/2006 11:58:00 AM

FED Governor Susan Schmidt Bies spoke today at the America’s Community Bankers Risk Management and Finance Forum, Naples, Florida. Her speech was an overview of risk management and the recent regulatory proposals.

On Commercial Real Estate:

It is perhaps an understatement to say that those gathered here today are aware of the proposed commercial real estate (CRE) guidance recently issued by the U.S. banking agencies. Indeed, we have received hundreds of comment letters on the proposed guidance so far: the comment period ends April 13.
...
Commercial real estate lending played a central role in the banking problems of the late 1980s and early 1990s and has historically been a highly volatile asset class. Past problems in CRE have generally come at times when the broader market encounters difficulties. Therefore, banks should not be surprised by the emphasis of the proposed CRE guidance on the importance of portfolio risk management and concentrations. One reason why supervisors are proposing CRE guidance at this point is that we are seeing high and rising concentrations of CRE loans relative to capital. For certain groups of banks, such as those with assets between $100 million and $1 billion, average CRE concentrations are about 300 percent of total capital. This compares to a concentration level of about 150 percent in the late 1980s and early 1990s for this same bank group.

On Nontraditional Residential Mortgages:

You are probably also aware that the U.S. banking agencies recently issued proposed supervisory guidance on nontraditional mortgages, for which the comment period ended March 29. We appreciate the extensive feedback from the industry and others. The agencies are now in the process of reviewing the comment letters and deciding on a way forward. While the main focus of the proposed guidance is on banks' ability to adequately identify, measure, monitor, and control the risk associated with these products, the proposed guidance also addresses consumer protection ...

She didn't address when the nontraditional mortgage guidance would be released.