Volcker Rule reform could boost CMBS: trade group

Fed proposal would make it easier for banks to trade

New York /
May.May 31, 2018 06:02 PM

Jerome Powell, Chairman of the Board of Governors of the Federal Reserve System (Credit: Getty Images)

On Wednesday, the Federal Reserve proposed loosening rules that limit banks’ trading activities, and it didn’t take long for the real estate industry to cheer the move.

In a statement, the CRE Finance Council, which represents the commercial real estate finance industry, lauded the proposed changes to what it called “burdensome regulations.”

Making it easier for banks to trade stocks and bonds will also make it easier for them to hold commercial mortgage backed securities, the trade group argued, which would improve “market liquidity.”

“This is an excellent example of policymakers recognizing a significant regulatory inefficiency in the system and addressing it,” CREFC’s executive director Lisa Pendergast said.

The Fed’s proposed changes concern the Volcker Rule, which was enacted by federal regulators in the wake of the 2008 financial crisis and prohibits banks that take retail deposits from using their own money to trade in stocks and bonds, unless certain criteria are met. Under the proposed changes, banks no longer have to prove that trades aren’t just speculative, the New York Times reported. Banks would get more freedom to decide which trade they can make.

Former Fed chair Paul Volcker, the rule’s namesake, welcomed the proposal — with a caveat. “What is critical is that simplification not undermine the core principle at stake — that taxpayer-supported banking groups, of any size, not participate in proprietary trading at odds with the basic public and customers’ interests,” he told the Times.


Related Articles

arrow_forward_ios
With a cooling trade war, stocks perform well, including real estate. (Credit: iStock)
Real estate stocks push up this week as U.S.-China trade tensions ease
Real estate stocks push up this week as U.S.-China trade tensions ease
416 West 25th Street and Maverick Real Estate Partners principal David Aviram (Credit: Google Maps and LinkedIn)
Chelsea landlord claims “predatory” lender is charging a crippling interest rate as punishment after losing foreclosure case
Chelsea landlord claims “predatory” lender is charging a crippling interest rate as punishment after losing foreclosure case
Broad Street Development, Invesco refi 80 Broad for $150M
Broad Street Development, Invesco refi 80 Broad for $150M
Broad Street Development, Invesco refi 80 Broad for $150M
CMBS issuance is set to break Great Financial Crisis record, report
CMBS set to break Financial Crisis record
CMBS set to break Financial Crisis record
Signature Bank CEO Joseph DePaolo (Signature Bank, iStock)
Signature Bank reports record results
Signature Bank reports record results
Hudson Yards (Getty, iStock)
City’s bet on Hudson Yards beginning to pay off
City’s bet on Hudson Yards beginning to pay off
The Closing: Ron Dickerman
The Closing: Ron Dickerman
The Closing: Ron Dickerman
Ministerial privilege: Would Tony Blair’s transfer tax loophole work in the US?
Ministerial privilege: Would Tony Blair’s transfer tax loophole work in the US?
Ministerial privilege: Would Tony Blair’s transfer tax loophole work in the US?
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...