CARW Members along with GMAR members met with Congresswoman Gwen Moore regarding proposed tax reform. Commercial issues discussion was led by Ben Adank of SARA Investment Real Estate (CARW RPAC Chair). Gwen has been a strong supporter of real estate issues and continues to engage in community betterment and business development matters. Of interest to Congresswoman Moore, is the issue of Basel III (see below). We also discussed potential changes to the 1031 Like-Kind Exchange and educated her on the importance to commercial real estate velocity. Read about other National issues HERE and the Basel III issue below. Members of CARW will join other NAR, WRA and GMAR members in Washington DC in May.
BASEL III: The Basel Committee on Banking Supervision released a proposal addressing Revisions to the Standardized Approach for Credit Risk, which outlines the risk-weighting regime for credit exposures for those using the standard approach. The proposal, High Volatility Commercial Real Estate (HVCRE), would have a negative impact on credit availability for commercial real estate through its changes to risk weighting different factors within the loan, and increased lending standards that would be higher than what regulators already have in place. The Committee also proposed a small fleet of changes, known as Basel IV, to complete ‘final calibrations’ of the Basel III standard.
NAR ACTION: NAR is active in working with its members and industry partners to understand the impact of Basel III standards in application. NAR signed onto a comment letter in March 2015 with several industry partners calling for the Committee to rethink its approach to the risk weighting standards and to scale back some of the changes that would be most limiting to commercial real estate lending. NAR submitted letters for the February 2016 House Financial Services Subcommittee on Capital Markets and Government Sponsored Enterprises hearing “The Impact of the Dodd-Frank Act and Basel III on the Fixed Income Market and Securitizations,” and the June 2016 Small Business Committee Subcommittee on Economic Growth, Tax, and Capital Access hearing on the impact of regulatory burdens stressing the burden that overly-broad regulations for lending institutions have on commercial real estate. NAR signed on to a coalition letter urging for the delay in finalizing Basel III reforms, which was ultimately successful.