MNI: Barr Says Fed Has Ramped Up Bank Oversight Post-SVB
Fed closely monitoring commercial real estate exposure in the banking system, Fed Vice Chair For Supervision Michael Barr says.
Federal Reserve regulators have become more proactive about bank oversight in the wake of the failure of Silicon Valley Bank and the burst of regional bank concerns that followed, Vice Chair For Supervision Michael Barr said Friday.
"Since SVB’s failure, we have focused on improving the speed, force, and agility of supervision, as appropriate to the situation," he said in prepared remarks.
"This means that supervisors take timely action as risks build up; that supervisors deploy supervisory tools and escalation effectively; and that supervisors are able to take account of changes in market, economic, and financial conditions, both to reprioritize examination activity as well as to draw supervisory conclusions based on new and different patterns of risks," he said.
Barr said the central bank is closely watching risks surrounding commercial real estate, where valuations have come under steep pressure in a post-covid environment that has changed the landscape for office space.
"Supervisors have been closely focused on banks’ CRE lending in several ways: how banks are measuring their risk and monitoring the risk, what steps they have taken to mitigate the risk of losses on CRE loans, how they are reporting their risk to their directors and senior management, and whether they are provisioning appropriately and have sufficient capital to buffer against potential future CRE loan losses," Barr said. (See: MNI INTERVIEW: Fed Could Cut As Early As June -Quarles)