MNI BRIEF: Yellen Has Concerns About Commercial Real Estate

U.S. Treasury Secretary Janet Yellen said Tuesday she has concerns about commercial real estate, adding that banking supervisors are working closely with banks to build up loan loss reserves.

"I do have a concern about commercial real estate," she told lawmakers on Capitol Hill in Q&A. "I believe it's manageable, although there may be some institutions that are quite stressed by this problem." Yellen said banking supervisors have been focused on commercial real estate and are working closely with the banks they oversee to discuss ways to manage and work with borrowers who have problems, and are working to make sure that loan loss reserves are built up to cover losses, dividend policies are appropriate, and liquidity is adequate.

In his 60 Minutes interview released Sunday, Fed Chair Jerome Powell predicted that more small banks will likely close or merge due to commercial real estate weaknesses, but that the problem is ultimately "manageable."