Earlier this month, U.S. Bancorp’s CEO Richard Davis issued a few words of caution regarding the commercial real estate markets to analysts, investors — and ‘some’ banks.
“It’s an area that we think has some undue risk in it,” he said during the third quarter earnings call. “It’s a pretty overheated market, not just in certain locations but in tenures, terms and the decisions some banks are making.”
The bank held $42.3bn in commercial real estate loans on its books as of 30 Sept. and Davis said he would seek to more-or-less keep it that way due to the potential risks. “[It’s] an area we’re going to keep a particularly close eye on,” he said.
But the comments also come as banks grapple with post-recession regulations tied to Basel III and Dodd-Frank that many commercial real estate insiders — even those outside of the banking sector — regard as excessive, overburdensome and/or counterproductive.
Do you agree with Davis? Are banks once again writing loans that are too risky? Or are regulations keeping them in check? Let us know by taking the poll below: