In a speech at the Brookings Institution last week, Michael Barr, the vice chair for supervision for the Federal Reserve (Fed), announced that the central bank would be reissuing a revised proposal for its so-called Basel III Endgame Regulations. The Fed had proposed the new rules in keeping with regulatory revisions promulgated by the Basel Committee on Bank Supervision that would have increased bank capital requirements on major banks. It delayed issuing them as final rules due to widespread industry concerns about the economic impact of the resulting tighter lending standards, with possible negative impact on commercial real estate lending at a critical time for the industry.

The continued availability of commercial credit for real estate is a top NAIOP public policy priority in 2024, and NAIOP and a coalition of real estate groups advocated for changes in the Fed’s proposed rule. In his speech, Barr stated that the Fed regulation would scale back the proposal, which originally required capital increases of up to 20% on major banks, to approximately a 9% increase. Banks with assets between $100 billion and $250 billion would be exempt from most of the proposed changes.

The Fed’s Board will next meet to review the revised plan with an announcement expected thereafter, with the public having 60 days to comment on the latest version.