Concerned that federal regulators are pressuring community and regional banks to unnecessarily restrict their exposure to commercial real estate, Rep. Kevin Brady, R-Texas, has introduced legislation that he says will help stabilize lending and strengthen private investment in the market.
The measure, H.R.6317, requires reports on the number of maturing commercial mortgage loans at banks that were current and had adequate cashflows for debt service, but that banks did not renew because of pressure from federal bank regulators. The legislation also changes current law to permit banks to build up loan loss reserves to better weather economic downturns, according to Brady, a member of the Joint Economic Committee.
‘Right now, federal bank regulators are overcorrecting, viewing every loan connected to commercial real estate as a problem loan,’ says Brady. ‘This inflexible, one-size-fits-all regulatory restriction creates harsh pressure on community and regional banks to deny loans to long-standing commercial real estate customers, including small businesses whose lines of credit are backed by CRE assets.’
Brady says his legislation would encourage private investment by reducing the tax depreciation schedule on commercial real estate from 39 years to 20 years and on residential rental real estate from 27.5 years to 20 years.
To allow businesses to use their losses to reduce their tax liabilities, H.R.6317 would also increase the carry-back period for net operating losses from five years to two years, among other provisions.
SOURCE: Office of Rep. Kevin Brady