CREFC Submits Basel Capital Comments
June 18, 2026
CREFC submitted today its response to the following bank capital proposals issued in March by the Federal Reserve Board, the Federal Deposit Insurance Corp (FDIC), and the Office of the Comptroller of the Currency (OCC):
CREFC also led a joint-trade effort spanning 11 associations. This joint letter was also submitted today.
As covered in previous CREFC Policy & Capital Markets Briefings:
- The Basel III proposal would revise the risk-based capital requirements that apply to the largest, most internationally active firms (Category I and II firms) and simplify the framework by subjecting firms to a single set of risk-based capital calculations; and
- The Standardized approach proposal would revise the U.S. standardized approach, which applies to Category III and IV banks, to better align capital requirements with the risk of traditional lending activities.
Both the CREFC and joint trade letters noted that the proposals made significant strides from the Biden-era capital proposal toward tailoring capital requirements to actual risk, including better risk-adjusted securitization risk-weight calculations.
However, we shared several recommendations to ensure that the final rules appropriately calibrate capital requirements for CRE exposures, preserve essential financing channels, and avoid unintended consequences for CRE lending and securitization markets.
A few key recommendations include:
- Permit Category III and IV banking organizations to access granular CRE risk weights without adopting the entire expanded approach - currently, the proposals only allow Category I and II banks to access tailored risk-weighting for CRE exposures;
- Broaden the “regulatory CRE” and “real estate exposure” definitions to avoid structural penalties for mezzanine and SPE-recourse structures, with measured add-ons for subsequent liens as warranted;
- Revise the securitization eligibility criterion to recognize transactions that depend “primarily” on underlying assets and equalize the 15% floor for comparable government-sponsored enterprise (GSE) exposures during conservatorship;
- Tailor the expanded “commitment” scope, retain a 0% credit conversion factor (“CCF”) for unconditionally cancelable, secured CRE warehousing under the standardized approach; and
- Reassess the mortgage servicing asset risk weight in light of empirical performance and the Federal Regulators’ own requests for comment.
We believe final rules could be released late this year or early 2027, with compliance phased in over the next few years across different elements of the rules.
CREFC will continue to engage with banking regulators as they review industry comments.
Please contact Sairah Burki (sburki@crefc.org) with questions.