Fed’s Lisa Cook Remarks on CRE

May 14, 2024

Last Wednesday,
Federal Reserve Governor Lisa Cook cited the rise of private credit, the impact of deteriorating CRE assets on small bank portfolios, and cyber risks as top financial stability concerns.

“All told, I view CRE risks currently as sizable but manageable, and I will be paying close attention to the sector in the short and medium run.” -Federal Reserve Governor Lisa Cook

Her remarks, made during a speech at the Brookings Institution in Washington D.C., outlined the Fed’s current assessment of financial stability focusing on four key areas: household and business leverage, financial institution leverage, funding risk, and asset valuations.

Why it matters: Cook is one of the seven members of the Board of Governors of the Federal Reserve, which regulates member banks and has a hand in crafting and approving bank regulation.

What they’re saying: Cook emphasized that CRE encompasses broad asset classes and geographies, and that the Fed is carefully monitoring concentration risk in small and regional banks. Excerpts from her speech are below:

  • “CRE is a broad asset class, encompassing multifamily housing, hospitality, retail, warehouses, office buildings, and many other business properties. Accounting for this heterogeneity is important in assessing the risks associated with CRE.”
  • “On average, CRE loans make up only about 5%of total assets at large banks but around 30% of assets at smaller banks. Those high concentrations have caused us to step up our supervisory work with community and regional banks that have significant CRE concentrations and to augment our regulatory data for this sector.”
  • “For instance, data available from SEC Form 10-Q filings suggest that office exposures account for a small share of most regional banks' CRE loans.”
Contact David McCarthy (dmccarthy@crefc.org) or Sairah Burki (sburki@crefc.org) with questions.


Sairah Burki
Managing Director, Head of Regulatory
Affairs & Sustainability

David McCarthy
Managing Director, Chief Lobbyist, 
Head of Legislative Affairs
The information provided herein is general in nature and for educational purposes only. CRE Finance Council makes no representations as to the accuracy, completeness, timeliness, validity, usefulness, or suitability of the information provided. The information should not be relied upon or interpreted as legal, financial, tax, accounting, investment, commercial or other advice, and CRE Finance Council disclaims all liability for any such reliance. © 2023 CRE Finance Council. All rights reserved.

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