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Geopolitical Shocks & Market Volatility – CREFC Investor Forums Share Markets Updates

March 31, 2026

The CMBS and CRE CLO markets, which entered 2026 with significant momentum, have transitioned into a period of uncertainty. The escalation of conflict in the Middle East has recalibrated investor expectations and introduced a fresh layer of volatility into what was previously a normalizing market.

Market Sentiment & Macro Impact

The late-March "geopolitical shock" has triggered a classic "flight to quality," characterized by wider pricing on new deals and a marked increase in investor caution.

• The "Iran War" Effect: Market participants are closely monitoring the 5-year and 10-year Treasury yields, which have surged approximately 50 bps in the past month. Unlike the reactions seen during the Ukraine Invasion or "Liberation Day," the S&P 500 has seen a more measured drop of approximately 7%, suggesting the market may be pricing in a quicker resolution—though many bond investors remain skeptical of this optimism.
• Refinancing Friction: The sudden rate spike has created immediate friction for active deal pipelines. Borrowers may be reluctant to close loans at current levels, and some loans are being reworked to adjust for higher rates.
• Bifurcation: There is a divide in liquidity. While "trophy" assets like data centers remain resilient, we are seeing "credit dispersion" in the secondary market, where distressed sectors like Class B office and retail are widening significantly more than industrial assets.

Sector-Specific Performance

1. Conduit CMBS. Conduit products have recently "underperformed" relative to SASB and CLO structures as macro volatility rattles pricing.
   • Spreads: Benchmark AAA LCF (Last Cash Flow) spreads have widened from S +72 bps in early Q1 to the mid-80s by late March.
   • B-Piece Resilience: Feedback from the B-Piece Forum suggests that while yields tend to lag the broader market, buyers are reacting by "removing the marginal loan" from pools rather than just requiring wider yields. The mezz market remains a "deal-by-deal" environment with highly varied outcomes.
2. Single-Asset Single-Borrower (SASB). SASB remains the dominant force, accounting for nearly 75% of total private-label issuance.
   • Selectivity & Pauses: The market is open but more selective. Some SASB deals have been put on pause due to wider pricing. Investors are pushing back on AAA and BBB tranches, leading to deal delays when initial "test" pricing fails to find traction.
   • Data Center Strength: High-conviction sectors continue to drive volume, however, even these "gold standard" assets are seeing a shift toward shorter-term structures to navigate the current rate environment.
3. CRE CLOs. The CRE CLO market has seen a massive resurgence, with issuance reaching $11.2 billion by early March (up 34% YoY).
   • Collateral Shift: Multifamily remains the backbone (~70%), while office exposure has cratered to less than 3%.
   • Relative-Value Play: Interestingly, some investors are reportedly selling senior AAA CRE CLOs to pivot into Corporate CLO dislocations (driven by recent AI/Software sector news) as a total return play.

Asset Class Nuance: The Impact of Oil and AI

• Hotel Sector: Rising oil prices are expected to create a "K-shaped" recovery. Select-service hotels and those catering to lower-end demographics are viewed with increased concern as higher fuel costs squeeze consumer discretionary spending.
• Office & AI: While the Iran war has taken center stage, underlying anxiety regarding AI’s impact on long-term office employment remains a background headwind, adding to the structural uncertainty of the sector.

Capital Flow Observations

What’s Next. An Emerging Theme among Participants Is the Potential for "Capital Rotation." As noise increases in Private Credit (where asset values are perceived to be at "top-quartile" levels), there is an expectation that capital may flow into Real Estate Credit, where valuations are seen as having hit "bottom-quartile" levels, providing a more attractive entry point.

Bottom Line: The market remains open for transactions with strong fundamentals and realistic pricing expectations. However, for "tougher" deals or those with structural question marks, the current geopolitical environment has triggered a "wait-and-see" approach.

Contact Rohit Narayanan (rnarayanan@crefc.org) with any questions.

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Warren Targets Institutional Owners of Rental Housing, Including Multifamily

March 31, 2026

On March 27, Senate Banking Committee Ranking Member Elizabeth Warren (D-MA) sent letters to the largest corporate landlords in the single-family, multifamily, and manufactured housing sectors.

• The letters request data on their business practices, including landlord-tenant concerns and rental housing portfolios. 
• The companies may choose to respond to Warren’s requests, but they are under no current legal obligation to do so as the committee has not subpoenaed any of the companies.

Why it matters: Warren has long targeted private equity and institutional owners of all rental housing, not just single-family, and blamed them for higher costs and worse tenant experiences in the housing market. 

• Warren’s letter comes amidst the stalled effort to pass the 21st Century ROAD to Housing Act, which includes a provision to limit large institutional investor purchases of single-family homes. 
• The Senate passed the bill 89-9, but the House is negotiating changes before acting. Concern on the SFR piece include a forced divestment of new BTR homes after seven years. 

The big picture: Sen. Warren introduced “The American Homeownership Act” (S. 3904) legislation earlier this year, which directly targets institutional owners of all housing through the tax code. 

• While the legislation is unlikely to advance this Congress, the 20 Democratic co-sponsors demonstrate the overarching issue will likely remain a flashpoint for progressives. 
• The bill itself would limit federal real estate tax deductions and depreciation for large owners (50 or more SF units) and institutional investors, as defined by the statute. 
• The bill would also prohibit financing to those covered transactions.

What’s next: The individual companies may choose to respond to Warren’s probe, but the broader legislation and any hearings would likely not occur unless Democrats flip the Senate or House. 

Contact David McCarthy (dmccarthy@crefc.org) with questions.

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FSOC Proposes Changes to Nonbank “Systemically Important” Designation

March 31, 2026

On March 25, the Financial Stability Oversight Council (Council), an interagency forum of financial regulators chaired by Treasury Secretary Scott Bessent, issued a new proposal that would undo interpretative guidance changes made under the Biden administration. Comments are due in 45 days.

• The Biden-era revisions made it easier for the Council to designate nonbank financial institutions as systemically important.

According to Secretary Bessent:

• As reported by Politico, this proposal aligns with Bessent’s previously-stated priority of having the Council focus on economic growth, rather than “prophylactic” measures to prevent financial collapse.

The proposed interpretive guidance seeks to:

• Incorporate economic growth and security into the analysis of risks to financial stability;
• Prioritize identifying, assessing, and addressing risks through an activities-based approach;
• Commit to performing a cost-benefit analysis before a designation decision; and
• Provide a pre-designation “off-ramp” and promote greater transparency.

What they are saying: Council members voted unanimously to issue the proposed interpretative guidance for public comment. 

Federal Reserve Chair Jerome Powell, stated:

Yet, some policymakers shared their concerns that the proposal could make it more difficult for regulators to address future threats to financial stability.

Ranking member of the Senate Banking Committee, Sen Elizabeth Warren (D-Mass.), as reported by Politico, cautioned:

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Talking Filibuster Explained

March 31, 2026

The “talking filibuster” is being discussed by members of the GOP as a new legislative strategy as they gear up for a battle over the Trump-supported election reform bill, the SAVE America Act. 

For context: A “silent filibuster” is what we typically see in the Senate today.

• This occurs when a group of 41 or more senators threatens a filibuster, or opposes ending debate; in this scenario, the Senate majority leader will often decline to call a vote. 
• The Senate majority leader then typically works to pacify members and improve the vote count on the proposed legislation or alter the legislation to ensure it will pass.
  

Conversely, the talking filibuster is a process that would use Senate rules to allow debate to continue until filibustering senators (typically the minority party) can no longer hold the floor. 

The chamber requires three-fifths of the senators, or 60 lawmakers, to agree to wrap up debate and vote on the bill that is being debated. That’s where the filibuster comes in. 

• If Republicans voted as a bloc and did not close debate on the SAVE Act, or any other legislation for that matter, the Senate floor would remain open.
• The minority party (Democrats) would cease holding the floor either through exhaustion or Senate speech limitations, which govern what a Senator can and cannot say on the Senate floor. 
• If each Democratic Senator uses their allotted time for two 12-hour speeches, a talking filibuster could last 47 days. During that time, the Senate could not move forward on other business, such as bills to fund the government or advance nominations for administration positions or judgeships.
• If the Republican majority outlasted the Democrat minority speeches or exhausted enough Democrat senators to the point of ending debate, then a final vote on the SAVE America Act would take place at a simple majority threshold of 51 votes.
  

What they're saying: One of the supporters of the talking filibuster strategy is Congressman Chip Roy (R-TX-2), who implored his colleagues in the House to put pressure on the Senate to take this approach in an open letter last month. 

• Roy and others argue that current Senate rules allow them to do this, and do not require them to make any change to the legislative filibuster requirement of 60 votes that has been discussed in recent years.

What’s next: Regardless of opposition, support for utilizing the talking filibuster to pass the SAVE Act is likely to continue over the next few months. CREFC will monitor the situation for updates.

Contact James Montfort (jmontfort@crefc.org) with any questions.

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Banking Regulators Issue Long-Awaited Bank Capital Proposals

March 24, 2026 

On March 19, the banking regulators issued the long-awaited bank capital proposals, with comments due June 18, 2026. 

• CREFC and Mayer Brown will hold a webinar on Wednesday, March 25 at 3pm ET to cover the proposals’ key recommendations and our initial views on implications for CRE finance. Please click here to register.

The below two proposals were issued by all three agencies, the Federal Reserve Board, the Federal Deposit Insurance Corp (FDIC), and the Office of the Comptroller of the Currency (OCC):

• Proposed revisions to the risk-based capital framework applicable to the largest, most internationally active firms and to firms with significant trading activity (Basel III proposal)
  
• Proposed regulatory capital and standardized approach for risk-weighted assets (standardized approach proposal)

The G-SIB Surcharge proposal was issued by the Fed:

• Proposed risk-based capital surcharges for Global Systemically Important Bank holding companies (GSIB surcharge proposal)

The accompanying Board Memo states that 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;
• GSIB surcharge proposal would improve the measurement of systemic risk in the framework that determines the surcharge that applies to the largest and most complex banks; and
• Standardized approach proposal would revise the U.S. standardized approach, which applies to most banks, to better align capital requirements with the risk of traditional lending activities.

The regulators estimate the following capital impacts:

• Aggregate common equity Tier 1 capital requirements of Category I and II firms would decrease by 2.4% under the proposals (a 1.4% increase due to the Basel III proposal and a 3.8% decrease due to the GSIB surcharge proposal).
• The standardized approach proposal would decrease the aggregate common equity Tier 1 capital requirements of Category III and IV firms by 3.0% and of smaller banking organizations by 7.8%

Initial high-level takeaways for CRE:

• The standardized approach proposal recommends that risk weights for non-construction commercial real estate loans decrease from 100% to 95%. Table V.4: Impact on Risk-Weighted Assets on page 129-130 provides a summary of risk-weight impacts across assets.
  • Securitization risk-weights also would decline. Additionally, the proposal reduces the minimum risk weight for senior securitization positions from 20% in the current standardized approach to 15%.
  • The threshold-based deduction of mortgage servicing assets (MSAs) has been removed. All MSAs would receive a 250% risk weight under the proposal
• The Basel III proposal goes into significant detail on the treatment of CRE, including the definition of what constitutes regulatory commercial real estate exposures and accompanying risk-weights.
  • It allows for more granular capital treatment than the standardized approach.
    
  • Unfortunately, one of CREFC’s concerns related to the 2023 proposal reappears in this proposal: although common mezzanine/SPE financing structures are economically equivalent to first-lien lending, they continue to be penalized under a definition that requires a direct property security interest.

These proposals are the culmination of many years’ work to implement the 2017 international Basel agreement on bank capital requirements.

• In July 2023, the banking agencies jointly issued the notice of proposed rulemaking to implement the Basel III Endgame, which would have raised core equity Tier 1 capital for large and complex banks by 16%.
  • The banking industry fiercely opposed it, and it was never finalized.
  • The proposal also had negative implications for CRE finance, particularly given the onerous capital treatment of securitizations and warehouse lending. CREFC submitted a comment letter highlighting its concerns and led a joint letter from real estate industry groups.
• In September 2024, then Fed Vice Chair for Supervision Michael Barr announced a re-proposal attempt, but that effort stalled when President Trump took office and Barr stepped down.

What’s next: As noted above, CREFC and Mayer Brown, who is serving as drafting counsel on our comment letter, will hold a webinar on March 25 at 3pm ET.

Please contact Sairah Burki (sburki@crefc.org) with questions or if you want to join the CREFC Bank Capital Working Group.

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Senate Election Outlook Shake Up 

March 24, 2026

As the battle for the midterms kicks into high gear the political outlooks are changing for Senate Republicans. 

Why it matters: After the 2024 results, Democrats have had a tough 2026 senate map to contend with: 

• All but two of the 22 Republican seats up for election are in states that President Trump carried by at least 10% in 2024. 
• Democrats would have to flip four seats and hold seats in Georgia and Michigan, both of which Trump won in 2016 and 2024. 
• There are four seats that have been considered toss-ups since the beginning of the cycle, they are Maine, Michigan, North Carolina, and Georgia. 
• Recent political headwinds for the Republicans have led many to believe that Democrats have a chance to compete in four more states: Texas, Alaska, Ohio, and Iowa.

Texas

• In the Lone Star state, Democrats have dubbed the current situation a “perfect storm” for them to compete in the general election this fall. 
• State Senator James Talarico prevailed over Congresswoman Jasmine Crockett (D-TX-30). Talarico was viewed as the more moderate of the two and has made his faith a centerpiece of his campaign. 
• On the GOP side, there is a messy primary going on between Sen. John Cornyn (R-TX) and Texas Attorney General Ken Paxton. The success of Talarico and infighting on the GOP sides makes this the best opportunity Democrats have had to win a Senate seat in decades.

Alaska

• Former Congresswoman Mary Peltola (D-AK) entered the race in January and immediately made the race more competitive. Peltola represented Alaska in the House of Representatives from 2022-2025, the first Democrat to do so since 1972.
• In 2024, the state voted for Trump by a margin of 13 points, while Peltola only lost her 2024 election by two points, outrunning Harris by double digits. If there is even a hint of a blue wave this fall, Peltola has a shot at winning the state.

Ohio

• Ohio is becoming a true toss-up, even in a state Trump carried by 11 points in 2024. Democratic nominee and former Senator Sherrod Brown lost by only 4 points in 2024, significantly outrunning the top of the ticket. 
• In an election cycle that is looking promising for Democrats, Brown has a great shot to take back the seat.

Iowa 

• Iowa’s open-seat race is unexpectedly competitive after Sen. Joni Ernst (R-IA) announced her retirement.
• Despite Iowa’s GOP tilt, Democrats see an opening thanks to a competitive midterm environment. Ernst won her last election by six points and President Trump won the state by 13 points.
• Democrats are deciding between Josh Turek, a two-time Paralympic gold medalist who represents the reddest state house seat held by a Democrat. The other option is progressive candidate Zach Wahls, a state Senator who is a sixth-generation Iowan who is currently serving in the state's Senate. 
• On the GOP side, Congresswoman Ashley Hinson (R-IA) is the likely nominee with a host of endorsement, including President Trump.

The bottom line: Strong candidate recruitment and macro political environment dynamics may put enough seats in play to make Democratic control of the upper chamber a possibility.

Contact James Montfort (jmontfort@crefc.org) with any questions.

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