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CRE Finance World, Autumn 2012

2013: Commercial Real Estate Finance’s “Regulatory Cliff” 3. Regulation AB: Once risk retention is finalized, Regulation AB PAC crucial to continued success should follow shortly thereafter (likely in Q2 2013). The dollars you provide to the CREFC Political Action Committee (“CREFC PAC”) in order to help elect policymakers to Congress 4. Basel Capital Standards: The U.S. lags far behind the rest of the are crucial to our efforts. world in implementing final Basel III rules, and there is pressure amongst the regulators to catch up. We expect final rules for Basel It’s important that you, our Members, are aware of CREFC PAC’s III in the first half of 2013. However, it is important to remember efforts. As of August 31, 2012, we received about $62,000, roughly that most of Basel III has a five year phase-in for compliance. 82% of our annual goal. We have also disbursed approximately $35,000 to 25 Members of Congress, with an additional $10,000 5. Credit Rating Agency Reform: The SEC is likely to release a committed to six more Members of Congress. Our current balance study on how — or if — to implement the Franken Amendment, stands at $140,000. which calls for random assignment of firms for initial credit ratings, after the elections. While the industry believes this model is not in While we are thankful to our CREFC Members for their generous the best interests of CMBS, no one has been able to come up with support, we believe our PAC inflows must be $125,000 per year in anything better than the current model. The question is, will the order to be optimally effective for the CRE industry. SEC? There is no date to implement the findings of the study. CREFC PAC has done yeomen’s work in stretching limited resources Not to be lost in 2013 will be two legislative priorities that will affect to the fullest extent possible, and we remain the leading voice for commercial real estate lending, both CMBS and portfolio: commercial real estate finance with policymakers. 1. Terrorism Risk Insurance Act (“TRIA”) Reauthorization: The To that end, we will continue investing in candidates who can best current TRIA extension expires in 2014. Congress will spend articulate and advocate for our industry. While there is a group 2013 deciding either to reauthorize TRIA, the Federal insurance members who have been strong advocates for CRE finance, our backstop, or whether the private sector is able to fill the gap. If goal for 2013 is to increase the “friends of CRE” ranks by an additional Republicans sweep the November elections, TRIA reauthorization five members. could be an uphill battle — and without terrorism risk insurance, the industry will stop lending. The CREFC GR team has been With additional resources next year, we can be well-positioned as visiting Congressional offices discussing the necessity for TRIA Congress considers significant legislation that could well reform reauthorization. Additionally, we are part of the Coalition to the GSEs, reauthorize the Terrorism Risk Insurance program and Insure Against Terrorism (CIAT), a 35-member association possibly modify significant sections of the landmark Dodd-Frank coalition formed after 9/11 to ensure that American businesses bank reform legislation. can obtain comprehensive and affordable terrorism insurance. If you want to learn more about CREFC PAC, please contact me 2. GSE Reform: I’d like to be able to tell you that a final reform bill at mflood@crefc.org. for Fannie Mae and Freddie Mac will be completed next year, but I can’t. However, all the groundwork — and positions of each Thank you for your continuing efforts on behalf of our industry! party — will be solidified in 2013. CREFC will be working to ensure that the solution for multifamily is separate and distinct from the solution for single-family. As you can see, decisions made in Washington in 2013 will play a large role in the future of our industry. As such, it is important that we remain diligent in our governmental affairs efforts. A publication of Autumn issue 2012 sponsored by CRE Finance World Autumn 2012 7


CRE Finance World, Autumn 2012
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