I would also like to mention up front that the proposed guidance is not intended to cap or restrict banks' participation in the commercial real estate sector, but rather to remind institutions that proper risk management and adequate capital are essential components of a sound CRE lending strategy. In fact, both of these components are already in place at many institutions.
No element of the proposed guidance is intended to act as a "trigger" or "hard limit" signaling the need for an immediate cutback in or reversal of CRE lending; rather, the thresholds in the proposed guidance are intended as benchmarks identifying cases for further review.