In fact, many institutions already have both of these elements in place and may not need to adjust their practices very much. I believe we are all aware of the central role that CRE lending played in the banking problems of the late 1980s and early 1990s.
One reason supervisors are proposing CRE guidance at this point is that we are seeing high and rising concentrations of CRE loans relative to capital. For certain groups of banks, such as those with assets of between $ million and $ billion, the average CRE concentration level is about 300 percent of total capital.