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.
Supervisors focus on commercial real estate because that sector played a central role in the banking problems of the late 1980s and early 1990s and has historically been a highly volatile asset class. Past problems in the sector have generally come at times when the broader market encountered difficulties.