The challenge is heightened when the borrower is also venturing into a new market. These practices led to significant losses in prior CRE credit downturns. I noted that CRE underwriting appears substantially better compared to the late 1980s and early 1990s. However, we have noticed some recent slippage. Therefore, the proposed CRE guidance underscores the existing interagency guidance on real estate lending standards.
But I do not believe that the seeming unresponsiveness of inflation to the apparent tightness of the labor market and other aspects of the economy tells the whole story in evaluating slack versus constraint in the economy.