WASHINGTON, DC-The commercial real estate industry saw many ofthe provisions it had hoped to incorporate in the financialoverhaul included in the final version of the bill, which washammered out early Friday morning in a conference between the Houseand Senate. Namely, it includes amendments authored by Sen. MikeCrapo (R-Idaho) to allow regulators to customize the new riskretention mandate for commercial real estate finance. Anothermeasure offered by Rep. Scott Garrett (R-NJ) requiring regulatorsto consider the combined impact of new reforms and mandates, priorto any rulemaking, is also there, according to the CRE FinanceCouncil, which had been tracking--and lobbying for--theseprovisions.

In other respects, the compromises forged in the bill are harderon the financial industry than had been hoped, but not as bad asmany had feared. The so-called Volcker rule prohibits banks frominvesting in risky assets with their own money has been preserved,but has modifications such as allowing limited investments in hedgefunds and private equity funds. A provision authored by Sen.Blanche Lincoln (D-AZ) still limits the ability of banks to tradederivatives, but allows them to trade interest rate swaps, somecredit derivatives and other vehicles to protect their ownrisk.

The risk retention language has been particularly dear to thereal estate finance community, as it has been viewed as anessential element to restarting the CMBS market. The languagein the bill gives regulators choices such as a percent retention,flexible underwriting guidelines and controls and strongerrepresentations and warranties.