Dodd-Frank Stands Out on Finance Council’s Radar

NEW YORK CITY-In a year with more than two dozen rules, reports and studies related to Dodd-Frank on the horizon, not to mention the prospect of GSE reform, the CRE Finance Council has is eye on Washington. In an overview document released Monday that details its 2011 legislative and regulatory policies, the association says it will concentrate its government relations and advocacy work on the following fronts: financial reform; GSE reform; new accounting and capital standards; credit rating agency reform; loan modification and REMIC issues; and covered bonds legislation.

“Economic conditions and uncertainty related to changing regulation remain significant concerns in the market and may hinder a resurgence in commercial real estate finance,” Lisa Pendergast, president of the council, says in a release. “Our highest priority is to ensure that policies provide certainty and confidence and lead to the promotion of private lending and investing that is absolutely critical to a broader recovery in commercial real estate.”

In the realm of financial reform, CREFC wants to make sure lawmakers understand “the unique nature of CMBS” and the need for its revival to support a recovery in the commercial sector. The council notes its success in getting a provision worked into Dodd-Frank that requires regulators to jointly adopt “risk retention” requirements by asset class and to provide a menu of options intended to align interests in the commercial mortgage market.

Another Dodd-Frank provision on which the council weighed in last year was the so-called “Volcker Rule,” securing language intended ensure that the ban on proprietary trading would not limit or prohibit lawful securitizations. This year, CREFC is working to ensure that the final rules do not impede the ability to originate and securitize loans, according to the council’s overview.

The council is also making it a high priority to ensure that GSE reform supports the commercial real estate finance market and focuses on providing “a stable, counter-cyclical and affordable source of capital for affordable and market-rate rental multifamily housing,” while also effectively managing the risk to taxpayers and avoiding a bias toward or against homeownership. CREFC says it’s currently working on a multifamily “white paper” to provide background and analysis to policymakers.

As the Financial Accounting Standards Board continues to roll out new rules with the potential for great impact on the industry, CREFC continues keeping tabs. The council is part of the Financial Instruments Reporting and Convergence Alliance, which continues to urge policymakers and standard-setters to provide “adequate time” to study and implement changes in accounting standards.

The SEC ramped up its credit rating agency reforms early this year, planning eight new rules for the rating agencies. CREFC says its goal is to ensure planned reforms are applied consistently, improve the understanding of ratings and instill confidence in our financial markets.

On the REMIC front, the council says it’s monitoring the effects of rule changes to ensure that they support, rather than hinder, the growth of commercial real estate finance. Finally, a new bill to create a covered bonds statute in the US is expected to move through the House of Representatives and receive strong consideration in the Senate this year. The measure will have CFREFC’s support, since the association believes covered bonds represent “an additive financing tool” for the US markets.