Regulators are concerned about heavy commercial real estate exposures and risky mortgage lending practices at U.S. banks, Federal Reserve Board Governor Susan Bies said on Thursday.
“There are certain rapidly growing business lines in banking operations that are placing pressures on risk-management systems,” Bies told a financial services industry conference as she outlined guidance regulators have issued on commercial real estate and so-called nontraditional mortgage lending.
In discussing the guidance on exotic mortgage products, such as interest-only loans, Bies repeated that government regulators were concerned risk-management practices had not kept pace with the risks that these widely available loan products could present.