CREF Policy Update: MBA’s Broeksmit Offers Recommendations on Basel III Bank Capital Re-proposal in Testimony Before Key Congressional Committee
MBA’s Broeksmit Offers Recommendations on Basel III Bank Capital Re-proposal in Testimony Before Key Congressional Committee
Last Tuesday, MBA President and CEO Bob Broeksmit, CMB, testified at a legislative hearing titled, “Prioritizing Main Street: Evaluating the Impact of Capital Proposals on Economic Growth and American Communities,” before the House Financial Services Committee. The hearing was focused primarily on the Banking Agencies’ Basel III “Endgame” (“BE3”) re-proposal to update bank capital rules that was released by the Federal Reserve, Office of the Comptroller of the Currency (OCC), and Federal Deposit Insurance Corporation (FDIC) on March 19, 2026.
• Read Broeksmit’s written and oral testimonies.
• Summaries of the hearing can be found here and here.
Why it matters: In his testimony before the Committee, Broeksmit told lawmakers that bank capital rules – while highly technical – directly affect the cost and availability of housing for families and investment in communities. He noted that the current BE3 re-proposal is markedly improved compared to both the current framework and the 2023 re-proposal but emphasized that key provisions still need refinement to better reflect actual risks. He also stressed the importance of aligning capital rules for commercial and multifamily lending with actual loan performance, noting that banks play a critical role in financing housing and community development.
• Additionally, he focused on the capital treatment of commercial and multifamily mortgages – “the loans that build our communities,” –noting that banks are essential to this market, accounting for 38 percent of all commercial and multifamily mortgage debt outstanding.
Broeksmit noted, “CRE loans are important to banks – being some of the best performing loans on bank balance sheets in recent decades. Regrettably, high capital charges have kept banks from playing their appropriate role in this market.
“We support the structure and direction of changes regulators have proposed to address this – including basing the risk weights for commercial mortgages held by the largest banks on the loan-to-value ratios of the loans. Further fine tuning is needed.
“We’re also urging the Agencies to give appropriate capital relief to essential community investment and rental housing tools such as multifamily loans and Low-Income Housing Tax Credit investments. The performance of these products has been strong and capital requirements should reflect that.”
Go deeper: Lawmakers from both parties asked Broeksmit to delve into how the proposed capital rules would impact competition, borrower costs, and access to credit. In his written testimony, Broeksmit outlined MBA’s support for the re-proposal’s more practical approach to commercial real estate capital requirements, particularly by removing an unworkable provision that would have broadly classified all of a borrower’s loans as defaulted.
The testimony also endorsed risk-weighting loans based on loan-to-value (LTV) ratios for large banks while recommending capping the highest risk weight at 100% to align with current standards. For mid-sized banks, MBA raised concerns about the lack of risk sensitivity in applying a flat 95% risk weight and urged for more tailored approaches, including allowing the use of external ratings.
• Broeksmit’s also highlighted the strong performance of multifamily mortgages, calling for capital relief and lower risk weights – particularly for Low-Income Housing Tax Credit investments – given their reliability and community benefits.
What’s next: MBA is meeting regularly with members of its Basel III working group to formulate a response to the re-proposal by the June 18, 2026, deadline.
For more information, please contact Rachel Kelley at (202) 557-2816, John Lammle at (202) 557-2789, Madisyn Rhone at (202) 557-2741, George Rogers at (202) 557-2797, or Jeremy Green at (202) 557-2849.
Federal Reserve Keeps Rates Unchanged
The Federal Reserve held the federal funds rate at a target range of 3.50-3.75% last Wednesday.
Why it matters: The Committee noted that, “Developments in the Middle East are contributing to a high level of uncertainty about the economic outlook. The Committee is attentive to the risks to both sides of its dual mandate.”
What they are saying: “The FOMC kept the federal funds target unchanged at its April meeting, likely to be Chair Powell’s last. Inflation has increased and is likely to rise further, given the oil price shock from the war in the Middle East. The job market has also remained resilient,” said Mike Fratantoni, MBA’s SVP and Chief Economist.
• Read more of Fratantoni’s commentary here.
For more information, please contact Mike Fratantoni at (202) 557-2935
HUD Rescinds Energy Building Codes
Last Tuesday, the Department of Housing and Urban Development (HUD) and the Department of Agriculture (USDA) rescinded the 2024 “Adoption of Energy Efficiency for New Construction of HUD- and USDA Financed Housing.”
• This rule would have required the use of the 2021 International Energy Conservation Code (IECC) building standards for all HUD and USDA-insured or guaranteed properties.
Why it matters: The vast majority of states require 2009 IECC or an older version of the codes. MBA had cautioned that if the rule had gone into effect, it would have created substantial burdens on developers of new or substantially rehabilitated multifamily properties and single-family homes – increasing costs and complexity.
What are they saying: In a press statement after the announcement, MBA’s Broeksmit said, “MBA welcomes today’s announcement from HUD Secretary Scott Turner and Secretary of Agriculture Brooke Rollins rescinding a burdensome and costly regulation that would have significantly increased the price of new home construction and limited access to FHA and USDA financing.”
What’s next: MBA will continue to ensure that the need for more affordable housing is balanced appropriately to support continued development of energy efficient, safe, decent, and sustainable housing across the nation.
For more information, please contact Megan Booth at (202) 557-2740.
MBA Welcomes Improvements in CFPB 1071 Final Rule
Last Thursday, the Consumer Financial Protection Bureau (CFPB) finalized its 1071 small business lending rule.
• While declining to exclude investment properties from the requirements, the final rule includes many positive enhancements, including increasing the origination threshold for reporting from 100 to 1,000 covered credit transactions for each of two consecutive years. The rule also changes the definition of small business from $5 million or less in gross annual revenue to $1 million or less. It also extends compliance to January 1, 2028.
What they’re saying: In a press statement after the release, MBA’s Broeksmit said, “This more tailored framework reflects important feedback from MBA and other industry stakeholders and helps reduce unnecessary compliance burdens and preserve market liquidity for commercial real estate finance. MBA looks forward to continued engagement with regulators to ensure smooth implementation.”
Why it matters: These changes to the small business reporting rule will exempt many lenders from its burdensome reporting requirements as they relate to investment real estate. The CFPB even noted that these changes, along with the ability to aggregate revenue of parents of affiliates, will exempt most investment real estate from the reporting requirements.
What’s next: MBA will monitor the changes to the final rule for their impact on commercial real estate lending and will continue to work with the CFPB to modify other unnecessary regulatory burdens.
For more information, please contact Megan Booth at (202) 557-2740.
FDIC Flags Steady but Strained CRE Market in 2026 Risk Review
Last month, the FDIC published its 2026 Risk Review, which provided an overview of funding, interest rate, and credit risks banks faced in 2025. The Risk Review devoted an entire section to commercial real estate. Items of note include:
• CRE loan portfolios grew modestly and reached a new high last year;
• Overall, CRE loan delinquencies and net charge-offs remained low;
• Concerns remain around elevated interest rates, operating costs, and vacancy rates continue to impede some borrowers’ ability to repay CRE-related debt; and,
• Despite challenges in the broader market, CRE property values saw slight improvement in 2025.
Why it matters: The Risk Review provided an overall assessment of the commercial real estate industry from the lens of a bank regulator. Understanding the areas of focus highlighted in the report – office delinquencies, CRE loan concentrations, upward trends in property values, and increased bank financing for both balance sheet lending and CMBS issuance – provides unique insight as to what the Banking Agencies are focusing on in the commercial real estate industry.
What’s next: MBA will continue to provide our members with the most up-to-date commercial real estate market data and ensure our members’ priorities are effectively advocated.
For more information, please contact John Lammle at (202) 557-2789.
Senate Authors Introduce TRIA Legislation
Last Tuesday, Senators Dave McCormick (R-PA), Tina Smith (D-MN), Thom Tillis (R-NC), and Ruben Gallego (D-AZ) introduced the Terrorism Risk Insurance Program Reauthorization Act of 2026.
• The bill, which has 19 bipartisan cosponsors, extends the TRIA program for seven years. Reauthorizing TRIA is crucial to continuing the availability of terrorism risk coverage for commercial properties.
• The Senate legislation introduced this week is similar (but not identical) to a companion bill (H.R. 7128) reported earlier this year by the House Financial Services Committee by an overwhelmingly bipartisan margin of 52-1.
What they’re saying: In a press statement, MBA’s Broeksmit said, “With only minimal differences between the House and Senate bills, Congress is well positioned to act swiftly. We urge lawmakers in both chambers to prioritize this legislation, move it forward as expeditiously as possible, and work together to ensure its enactment before the end of this year.”
Why it matters: The private insurance market has relied on TRIA’s federal reinsurance backstop since the aftermath of the September 11, 2001, attacks. With the continuing threat of terrorism, any lapse in terrorism insurance coverage would lead to an impasse in the market.
What’s next: TRIA was a key point of emphasis as a priority issue during MBA’s recent National Advocacy Conference. MBA will continue to work with congressional allies in the House and the Senate, as well as coalition partners, to encourage passage of this important legislation to enactment prior to year’s end.
For more information, please contact George Rogers at (202) 557-2797 or Jeremy Green at (202) 557-2849.
Senate Banking Committee Advances Federal Reserve Chairman Nominee Warsh
Last Wednesday, the Senate Banking Committee held an executive session and favorably reported the nomination of The Honorable Kevin Warsh to be a Member and Chair of the Board of Governors of the Federal Reserve System (“the Fed”).
• The Committee advanced Warsh’s nomination to the full Senate on a party-line 13-11 vote. Warsh formerly served as a Senate-confirmed Governor on the Fed Board from 2006 to 2011.
Go deeper: Once confirmed, Warsh would succeed Jerome Powell, whose current term as Fed Chair expires on May 15. Warsh’s nomination advanced after Senator Thom Tillis (R-NC) lifted his hold on the nomination following assurances the Department of Justice it would end its investigation into Powell’s handling of major building renovations to the Fed’s office structure.
• Senator Tillis had viewed the probe as political pressure on the Fed’s independence. Powell said during Wednesday’s FOMC press conference that he plans to remain on the Fed’s Board of Governors —where his term as an individual Governor runs through January 2028 —for at least some period while an internal Fed Inspector General review continues.
Why it matters: During his confirmation hearing last week, Warsh said an expanded Fed balance sheet distorts markets, favors financial assets, and weakens the Fed’s credibility. He supports gradually reducing the balance sheet and returning to interest rates as the primary policy tool to better serve the dual mandate of price stability and maximum employment.
What’s next: Senate Majority Leader John Thune (R-SD) has filed a cloture motion to limit further debate on the Warsh nomination. With next week’s Senate recess, the cloture motion will “ripen” for a vote during the week of May 11. If cloture is invoked (as expected), Warsh’s nomination is then subject to up to 30 hours of “post-cloture” debate. Warsh’s confirmation vote by the full Senate is expected to occur prior to the expiration of Powell’s term as Chair of the Fed Board on May 15.
For more information, please contact George Rogers at (202) 557-2797 or Jeremy Green at (202) 557-2849.
MAA Action Week, May 11-15: Sign Up to Run a MAA Enrollment Campaign
With Congress considering a ban on institutional investors that could impair multifamily and build-to-rent (BTR) capital flows, new bank capital rules, a correction to drafting errors impacting a planned increase in FHA multifamily statutory loan limits, and TRIA reauthorization, it remains an impactful and important time to be engaged and involved in MBA Advocacy.
• From May 11–15, MBA will rally members nationwide to engage with policymakers, share their stories, and help shape the future of real estate finance during MAA Action Week. SIGN UP to lead a campaign at your company or state association (if applicable) and help grow MBA’s FREE grassroots network of industry professionals. Your participation strengthens our collective impact and ensures our voice is heard.
Why it matters: A strong grassroots campaign does more than raise awareness — it builds a lasting advocacy engine that drives progress well beyond Action Week. When companies mobilize their employees for advocacy, participation grows, momentum builds, and policymakers hear directly from the professionals engaged in commercial real estate finance. With more than 100 organizations joining us last year, 2026 is our moment to set a new benchmark.
• MBA provides ready‑to‑use resources—email templates, social content, active MAA rosters, and more—so participation is a simple and efficient exercise.
What’s next: Let’s make this milestone year truly monumental. Complete our sign-up form, and we will begin preparing your customized campaign materials.
For more information, please contact Jamey Lynch, AMP at (202) 557-2818.
Upcoming MBA CREF Council and Committee Meetings
MBA’s CREF Councils and Committees are a key way to connect to everything MBA has to offer around policy, advocacy, market intelligence and research, education, and networking. Visit www.mba.org/yourCREF to find out more. Councils and Committees are built around specific capital sources and serve as an opportunity for you to join other commercial real estate finance professionals to hear from experts, discuss opportunities and challenges, and connect with peers.
Upcoming virtual meetings include:
• FHA Committee: May 12
• Life Company Council: June 16
• Bank Council: June 18
• Structured Finance Council: June 24
• Private Credit Finance: June 17
• Agency Council: July 9
• Commercial Council: July 21
For more information, click on the links above and/or contact Kelli Burke at (202) 557- 2742.
Upcoming MBA Education Webinars on Critical Industry Issues
MBA Education continues to deliver timely commercial/multifamily and single-family programming that covers the spectrum of challenges, opportunities, obstacles and solutions pertaining to our industry. Below, please see a list of upcoming and recent webinars – all complimentary to MBA members:
• Basics of Commercial Loan Closing and Loan Documentation – May 12
• HUD’s Role in Multifamily Financing – May 20
• Mastering Commercial Insurance Modeling: Key Insights and Applications – May 21
• Understanding Tax-Exempt Private Activity Bonds in Affordable Housing Finance – June 12
• Fundamentals of Commercial Insurance Issues and Problems – July 15
MBA members can register for any of the above events and view recent webinar recordings by clicking here.
For more information, please contact David Upbin at (202) 557-2931.
