Source: AFP
U.S. Treasury Secretary Janet Yellen expressed concern Tuesday about the commercial real estate sector in the current environment of higher interest rates — but added that the overall situation should be “manageable.”
Speaking before the House Financial Services Committee, Yellen noted that banking supervisors are trying to help institutions manage these conditions.
He added that the Financial Stability Oversight Council (FSOC) — which brings together financial and government regulators — is focusing on the sector.
At the moment, interest rates are high, while property owners are also facing changes in working patterns following the Covid-19 pandemic, with more office workers working remotely.
As commercial real estate loans mature, they will need to be “refinanced in a context where vacancy rates in some cities are quite high,” Yellen said in a filing.
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“It will put a lot of pressure on the owners of these properties,” he added.
But he said: “I think it is manageable, although there may be some institutions that are quite stressed by this problem.”
Bank supervisors work closely with institutions they supervise to manage and work with troubled borrowers, Yellen said.
For example, they seek to ensure that loan loss reserves are adequate and that liquidity is adequate.
In her testimony for the FSOC’s annual report, Yellen also emphasized that Congress should pass legislation that would allow stablecoins to be regulated.
These are a type of cryptocurrency designed to have a relatively stable price and are usually tied to an actual commodity or currency.
“FSOC believes it is critical to have a federal regulatory framework that applies to all states,” Yellen said.
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![](https://images.yen.com.gh/images/8308c627b273ede3.jpg?impolicy=cropped-image&imwidth=256)
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A federal regulator should also have “the ability to decide whether a stablecoin issuer should be barred from issuing such an asset,” he added.
Source: AFP