Fed Flags Risks Tied to Office Space, Capital Planning (1)

The Federal Reserve said it was monitoring community and regional banks’ commercial real estate loan portfolios amid concerns over “elevated interest rates, tighter underwriting standards, and lower commercial property values.”

The central bank said those factors may affect borrowers’ ability to refinance or pay off their loans, according to a supervision and regulation report released Monday. Officials are monitoring commercial real estate loan trends in addition to closely reviewing underwriting practices and credit loss reserve levels.

Among Wall Street lenders, the agency’s watchdogs are monitoring for weaknesses in capital planning and liquidity risk-management practices among such banks. Still, the Fed ...