Hensarling Promotes Republican Plan to Replace Dodd-Frank

Jeb Hensarling (R-TX), chairman of the Financial Services Committee in the House of Representatives, is scheduled to unveil the Republican plan to replace the Dodd-Frank Act at a speech before the Economic Club of New York on Tuesday, June 7. Hensarling has advocated for an aggressive approach to revamping the methods taken under Dodd-Frank to regulate the banking sector, arguing that a pro-growth alternative is needed that would not unduly constrain credit to businesses. Hensarling is expected to give details as to his proposals, which could include changes to capital requirements imposed on banks.

NAIOP and its allies in the real estate industry have been focused on issues arising from Dodd-Frank implementation that could adversely affect available credit to the industry. In December of this year, the final rules for implementing provisions of the Dodd-Frank legislation relating to credit risk retention will become effective. These rules would require sponsors of commercial mortgage backed-securities (CMBS) to retain a 5 percent interest in the securitized transaction. The new rules are raising concerns in the CMBS market, and the real estate industry is working with Congress on legislation, namely the Preserving Access to CRE Capital Act (H.R. 4620), to clarify the risk retention rules so as to mitigate the negative impact they could have on commercial real estate. The legislation, which has been passed by the Financial Services Committee and must be passed by the full House, could become part of Hensarling’s broader legislative reforms.

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