By Kevin Drawbaugh and Corbett B. Daly
WASHINGTON, Feb 22 (Reuters) – U.S. Senate Banking Committee Chairman Christopher Dodd, citing concerns about the outlook for commercial real estate, asked regulators on Monday for action and a report on efforts to stabilize the sector.
“The weakness in the (commercial real estate) market requires prompt and robust responses from the regulators to guard against harmful effects on financial institutions and the economy,” Dodd said in a statement.
“I urge you to redouble your efforts to provide appropriate oversight of this vital component of our economy,” he said.
Dodd asked regulators for an update on their work to stabilize the market. The letter went to Federal Reserve Chairman Ben Bernanke and other top regulators.
This month, a congressional watchdog panel said the commercial real estate market has fallen more than 40 percent from early 2007 and a wave of loan failures in the next few years could threaten the U.S. economy just as it struggles back to its feet from the worst recession in 70 years.
Dodd noted that a Fed official testified last month before the watchdog panel that examiners at the U.S. central bank are reporting a “sharp deterioration” in commercial real estate loan quality.
The letter comes amid a broader debate on Capitol Hill over rewriting the way the U.S. financial services industry is regulated in the wake of the financial crisis.
The Obama administration is urging lawmakers to support a U.S. financial consumer watchdog that is strong and independent, pushing Senate Democrats to resist compromises sought by Republicans and bank lobbyists.
Treasury Secretary Timothy Geithner said the administration is still fighting “to consolidate the fragmented authority of seven separate agencies into a single, independent and accountable Consumer Financial Protection Agency (CFPA).
Seeking compromise, Dodd in recent weeks has discussed multiple options with Republicans, who oppose the CFPA, but has not struck a deal.
The Connecticut Democrat is working closely with Tennessee Republican Senator Bob Corker, a committee member, on crafting an agreement they hope will win broad support. Its release is expected within days.