Battle Rages On

March 7, 2002

Banking Industry ?Extremely Mobilized? On Fight To Gain Access To Real Estate Business

By Bridget McCrea
Inman News Features

The American Bankers Association is pressing ahead with its efforts to oppose Federal legislation that would thwart its attempt to gain access for banking institutions into the real estate brokerage and property management businesses.

The group and its members this year have sent more than 54,000 letters to Congress arguing against the legislation, according to Catherine Pulley, spokesperson for the Washington, D.C.-based association.

"The banking industry is extremely mobilized on this issue," Pulley said. "We?re working hard to get the word out and fight these protectionist bills."

The bills being fought are H.R. 3424 and S. 1839. Both bills would preclude regulations proposed by the Federal Reserve and U.S. Treasury that would declare real estate brokerage and management activities to be financial in nature and therefore open to federally chartered banks.

Pulley said ABA?s members are not only sending letters to Capitol Hill, but also meeting with individual Congressional representatives in their home towns.

Pulley called the conversations "private" and wouldn?t say whether the representatives were giving the bankers positive feedback or support for their cause.

"Our state associations are all working on this," Pulley added. "It?s a top priority for us--make no mistake."

ABA Executive Director of Government Relations Edward Yingling earlier this year sent a four-page letter on the matter to all members of Congress. In the letter, he called both bills "anti-competitive" and claimed they would "undermine the clear authority of the Federal Reserve and Treasury to respond to changes in the marketplace under the Gramm-Leach-Bliley Act.

"Combining real estate brokerage and banking services is not a new or unusual activity," the letter stated. "Real estate firms do it. Insurance companies do it. Security firms do it. Credit unions do it. And state-chartered banks in half the states do it. So why not all banks?"

Competition from banks would be "pro-competitive and good for consumers," the letter stated.

The National Association of Realtors in Chicago strongly disagrees and has mobilized a more public show of support against banks getting involved in real estate businesses. The latest effort is a series of newspaper advertisements urging consumers to contact their own members of Congress in support of NAR?s position.

NAR President Martin Edwards Jr. said the group has marshaled more than 165 co-sponsors for the House bill. He pointed to the bipartisan nature of that support as a positive sign for the real estate industry.

"The last time we saw the breakdown for the House bill, there was a 50-50 split between Democrats and Republicans," he said.

But the Senate bill has fewer only about eight co-sponsors so far.

Edwards also pointed to the time that has elapsed since the banks initially promulgated the change in Gramm-Leach-Bliley as a positive indicator for NAR?s side of the debate.

"They sought regulatory support and 15 months later the action has not been forthcoming," he said. "In the meantime, we have 165 members of Congress on the bill?that?s a lot of members."

But NAR is facing some dissention in its own ranks. The Realty Alliance, an organization that represents a number of independent residential real estate brokerage companies, recently released a white paper, "Why the Real Estate Industry Should Allow Banks to Enter the Business."

It was an obvious stab at NAR?s stance.

Yingling said The Realty Alliance doesn?t support the banking industry, but clearly opposes NAR?s arguments.

"We were encouraged because we never really understood why NAR became so unglued about this issue," he said.

"We don?t believe it?s a threat to Realtors because no bank is going to set up a real estate company and try to turn bankers into (Realtors)," he added. "What they will do is partner with existing (brokers) and Realtors in a way similar to what?s happened in the insurance industry."

Yingling said the ABA has talked to The Realty Alliance "from time to time" and the realty group isn?t attempting to join the banks in the legislative battle.

But internal opposition to NAR?s bills is positive for the banking industry, he said.

"We think it?s better if that pure debate (happens) within the real estate industry," he said. "Having such a significant leadership group take on NAR?s arguments clearly undermines (NAR?s) position on Capitol Hill."

Copyright: Inman News Service

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