Banks in Real Estate

REALTORS® want the to House pass H.R. 111 and the Senate pass S. 413, the Community Choice in Real Estate Act, which will permanently prohibit banks from entering commerce.  REALTORS® also want the permanent ban on banking in real estate passed in the FY2008 Senate Financial Services and General Government Appropriations bill.Our concerns include:

• Real Estate Brokerage/Management are commercial, not banking activities.  The separation of commercial activities and banking activities has always been absolute.  There is no need or reason for this line to be blurred or crossed. 
• The U.S. economy depends on a strong real estate market and a healthy banking industry. Therefore, REALTORS® are concerned about market disruptions, especially those thatwould affect both banking and real estate.
• Banks should be impartial providers of credit, not powerful, concentrated conglomerates that grow bigger to the detriment of small businesses and consumers. The success of real estate agents is determined by how well he or she meets consumers' needs.
• Putting real estate into the hands of banks would leave consumers with fewer choices and agents who may be pressured to put the interests of parent companies and shareholders above those of the home buyer or seller.
• Banking is financial in nature. Real estate is commercial. Throughout the years Congress has defended its Depression-era policy that the two should not be mixed.
• The Gramm-Leach-Bliley Act (GLB Act) stated that the Federal Reserve take into account changes in the marketplace and changes in the technology for delivering financial services when determining the expansion of banking.  There have been no significant changes in the marketplace or in the technology for delivering financial services since the passage of the GLB Act that in any way would justify such a dramatic change as allowing Banks to enter into real estate brokerage/management.
• If permitted to enter the real estate brokerage/management industry, financial holding companies, FHCs, possess advantages not held by their real estate brokerage competitors. The real estate brokerage industry is already characterized by fierce competition, market efficiencies, and ease of entry. 

General Background:In early 2001 the Federal Reserve and the U.S. Treasury Department proposed rules to expand the powers of national bank conglomerates.  The agencies proposed allowing national bank conglomerates to engage in real estate brokerage and management, reclassifying these activitiesas financial in nature.  C.A.R. and NAR strongly oppose the proposal, arguing that the Bank Holding Company Act of 1956 and the Gramm-Leach-Bliley Act (GLB) of 1999 do not authorize banking firms to provide real estate brokerage and property management services, as these are non-financial activities.  REALTORS® have supported the enactment of the Community Choice in Real Estate Act in previous sessions of Congress, which removes the powers of these agencies to regulate these real estate activities. C.A.R. and NAR policy supports the separation of banking and commerce.  If permitted to engage in real estate brokerage and management, national bank conglomerates would have an unfair competitive advantage and inherent conflicts of interest would result.While the Community Choice in Real Estate Act has yet to pass, C.A.R. and NAR have been successful in getting Congress to block the Treasury from implementingits rule.The House has introduced H.R. 111 and the Senate has introduced S. 413 which would place a permanent ban on banks entering into real estate activities.  Presently, H.R. 111 has 267 cosponsors and S. 413 has 21 cosponsors.  C.A.R. is also lobbying for the permanent ban which was included in the FY2008 Senate Financial Services and General Government Appropriations Bill.  Currently, the House Financial Services and General Government Appropriations Bill includes a one-year ban.  We will lobby for the Senate language to be kept through the appropriations process and the conference.