Real Estate Claims Win Over Banks
What the association applauded was the Feb. 13 passage of the omnibus spending package that includes a provision that prohibits the U.S. Department of Treasury from finalizing a rule that would allow banks to enter the real estate business in the fashion that they have entered the securities and insurance industries.
According to the association, banking conglomerates have been seeking permission to sell and manage real estate via a rule proposed before the Federal Reserve Board and the Treasury. The association’s position, however, is that the proposed rule is contrary to what Congress intended when it passed the 1999 Gramm-Leach-Bliley Act.
The budget provision, which was introduced at the behest of U.S. Rep. Anne Northup, R-Ky., specifically precludes the Treasury Department from using any funds to implement the rule for the remainder of fiscal 2003, which concludes Sept. 30.
The association termed the provision’s adoption as “a major victory for Realtors, consumers and communities everywhere” and further said it was a “testament to the sustained, proactive grassroots activities of local Realtors.”
The association also reports that it is supporting new legislation that would permanently prohibit big banks from entering the real estate business. The measure, which the association says is co-sponsored by 175 members of the House and 10 senators, is called the Community Choice in Real Estate Act (HR 111 and S 98).
Introducing the measure on Jan. 7 was a bipartisan set of sponsors: Reps. Ken Calvert, R-Calif., Paul E. Kanjorski, D-Pa., and Sens. Richard Shelby, R-Ala., Wayne Allard, R-Colo., and Hillary Clinton, D-N.Y. A similar bill died in the previous Congress.
The association’s former president, Mark Edwards, said that the Feb. 13 votes by the House and Senate “send a clear and strong message to the Treasury that Congress never intended to mix banking and commerce. Both houses of Congress have spoken and officially declared their intent to keep banks out of real estate. We are hopeful that Treasury will deny the rule. We continue to believe that the banks cannot obtain through regulation that which they obviously cannot get through legislation.”
The association’s current president, Cathy Whatley, said the organization is grateful to Congress and hundreds and thousands of Realtors whose support made the Feb. 13 victory possible. “We expect momentum for the stand-alone bill to grow even stronger,” she said, “as Realtors continue their regularly scheduled visits with their congressional delegates.”
She indicated that the association believes congressional support will mount for keeping banking separate from real estate sales and management. She sees that support growing in light of recent renewed accounting scandals along with gathering allegations that firewalls between differing banking activities have been violated.
Association spokespersons say a chorus of consumer, community and small business advocates also have voiced support for the Community Choice in Real Estate Act. Their concern is that if banking conglomerates succeed in taking over local real estate businesses, home buyers and sellers would have fewer choices and would face higher loan fees and reduced customer service.
“Housing continues to be the leading sector of our economy,” Whatley added. “Approximately 68 percent of new growth in our gross national product last year was housing-related.
“We’re thrilled that Congress agrees that America as a nation simply cannot afford to allow big banks to take over the real estate business, which has been the leading pillar of our economy.”