Realtors hold no punches in effort to exclude bankers

Northwestern Financial Review, Apr 15, 2001 by Bengtson, Tom

The real estate lobby is doing everything it can to limit the expansion of banking industry powers. May 1 is the deadline for submitting comments to the Federal Reserve Board regarding a rule that would give financial holding companies the opportunity to offer real estate brokerage and property management services.

The National Association of Realtors has launched an all-out offensive to inundate the Fed with letters in opposition. The old-line realtors are afraid competition posed by banks will be overwhelming, ultimately resulting in a reduction of real estate agent options for consumers. Of course the exact opposite is true. Add real estate brokerage services from banks and consumers will have more options than ever when it comes to buying or selling a home.

The banking industry's support of the Fed's rule on real estate powers makes eminent sense for several reasons. First, it will make the creation of a one-stop financial services center all the more possible. Why should consumers who want it be denied this level of convenience? Second, the real estate industry already includes several behemoth players (Century 21 and Coldwell Banker) that offer an array of services such as brokerage, mortgages, and title and property insurance. Third, Congress specifically considered a real estate brokerage carve-out when it was debating the Gramm-Leach-Bliley Act and dismissed it. And fourth, federal savings institutions and credit unions, and some state-chartered banks, have had real estate brokerage powers for years with no negative consequences to consumers.

The NAR published a survey on March 27 that concludes consumers are concerned about banks getting involved in real estate. The survey posed four leading questions to 2,049 consumers. For example, 81 percent responded "yes" when asked if they would be concerned that their bank would use private financial information to sell real estate services. On another question, 89 percent responded "yes" when asked if they would be concerned that their privacy might be violated.

The survey was designed to give the realtors the answers they wanted to hear. And give them extra tactical points for tying their cause to another hot-button issue on Capitol Hill - privacy. My hope, however, is that federal rule-makers have seen enough self-serving surveys to know how worthless they are. But if real estate brokerage services are important to the future of your bank, don't count on it. Respond to the Fed's request for comments; don't let the NAR's baseless charges go unchallenged.