Congressional support for real estate bill growing

Northwestern Financial Review, Jan 15, 2002

[chronicle]

The battle over real estate brokerage is heating up on Capitol Hill and national trade associations representing the affected industries are squaring off against each other.

More than 120 members of the House of Representatives have signed on to co-sponsor H.R. 3424, also known as the Community Choice in Real Estate Act of 2001. The legislation would prohibit banks from engaging in the real estate business. Edward Yingling, Executive Director of the American Bankers Association's Government Relations, blasted the National Association of Realtors for persuading Congress to reconsider provisions of the Gramm-Leach-Bliley Act that permit banks to broker real estate.

"The campaign mounted by NAR is a transparent attempt to scare its membership, alarm consumers, and turn the clock back on the Gramm-- Leach-Bliley Act. This debate is about more than real estate brokerage this is about the authority Congress specifically delegated to the regulatory agencies to determine what activities are financial in nature. If NAR wants to change that, they should go to court - not ask Congress to reopen GLB," Yingling said.

Yingling went on to call the NAR's efforts "disingenuous and wrong" adding that "...the NAR spin is nothing more than misleading propaganda."

NAR is lobbying for H.R. 3424 because it says consumers may be undermined by large banking organizations that get into real estate or property management. "Banks that broker real estate and also sell mortgages cannot avoid a conflict of interest," said NAR President Martin Edwards Jr. "They will steer consumers toward their proprietary products and services. When they say `one stop shopping,' they really mean `one bank shopping.' If you buy their home, you'll have to buy their loan whether it's the right product for you or not."

NAR announced its opposition to the proposed regulation in December 2000, following the decision by the Federal Reserve's Board of Governors to seek public comment on the proposal. The association recently delivered 50,000 letters to President Bush asking him to stop the regulation. This is in addition to the 100,000 protest letters sent to Congress, the Treasury and the Federal Reserve that Realtors generated last spring.

"Many of the NAR's arguments are identical to those made by the insurance agents during the debate of Gramm-Leach-Bliley," Yingling said. There is no legislative history supporting NAR's claim that Gramm-- Leach-Bliley prohibits banking institutions from offering these services. Gramm-Leach-Bliley clearly left that determination to the Treasury and the Federal Reserve."