NAR Lobbies to Keep Banks Out of Brokerage Business

WASHINGTON, DC-Nearly two out of three consumers believe that, to protect consumers, the Federal Government should not allow banks to own real estate brokerages, according to a survey released by the National Association of Realtors. The group stepped up its battle Tuesday against a regulation proposed by the Federal Reserve Board and the US Treasury that would open up the real estate industry to financial institutions. According to the Fed, the new regulation would define real estate brokerage and management services as financial in nature or incidental to financial activity and, therefore, permissible for financial holding companies. Banking officials say opening up real estate to their industry would increase competition and customer service.

According to the NAR, however, 68% of consumers believe they would be hurt under the proposal because of privacy issues. In the survey, consumers said bank-owned real estate brokerages would have access to all personal financial information of those involved in real estate transactions. Fifty-eight percent of respondents said banks are already too powerful.

At a press conference in Washington, NAR president Richard A. Mendenhall spoke out against the rule, noting that, “Should this regulation take effect, consumers would be the real losers. Real estate brokers’ loyalty is to buyers and sellers. Their success depends upon the quality of service they provide their customers. On the other hand, banks’ expertise and vested interest lies in making loans, not providing real estate services. If the Fed grants by regulation what Congress in its wisdom has banned since 1933, Federal banks could quickly assume a monopolistic hold on virtually all aspects of the real estate transaction. This rule would allow banks to buy up large brokerages and force the closure of thousands of smaller brokers, unable to complete with the advantages of a Federal bank charter and the financial resources enjoyed by major banking superpowers.”