The Federal Reserve and Department of Treasury are considering whether to allow banks into property management and real estate brokerage, after the banking industry was deregulated a couple years ago. At issue is the fundamental question of whether real estate brokerage services are either financial in nature or incidental to financial transactions. If they were deemed either, banks would theoretically be allowed to enter the real estate arena.

"This proposal is a lose-lose proposition. It's a bad idea for banks and it's really terrible for consumers. Market concentration reduces competition and consumers end up paying more for less service and having fewer options in terms of service providers," says NAR chief economist David Lereah.

The NAR's paper contends that, if approved, the regulation would introduce unfair competition, concentrate the market too much and could result in more foreclosures."If regulators approve the proposal allowing the expansion of bank powers into real estate brokerage, the alignment of homeowner and bank interests would be eliminated and so a perverse set of incentives could be substituted," the white paper states.

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