Bankers Scrap With Real Estate Agents, This Time
In another ongoing turf war, the banking industry has stepped up its long-time dispute with real estate agents over the banks' efforts to carve out a greater share of the real estate services market.
The American Bankers Association, which has been fighting for years to limit credit unions' role in the financial services market, testified before Congress last week that banks' expansion into real estate brokerage and management services would benefit consumers by increasing their choices.
But the powerful real estate lobby, represented by the National Association of REALTORS, told the House Financial Services Committee that the mega-banks' expanded role in the market will create conflicts, putting mortgage lenders in the role of real estate brokers, and actually reduce competition by forcing many smaller players out of the business.
Elizabeth Duke, a VP for Wachovia Bank and chairman of the ABA, told the panel, "to listen to the National Association of Realtors, keeping banks out of the real estate brokerage industry is all about protecting customers. In reality, their campaign has been about protecting themselves from competition."
This is the same group that has been lobbying Congress to restrict credit unions' role in the business lending market, ostensibly because an expanded role by credit unions could threaten their safety and soundness.
This time, the banks, which were given authority to enter real estate services under the Gramm-Leach-Bliley Act of 1999, appear to have Congress on their side. However, that provision has been blocked by the realtors who have been lobbying the Treasury Department and the Federal Reserve to halt enabling regulation, in effect, helping them keep the banks at bay.
Both Financial Services Chairman Michael Oxley (R-OH) and the ranking Democrat on the committee, Barney Frank (D-MA) have introduced a bill that would ensure the provision of the GLB Act are enacted allowing financial holding companies and national bank subsidiaries to offer real estate brokerage and management services. Currently thrifts and credit unions are authorized to provide those services.