WASHINGTON -The Federal Reserve Board and the Treasury Department announced Wednesday that they would extend the deadline for comment on a controversial proposal to allow banks to act as real estate brokers or managers.
In a press release the agencies said they had extended the comment period to May 1 because of wide public interest and their desire "to give the public sufficient time to consider the proposal." The original deadline was March 2.
Meanwhile groups opposed to the proposal - such as the National Association of Realtors, which last week held a press conference last week to blast the proposal as a breach of Gramm-Leach-Bliley - have received help from an unexpected quarter.
In a Jan. 30 comment letter, the Utah Bankers Association wrote that the proposal would tip the mortgage loan market in favor of large financial companies that could afford to add real estate brokerage services and thus would limit competition.
The letter said the plan would "create an unfortunate precedent to future rules permitting other kinds of open-ended business activity that will significantly affect the ability of smaller institutions to compete for loans.
"It does not make sense to broaden the outskirts of what services may or may not be deemed financial, or incidental, in nature when to do so would be at the expense of fair competition among financial institutions in the core function of lending," the Utah group wrote.
Several lawmakers have also written letters of opposition, including Rep. Spencer Bachus, R-Ala., the chairman of the House Financial Services subcommittee on financial institutions, who plans to hold hearings on the proposal this spring.
