- The Washington Times - Wednesday, May 15, 2002

More than 7,000 real-estate agents have come to Washington this week to plot a strategy to keep banks out of their business.
Rules pending before the Federal Reserve Board and the Treasury Department would allow banks to offer the same services that real-estate firms now do, such as brokering home sales.
Legislation is pending in Congress to block those proposed rules.
"We see this as nothing less than a sea change in the way houses are bought and sold in this country," said Stephen K. Cook, spokesman for the National Association of Realtors, the industry's main trade group, which is lobbying against the proposal to allow banks into the real-estate business.
The issue is dominating the association's midyear legislative meeting in Washington. Between 7,000 and 8,000 of the group's members are in town this week, primarily to lobby Congress, Mr. Cook said.
At least 1,000 of the association's members will go to Capitol Hill today to meet with lawmakers.
The battle has been joined at a time when residential real estate is booming, despite a weak economy. A survey by the National Association of Business Economists this week found that two-thirds of economists credit the resilient housing market for reducing the severity of the recession.
Realtors say that banks would have an unfair advantage in the real-estate industry because they have special access to discount loans from the Federal Reserve and can raise low-cost, federally insured deposits.
Bankers say the proposal would make banks more competitive, pointing out that many real-estate firms already offer mortgage lending, title insurance and property insurance services. Often, real-estate firms do this through affiliated companies or subsidiaries.
"It's no secret that many realty firms are offering traditional financial services, and many agents and bankers are already working together in the first place," said Catherine Pulley, spokeswoman for the American Bankers Association, the banking industry's main trade group.
A 1999 bank modernization law lets banks enter new businesses, and the Federal Reserve Board has said real-estate brokerage and management services are permissible once the U.S. Treasury sets the rules.
The Treasury proposed rules in January 2001 that were scheduled to go into effect within 60 days. Those rules have been delayed repeatedly, the result of heavy lobbying by the real-estate industry.
The Treasury has received about 35,000 letters on the issue and needs more time to develop regulations, Treasury Secretary Paul H. O'Neill said in an April 22 letter to House Financial Services Chairman Michael G. Oxley, Ohio Republican.
"The volume of letters demonstrates the sensitivity of this particular determination as well as the difficulty of the task that Congress gave us in promoting competition in financial services," Mr. O'Neill wrote.
Before Mr. O'Neill sent the letter, the real-estate and banking industries blitzed the radio airwaves with advertisements giving their side of the argument.
A House Judiciary subcommittee is scheduled to hold a hearing tomorrow on the decision to delay action on the proposed rules.
Rep. Bob Barr, Georgia Republican and chairman of the administrative and commercial law subcommittee, opposes adding real-estate brokerage to the list of activities that are "financial in nature" under the 1999 bank reform law, called the Gramm-Leach-Bliley Act.
Mr. Barr, who also sits on the House Financial Services Committee, is among 226 co-sponsors of a bill that would block the Treasury and Federal Reserve from finalizing the proposed rules.
The two sides are locked in a fierce public relations battle and vow to continue their advertising.
"This is a long-term issue for us. Every day that goes by, more and more real-estate brokerages are offering financial services," Ms. Pulley said.

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