Bankers, Real Estate Agents Engaging In Annual Turf Battle.

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Author: Peterson, Molly M.

Finance

A long-running battle between banking and real estate industries over the interpretation of the 1999 Gramm-Leach-Bliley law again is flaring up, as Realtors continue to push for legislation to bar banking conglomerates from entering the real estate business. At issue is a four-year-old Federal Reserve proposal that would categorize real estate brokerage and management services as being "financial in nature" or "incidental to financial activity." Under that definition, financial holding companies would be allowed to sell and manage real estate. A joint proposal with the Treasury Department would allow financial subsidiaries of national banks to also act as real estate brokers and managers. Congress has barred the regulators from implementing that rule during the past three fiscal years as part of the appropriations process.

Rep. Ken Calvert, R-Calif., and House Financial Services Capital Markets Subcommittee ranking member Paul Kanjorski, D-Pa., are pushing a permanent prohibition. The lawmakers introduced legislation last week that would permanently block the Federal Reserve and Treasury from implementing that rule. The bill, which has more than 100 co-sponsors, is identical to legislation Calvert introduced in 2003. That measure had more than 250 co-sponsors but never saw legislative activity. Sen. Wayne Allard, R-Colo., sponsored a companion Senate bill during the 108th Congress. That bill had more than 25 co-sponsors, including Banking Chairman Shelby. Allard has not yet decided whether to reintroduce it, according to a spokeswoman. Jerry Giovaniello, the National Association of Realtors' senior vice president of government affairs, said he is optimistic Allard will revive the bill. He added the legislation remains the association's highest priority. "We believe the Gramm-Leach-Bliley Act continued the traditional separation of banking and commerce, and that's what Congress intended, and we just want to pass that bill to clarify the original congressional intent," Giovaniello said.

Floyd Stoner, the American Bankers Association's director of congressional relations, said the banking industry will continue its push for implementing the proposed rule. "We are opposed to the bill because it would deny competition in an area that can benefit consumers and broaden the number of players involved in real estate brokerage," Stoner said. "And it artificially singles out national banks while other lenders, like credit unions and savings institutions, have the authority to be involved in real estate brokerage."

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By Molly M. Peterson