REALTORS Say Treasury 'BluePrint' Causes Financial Concern
The National Assn. of REALTORS®, in a letter to U.S. Secretary of the Treasury Henry Paulson, expressed opposition to the “Blueprint for a Modernized Financial Regulatory Structure,” which would permit banking conglomerates to engage in the commercial activity of real estate brokerage and management, and asked the Treasury to withdraw this proposed rule.
“The blueprint makes extremely ambitious recommendations, most of which, as you have acknowledged, will require many years of debate and refinement,” said NAR President Dick Gaylord. “The immediate response to the blueprint from those potentially affected confirms that the subject is one of great importance and controversy.”
NAR has opposed mixing banking and commerce for fairness and financial soundness reasons, which the current law prohibits. The association is extremely disappointed that this recommendation asks Congress to repeal the national policy against mixing banking and commerce and authorizes holding companies to own both insured depository institutions and commercial firms. “This poses a direct conflict of interest and offers unfair advantages,” said Gaylord in earlier communications.
NAR also questions whether it is good public policy to concentrate oversight of all insured depository institutions under one prudential financial regulator. As one example, Gaylord noted, “Requiring state banks to also have a federal charter will have the effect of weakening and very likely killing the state bank option under the dual banking system that dates back to the Civil War era.”
NAR has strongly opposed an earlier Treasury Department and Federal Reserve Board rule that was jointly published in 2001, which would allow financial holding companies and financial subsidiaries of national banks to engage in real estate brokerage and real estate management. “The current crisis in the credit markets and the strain on the banking system support our view that banks should not engage in any commercial activities. Allowing bank conglomerates to divert their focus from financial activities onto commercial activities will do nothing to strengthen the nation’s financial system,” Gaylord said.