Banking Law

It's only two years late, but the National Association of Realtors President's confident prediction that Congress would enact a permanent ban on national banks exercising real estate brokerage powers "by the end of this year" has finally come to pass. According to The American Banker (paid subscription required), "Congress was poised to pass an appropriations bill that would permanently ban the Treasury Department and Federal Reserve Board from finalizing a 2000 proposal to let banks into the brokerage business."

For the past eight years, NAR lobbyists have successfully inserted a one-year ban in appropriation bills. 2009 marks the "final victory" for realtors, who never again will be threatened by competition form those bad old banks. I mean, what would have been next: transparency for the multi-list? Perish the thought!

It wasn't as if banks fought for real estate brokerage powers tooth and nail, down to the wire. Basically, they threw in the towel and turned their attention to more important matters, like survival.

"It just wasn't important to bankers, and we had many other fish to fry," said Ed Yingling, the  president. "We had strung the issue out for several years just using lobbying tactics without engaging our grass roots at all. It was no longer on our priority list."

[...]

Industry observers said it made sense for the ABA to give up, especially given the pressing problems of today.

"As the mood shifted, the efforts of banks to defend this ? and the degree of political capital the industry is using on everything else ? left them unwilling to fight on this political loser," said Karen Shaw Petrou, managing partner of Federal Financial Analytics Inc.

It was never a question of a large number of bankers being hot for dirt brokerage. The fight was over whether the expansive potential of Gramm-Leach-Bliley was going to be nipped in the bud on one of the first contentious tests of the ability of national bank regulators to "regulate" national banks into new areas traditionally denied to them, pre-G-L-B. However, fighting over a "matter of principle" that doesn't fire up "the base" is foolish when the current crisis leads you to believe that banks had better hoard all the political capital they can muster for the "re-regulation tsunami" that's coming their way.

Just walk away, ABA. Hooray.

Besides, if a national bank really wants to engage in real estate brokerage, it can always flip to a charter in one of the 24 states that allow their state-chartered banks to engage in real estate brokerage. That would make the Conference of State Bank Supervisors happy, we assume.

We do regret that an issue that has given so much fodder for "deep, thoughtful commentary" in the past has now been laid to rest. We trust that NAR will soon throw us another softball to knock out of the park, though.