Real Estate Brokerage
On January 3, 2001, the Federal Reserve Board and the Treasury Department issued a proposed rule under which real estate brokerage and property management would be permissible for financial holding companies as financial or "incidental to financial" activities. This authority was granted under Gramm-Leach-Bliley Act (GLBA). This is a positive proposal for our industry. While only a minority of our industry may be interested in using the new authorities now, we need to maintain our options for the future, particularly as real estate brokerages increasingly provide mortgage loans and insurance to their customers. Large national firms currently provide the same combination of services the realtors' trade association is now protesting.
The National Association of Realtors has had legislation introduced in the House and Senate to prevent the Treasury and Federal Reserve from moving ahead with their proposed regulation allowing financial holding companies into the real estate brokerage and management business. In the meantime, the NAR was successful in 2005 and again in 2006 in obtaining temporary “moratorium” language in the Treasury appropriations bill.
To counter this heavy opposition, bankers also wrote comment letters to the Fed and Treasury supporting the proposal and reminded Congress how important the rule is to consumers. Comment letters were sent to the Federal Reserve and Treasury Department in May 2001 and a subcommittee of the House Financial Services Committee held a hearing on the issue shortly thereafter. Several committee members expressed concerns that the proposal is wrongfully mixing banking and commerce and that it might be necessary to legislate to change the standard under GLBA. Bankers should continue to contact their House member and Senators Chambliss and Isakson to express that this is a regulatory issue that should remain with the agencies – Congress already addressed this issue in GLBA.
In 2007, Rep. Paul Kanjorski (D-PA) introduced H.R. 111 that would permanently ban national banks from engaging in real estate brokerage and management services.
GBA Counsel Walt Moeling of Powell, Goldstein, Frazer and Murphy shared his thoughts about whether adding real estate brokerage to a bank’s menu of services would have any value on the bank’s franchise. We encourage our community bank CEO’s to read Walt’s memo as it provides some interesting insights.
At a hearing of the House Financial Services Committee, the Conference of State Bank Supervisors (CSBS) testified that 25 states already allow their state-chartered banks to conduct real estate brokerage. CSBS said the Federal Reserve's and Treasury's interpretation of real estate brokerage as an appropriate activity for banks. Click here for a copy of the CSBS testimony.
The GBA's congressional delegation page provides addresses, phone and fax numbers, as well as email addresses for each representative and senator. View GBA's comment letter to the Fed and Treasury.
Questions? Email the Webmaster.
GBA's professional staff represents the membership at the both the state and federal levels. Contact any of them with questions about issues:
Joe Brannen,
President
Elizabeth Chandler, Senior Vice President - Government Relations
Don Browne, Legislative Consultant