Magazine article Journal of Property Management

President's Letter

Magazine article Journal of Property Management

President's Letter

Article excerpt

Real Estate Battles the Banks

Who should be allowed to sell and manage real estate? That question has been at the heart of a battle that has been publicly waging in recent months between banks and real estate organizations.

Fighting stagnant growth in their traditional service categories, banks have already received the nod to sell insurance and securities. They're now going after real estate brokerage and property management as permissible financial services.

In a March 15 letter to Members of the House of Representatives, the Institute of Real Estate Management joined the National Association of REALTORS[Trademark] and eight other organizations in vehemently opposing the Federal Reserve and Treasury Department proposal which would give banks the right to sell and/or manage residential real estate.

"Not only does it (the Fed proposal) circumvent congressional intent, potentially jeopardize the safety and soundness of the country's financial system, and create substantial conflict of interest issues, but it also could result in severe negative consequences for consumers," the letter states.

IREM and its partners oppose the regulation based on these issues:

* It oversteps congressional intent. Congress specifically decided to keep banking and commerce separate. Management and brokerage are clearly commercial activities.

* Competition may be stifled. If the Fed proposal becomes enacted, it's likely to accelerate the consolidation of market power by a few large companies at the expense of smaller banking and financial firms.

* Potential erosion of consumer protection. As banks continue to lobby for expanded powers, consumers may see the potential erosion of current statutory protections.

* Places consumer privacy at risk. A recent poll conducted by Public Opinion Strategies found that 68 percent of consumers are concerned that banks would obtain access to all of a home buyer's personal financial information.

* Mixing banking and commerce exposes taxpayers to risk. Financial holding companies receive substantial subsidies from the federal government. Recognizing this, Congress has placed limits on their non-banking activities. …

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