You are here:HomeNews CenterInsurance News2007Subcommittee Approves Measure to Continue Ban on Banks in Real Estate

Subcommittee Approves Measure to Continue Ban on Banks in Real Estate

The financial services subcommittee of the House Appropriations Committee has approved a budget measure that will continue a years-long ban on banks engaging in real...
June 26, 2007

The financial services subcommittee of the House Appropriations Committee has approved a budget measure that will continue a years-long ban on banks engaging in real estate activities. A provision in the bill prohibits the Treasury Department from finalizing a 7-year-old proposal that would classify real estate brokerage as "financial in nature," meaning that banks could sell real estate.

The 1999 Gramm-Leach-Bliley Act gave Treasury and the Federal Reserve Board the authority to allow, at their discretion, changes to the list of permissible activities by banks. In 2000 the Treasury and the Fed first drew up the proposal to allow banks to expand into real estate brokerage. Since then, the National Association of Realtors has aggressively lobbied for a permanent ban and succeeded in getting temporary bans enacted.

According to the Realtors, under the proposed expansion agents and their employees would not need real estate licenses to sell property, nor would they have to pass state licensing exams or pay state licensing fees. Federally regulated banks would not have to comply with state regulations regarding consumer disclosures, predatory lending, or disclosures about dual agency when a broker represents both the buying and selling party.

What It Means to Agents:  The concerns of the Realtors parallel the concerns of Main Street insurance agents when it comes to proposals to allow federal regulation to replace state regulation.