Posted on: Friday, June 20, 2003
Banking, real estate battle for territory
| • | Rapport critical when hiring real estate agent |
| • | Apartment demand sinks as home market booms |
By Sharon Theimer
Associated Press
WASHINGTON — When Rep. Anne Northup, a longtime banking industry ally, sided with rival real estate agents in a legislative dispute on home sales, her campaign treasury felt the impact. Bankers' donations to the Kentucky Republican declined while those from real estate agents shot up.
With campaign cash, advertising and grassroots contacts in every community in America, the two well-heeled industries are engaged in a goliath campaign to persuade lawmakers to take sides in a fight over whether banks will be permitted to sell real estate.
"I don't know of one person who wants to be in the middle between these two groups. They all are part of our communities," said Northup, who saw the banks that held fund-raisers for her turn around and raise money for her challenger in the last election.
The American Bankers Association and the National Association of Realtors have matched each other maneuver for maneuver as the banks seek government permission to get into the real estate business while real estate agents try to stop it.
Both lobbies have huge influence on Capitol Hill. Realtors donated at least $65 million during the 2002 election cycle, almost equally split between Democrats and Republicans. The banking industry gave at least $20.5 million, about 60 percent to Republicans.
At stake in the current debate is how consumers buy and sell their homes, one of the few growth areas in the struggling economy.
The banks say they could offer consumers convenient one-stop shopping and provide competition that would improve customer service. Real estate agents argue banks could easily become monopolies that would be unresponsive to consumers' needs.
The two sides have been running ads in Capitol Hill newspapers, organizing letter-writing campaigns among their members, lobbying lawmakers and making campaign contributions based in part on incumbents' positions on the issue.
Realtors want a law passed barring banks from entering their profession. "Every month that passes we're making more progress," said Steve Cook, spokesman for the Realtors' lobby. The group has an "action center" on the Internet that urges members to write to their lawmakers on the issue. The group "will fight this to the end," he said.
The banking association, which wants the Bush administration to permit its members to sell real estate, is equally determined. Its Web site includes a "grassroots action kit" with a "real estate action flyer," an "employee action memo" and other tools its members can use to lobby.
"We believe that we are right, and that the rationale for allowing national banks into the business is just unassailable," banking lobbyist Floyd Stoner said.
It's a clash of lobbying titans that dates to at least 2000, when a law commonly known as the Gramm-Leach-Bliley Act took effect and let financial holding companies offer banking, securities and insurance products.
The law also allows the government to decide whether banks could offer additional services in the future. Soon after, banking interests asked the Treasury Department and Federal Reserve Board to let them offer brokerage and real estate services.
The Clinton administration proposed such a rule in its final days. Realtors opposed it and organized a campaign that produced more than 35,000 letters to federal agencies.
With the huge outcry by Realtors and then the Sept. 11 terrorist attacks, President Bush's first Treasury secretary, Paul O'Neill, and Federal Reserve Chairman Alan Greenspan decided to put off a decision until 2003.
Northup, a member of the House Appropriations Committee, helped the Realtors ensure that the proposed rule went nowhere through at least the end of the 2003 fiscal year by sponsoring an amendment barring Treasury from spending any money through Sept. 30 on finishing the rule.
