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By Glen Justice Bloomberg News
Three years ago, the American Bankers Association began
lobbying to gain the right to broker home sales. The group
has sent every member of Congress a Monopoly game — a
message that real-estate agents have a lock on the U.S. housing
market.
The National Association of Realtors opposed bankers by
putting the image of a giant cartoon octopus with a tentacle
wrapped around a house and the words "Stop the Big Grab" on
buttons, stickers and even Beanie Babies.
The octopus makes the group’s point that bankers are
sticking their tentacles where they don’t belong. If
banks get into home sales, many Realtors would be put out
of work, said Martin Edwards, who was the association’s
president in 2002. "I don’t think a lot of people
understand the resolve of the membership on this issue," he
said. "It is not going to die."
The two sides, which are among the country’s largest
and most-influential lobbies, have been battling over whether
banks may legally intrude on Realtors ’ turf. So far,
the Realtors have halted the banks’ advance — first
in the Bush administration and then in Congress — by
winning a one-year moratorium preventing bankers from brokering
real estate. "We have put together one of the most effective
lobbying campaigns this city has ever seen," said Stephen
Cook, vice president of public affairs for the Realtors association.
The war is far from over, said Edward Yingling, director
of government relations for the bankers association. "We’ve
always looked at this as a long-term fight," he said.
At stake is access to a market that brought real-estate
agents $56 billion in commissions last year, according to
Real Trends, an industry newsletter. "It’s a huge
market," said Marshall Front, chairman of Front Barnett
Associates LLC, a Chicago investment firm with $1.5 billion
under management and more than $1 million invested in Citigroup
Inc. and J. P. Morgan Chase & Co.
Front said banks could eventually win over real-estate customers
simply by sending out ads and fliers in monthly mailings. "You
can see the flier in the bank statement going to every customer,
millions and millions of them," he said. Brokering real
estate could also help banks sell other services to real-estate
customers. "The home buyer is the ideal bank customer," Cook
said. "They’re all terrific prospects to cross
sell other services." Yingling said that if banks can
broker home sales, they’d gain the opportunity to sell
mortgages, other loans, insurance, checking and savings accounts,
investment advice, and retirement plans to home buyers.
REALTORS INVADE
Realtors have already invaded the traditional turf of banks.
Companies such as Long & Foster Cos. and Cendant Corp.,
which operates Coldwell Banker Corp. and Century 21 Real Estate
Corp., offer real-estate brokerage services and mortgages
through their own subsidiaries.
Yingling said that gives Realtors a competitive advantage. "That’s
where the person goes first," he said. "We may
never see that customer."
The lobbying campaign is the first test of the Financial
Modernization Act, which Congress passed in 1999. It altered
the 47-year-old Bank Company Holding Act, which barred banks
from entering other fields.
The law left it to the Treasury Department and the Federal
Reserve Board to jointly regulate which financial services
and related activities banks can pursue.
So far, the fight between Realtors and bankers has trapped
Republicans in Congress and the Bush administration between
two lobbies that provide campaign money and support as the
2004 elections approach. "The Republican Party in general
didn’t want anything to do with this fight," Cook
said. "We’ve got bankers and Realtors, both of
whom are traditional Republican constituencies, going at
each other tooth and nail."
The three-year duel shows how lobbies bring their weapons
to bear. The bankers have a 28-person office in Washington
and use at least half a dozen outside lobbying firms.
With 908,000 members, the Realtors claim to be the largest
U.S. trade association, and at $3.7 million in last year’s
elections, their political action committee gave more to
candidates than any other, according to the Center for Responsive
Politics, which tracks campaign financing.
The two sides spent at least $41.9 million on lobbying from
2000 to 2002, according to filings in Congress. They spent
a combined $12.3 million on campaign contributions in the
past two federal elections.
Early in 2000, the bankers association asked the Treasury
Department and the Fed to set a rule allowing banks to broker
home sales. In December 2000, the two agencies released a
proposal that would have allowed bankers to broker real estate.
Realtors and bankers sought support from lawmakers. So far,
Congress has passed a one-year moratorium preventing the
Treasury Department from making an immediate decision on
whether banks can broker real estate.
In June 2001, the Realtors met with then-Treasury Secretary
Paul O’Neill to discuss their interpretation of the
1999 law.
The Realtors Association hoped legislation would give O’Neill
the proof he needed from Congress, Edwards said. The Realtors
turned to an often-used strategy, collecting large numbers
of co-sponsors for the bill.
House members swarmed to a bill to block banks’ entry
into real estate. By April 2002, Realtors reached a magic
number: 219, a majority of the House.
Five days after the Realtors Association signed up a House
majority, O’Neill announced that the Treasury Department
and the Fed would not decide on the matter for at least another
year.
Bankers didn’t give up, Yingling said. Their lobbyists
attempted to strip out the language, and Rep. Michael Oxley
issued a statement showing his displeasure at having his
Financial Services Committee bypassed. Those efforts failed,
and President Bush signed the bill into law Feb. 20.
It was as much a beginning as an ending. The clash is shaping
up to be an annual event, as Realtors are trying to get another
one-year moratorium in the 2004 spending bill.
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