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Should Banking Powers Expand into Real Estate Brokerage and Management? 1 (August 2, 2002)

handle is hein.tera/crser0040 and id is 1 raw text is: Order Code RS21104 Updated August 2, 2002 CRS Report for Congress Received through the CRS Web Should Banking Powers Expand into Real Estate Brokerage and Management? William D. Jackson Specialist in Financial Institutions Government and Finance Division Summary In late 2000, the Federal Reserve and the Treasury proposed to use their authority to increase banking powers to adapt to changing financial markets. The regulators proposed allowing banking companies to engage in real estate brokerage and management as activities that are financial in nature. Their proposal has been controversial, pitting real estate companies against banks. The substantiative issues are of two sorts: those that question the respective nature of banking and of real estate activities; and those that question what the impact on consumers will be from the possible benefits of efficiency and potential changes in competition. Procedural questions involving the intent of the 106th Congress in a major public law, which delegated authority to the two agencies to issue new regulations of this kind, also surround the proposal. Members have introduced H.R. 3424/S. 1839, the Community Choice in Real Estate Act, to block the regulatory proposal and to remove these real estate activities from future consideration under the market-adaptive powers of the regulators. In view of the controversy over it, regulatory action on the proposal is in a holding pattern until 2003. Both sides to the controversy continue their public and legislative relations initiatives, nonetheless; hearings occurred in both House and Senate Subcommittees even after regulatory postponement. The House, via an amendment introduced by Representative Northup to the Treasury-Postal appropriations measure, H.R. 5120, has also just voted to block issuance of the proposed rule in fiscal year 2003. The corresponding Senate appropriations bill, S. 2740, contains no such prohibitory provision. This report will be updated as events warrant. Framework of Legislation and Regulation The Gramm-Leach-Bliley Act (GLBA, P.L. 106-102)' was landmark legislation that allowed banking, securities, and insurance companies to operate in affiliation with each other under the umbrella organizational form of financial holding companies (FHCs.) 1113 Stat. 1338-1481, Nov. 12, 1999. Congressional Research Service **** The Library of Congress

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