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Should Banking Powers Expand into Real Estate Brokerage and Management? 1 (July 30, 2003)

handle is hein.tera/crser0043 and id is 1 raw text is: Order Code RS21104 Updated July 30, 2003 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. 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 two: those that question the respective nature of banking and of real estate activities; and those that question what the impact on consumers will be. Procedural questions involve the intent of the 106th Congress in the Gramm-Leach- Bliley Act, which delegated authority to the two agencies to issue new regulations of this kind. Members have reintroduced the Community Choice in Real Estate Act, as H.R. 111/S. 98, to remove these real estate activities from consideration under the market- adaptive powers of the regulators. The House, via an amendment introduced by Representative Northup to the Treasury-Postal appropriations measure, H.R. 5120 of the 107th Congress, voted to block issuance of the proposed rule in fiscal year 2003. As a result, the Treasury Department became forbidden to act upon its regulation until October 2003, when fiscal year 2004 begins. Consequently, the Federal Reserve cannot issue it either. On July 11, 2003, Representative Northup reintroduced the amendment to be in effect in fiscal year 2004, as approved by a Subcommittee, then the full Appropriations Committee on July 24. This report will be updated as events warrant. Framework of Legislation and Regulation The Gramm-Leach-Bliley Act (GLBA, P.L. 106-102)1 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.) GLBA also permitted FHCs, like financial subsidiaries of banks (FSs) newly authorized by the law, to engage in a variety of financial activities not previously allowed to banks 113 Stat. 1338-1481. Congressional Research Service ** The Library of Congress

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