New Bill to Keep Banks out of Real Estate
Sunday 17 February
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by Sid Cameron
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This week Congress introduced a bill titled, "Community Choice in Real Estate Act," to permanently ban banking conglomerates from entering real estate brokerage or property management. This is because some of the larger banking conglomerates have requested permission from the Federal Reserve Board to sell and manage real estate. Pretty much every major organization in the real estate industry is backing the bill against banks in real estate.
To be honest, the name of the bill sounded a bit Orwellian to me. My first thought is, “how does prohibiting competition (i.e. the banks) give me the consumer a greater choice?” It’s easy to assume that real estate industry giants are just trying to keep a potential competitive threat out of their business in much the same way the local mom and pop retailers will do everything possible to keep new Wal-Marts and Home Depots from being built next to their stores.
Then I started thinking about this a bit more. If Bank of America, CitiBank, and the rest of the national banks were allowed into the industry, what would really happen and who would benefit the most from it? Would it give us more or less competition? What would it mean to the average Joe who just wants to buy or sell a home?
That’s when I realized it really would eliminate competition and hurt the average consumer. Why? Because a bank like Bank of America wouldn’t just go rent a small office space with a couple of employees downtown and try to build their business from the ground up- beating the Prudential’s, Coldwell Banker’s, and Remax’s of the world on better service. No, a Bank of America would enter the market by throwing out Billions in cash to buy out the largest real estate chain they could land. Heck, they might even buy a couple of them! Not to pick on Bank of America, but where I live that is how they became a bank here - by buying out one of our local chains?
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