NAR: Don't allow banks to engage in commercial activities

WASHINGTON -- Sept. 28, 2006 -- The National Association of Realtors® (NAR) expressed growing concern to a House panel yesterday about the inappropriate expansion of banking powers being permitted by the Office of the Comptroller of the Currency (OCC), an agency within the Department of the Treasury.

NAR contends that the OCC's rulings inappropriately expand congressionally established bank authority, in essence creating a new law, without public or congressional participation.

"The OCC's actions set in motion a process that could result in dramatically increased risk to national banks and threaten the safety and soundness of the nation's banking system," said NAR President Thomas M. Stevens in his testimony before the House Government Reform Subcommittee on Government Management, Finance and Accountability.

Cynthia Shelton, CCIM, a Realtor and vice president of a commercial brokerage firm in Orlando, Fla., also testified. "As a commercial real estate professional who has developed close working relationships with large banks, I am concerned that the decisions by the OCC will compromise banks' ability to act as honest brokers of financial services," she said.

In December of 2005, the OCC granted three national banks the ability to enter into speculative real estate development transactions. It permitted PNC Bank to develop retail space, offices, a hotel and condos for resale; approved Bank of America's request to develop a Ritz-Carlton Hotel, in which less than half of the rooms will be used for its own business; and authorized Union Bank of California to own 70 percent of the equity interest in windmill farms. NAR believes that those OCC actions represent a marked departure from what is permitted by the National Bank Act, which clearly prohibits the mixing of banking and commerce.

"We remain concerned about the OCC's real estate decisions and strongly believe that these rulings will inevitably lead to an irreparable breach in the wall separating banking and commerce," said Stevens. "Without congressional action, we foresee the OCC stringing together authority with decisions that permit national banks to participate in negotiating sale transactions on behalf of real estate investors and authorize national banks to engage in full service real estate brokerage free from controls and protections established by state and local laws."

© 2006 FLORIDA ASSOCIATION OF REALTORS®

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